IBM Next Best Action
Tony Hocevar
Business Analytics
Growth Markets
Agenda
• Introduction to Next Best Action
• Demonstration
• Questions
“Data is the new oil”
Ann Winblad
Hummer-Winblad
The CMO’s Dilemma:
Analyze Effectively or Drown
73% of CEOs
identify
customer
insights as the
most critical
investment area
Global Chief Marketing Officer Study
IBM Institute for Business Value
2011
Global Chief Executive Officer Study
IBM Institute for Business Value
2012
As the voice of the customer in the C-suite
and an officer of the company, the CMO has
the responsibility and, increasingly, the
credibility to lead a customer-obsessed
transformation of the business strategy.
Global Evolved CMO Online Survey
Q3 2011 Forrester/Heidrick & Struggles
Forrester Research Inc.
Seeing Customers as Individuals Video
Understanding Each Customer
as an Individual
Act
Predict
Analyze
Interconnect
Collect
“Unless a decision has
degenerated into work it is
not a decision; it is at best a
good intention.
The Effective Executive, 1967
by Peter Drucker
The Old Marketing Approach
I have an offer…
Who wants to buy?
Direct Mail
Product A
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
let
me
Offer
Offer
Product B
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
F2F
Product C
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Online, Email
Product D
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
Offer
find a customer to
sell toIVR
Agent,
Mobile, SMS
Kiosk
The Next Best Action Approach
I have a customer…
What do they need most?
Product A
let me find a customer to
sell to
Agent,
IVR
Customer
Analytics
ice
rv
e
s
Product B
offe
r
Governance,
Prioritization &
Optimization
m
or
Product D
inf
Product C
Online, Email
Mobile, SMS
Brilliant!
Next Best Action aligns all channels
• Marketin
g
• Customer
Support
Buying
Patterns
Recent
Issues
Next Best Action
Interactio
n Profile
• Channels
Financial
Profile
• Customer
Accounts
IBM Next Best Action
Build relationships, one interaction, one decision at a time
Call Center
Agent
Next Best
Action
Real-time
Business
Analyst
•Improve customer
satisfaction
•Optimize revenue
•Increase lifetime
value
NEXT
BEST
ACTION
Marketing
Cross-channel
delivery of best
action
Support
Customer Data Insights
Data
Miner
Offers
List
Comprehensive view of a customer
IBM Next Best Action Demonstration
Call Center
Agent
Marketing
Business
Analyst
Support
Data
Miner
Dashboard visually shows customer situation
At Risk
Valuable
Influential
Real-time sentiment analysis feeds dashboard
Action tab recommends action
Dashboard reflects higher customer sat
Behind the Scenes
Business
Analyst
(optimized
next best
action)
Marketing
Support
(multiple
offers)
(multiple
offers)
Data
Miner
(insights &
predictions)
IBM Next Best Action Demonstration
Call Center
Agent
Marketing
Business
Analyst
Support
Data
Miner
Offers
List
Offers are aligned with segments
Campaign includes automated nurturing actions
Case Study
Business Challenge
• Suspects it is wasting money on
direct marketing campaigns
• Focusing on products rather than
customer knowledge and behavior
• Abundance of data but not using it
Solution
• Combine customer segment data with
real P&L data to optimize its marketing
spend to focus on programs that deliver
the highest return on investment (ROI)
• IBM SPSS and Unica
Outcome
• Increased marketing response rates by
3.1% by more accurately targeting offers
to high-value customer segments
• Achieved a 20% reduction in mailing
costs and a 17% reduction in printing
costs due to the ability to target the most
attractive segment for specific offers
• Tennessee’s oldest and largest bank
• 5,500 employees
• 180 bank locations
IBM Next Best Action Demonstration
Call Center
Agent
Marketing
Business
Analyst
Support
• Offer Response Propensity
• Customer Churn Risk
• Customer Lifetime Value
Data
Miner
Offers
List
Quick Quiz
•
•
•
•
Johnny's mother had 3 children.
The first child was named April;
The second child was named May.
What was the third child's name?
Source: Forbes, 10 brainteasers to test your mental
sharpness, Holly Green
Find Patterns… Using Powerful Tools
Most segmentation approaches
only focus on attributes such as
Time until
Repurchase in
Key Categories
Preferred
Channel
Econometric:
Real-estate &
Unemployment
Age +
Annual
Annual
Income
+
Spend Transactions
Geography
Level
Preferred
Product
Categories
Length of
Time as
Customer
Segmentation
Breadth of
Categories
Shopped
Recency +
Frequency +
Value
Response
to Media
Return /
Exchange
Behavior
Use of
Service
Programs
Participation
in Loyalty
Use of InHouse Credit Program
Card
Find Patterns… Using Powerful Tools
Segmentation
Association
Identify what
events occur
together
Anomaly
Detection
Social Network
Analysis
Real-time sentiment analysis feeds dashboard
Structure the unstructured: Text Analytics
What is Text Analytics?
•Puts text into categories to impose structure:
positive, neutral, negative
UNSTRUCTURED
What are the benefits?
•Makes unstructured text “quantifiable”
•Can now be mined
STRUCTURED
Modeler interface showing churn propensity
calculation
Churn
Propensity
Case Study
Business Challenge
• Protect existing revenue by reducing
customer churn
• Improve client service without
substantially increasing headcount
Solution
• Use data mining to identify at-risk customers
• Provide insights to client services agents to
focus their proactive outbound “health check”
calls
• IBM SPSS
Outcome
• Reduced customer churn from 1.9% to
1.4% in the first year
• Decreased the number of client services
agents needed for same level of contact
• Build analytics competence within an inhouse team to quickly extend predictive
analytics to new business areas
• Communications
provider in USA
• Employs >4,000
• Revenues >$1.5B
IBM Next Best Action Demonstration
Call Center
Agent
Next Best
Action
Marketing
Business
Analyst
Support
• Offer Response Propensity
• Customer Churn Risk
• Customer Lifetime Value
Data
Miner
Offers
List
Quick Quiz: What do we know about a shopper
if they buy the items below?
•
•
•
•
•
•
•
Cotton balls
Hand sanitizers
Washcloths
Unscented lotion
Big purse
Zinc supplements
Calcium, magnesium supplements
87% chance of pregnancy
Kashmir Hill, Forbes, 2/16/2012
Drive Real-time Decisions at the Point of Interaction
Optimized decisions
+
Business
rules
+
Optimization
Predictive
analytics
Decision models add rules and span depts
Optimization equation finds the “best” offer
Case Study
Business Challenge
• Agents had to investigate all claims,
both high-and low-risk
• All claims took a minimum of three
days to settle
• Santam began to feel its good
reputation for customer service suffer
in the age where customers demand
fast results
Solution
• A solution that more effectively assessed risk
• Separated potentially fraudulent claims from
lower risk ones in real-time
• SPSS Decision Management
Outcome
• Reduced processing time by 90% for
lowest-risk claims
• Saved more than US $2.5 million
through early fraud detection and
prevention in the first six months
• The largest short-term
insurance company in
South Africa
IBM Next Best Action
Build relationships, one interaction, one decision at a time
Call Center
Agent
Next Best
Action
Real-time
Business
Analyst
•Improve customer
satisfaction
•Optimize revenue
•Increase lifetime
value
NEXT
BEST
ACTION
Marketing
Cross-channel
delivery of best
action
Support
Customer Data Insights
Data
Miner
Offers
List
Comprehensive view of a customer
Next Best Action Logical Architecture
Deploy Decision Models
Sensors
producing
readings
Capturing Customer's Activity
Reporting
Master Information and System of Record
Update
Sandbox
INFORMATION
Files
Process
Internet
WAREHOUSE
Social Media
Services
Process
Updates,
Actions + Outcomes
Customer
Conversations
APPLICATIONS
Process
CEP
CUSTOMER
PRODUCT
ACTIVITY
MASTER
MASTER
Additional
Information
Action
Outcomes
Customer
Action +
Outcome
Real-time Decisions
Context
Human
Operated
Channel
Trigger
Automated
Channel
Execute
Action
Channels
Business
Analyst
Decision
Model
CUSTOMER
Trigger
Usage
Data
Miner
SANDBOX
Process
Shared
Staging Area
Analytics Management
MARKETING
PLATFORM
Decision
Management
Workbench
10001
01010
00100
01010
10001
?
Deploy
Decision
Model
DECISION
DECISION
ENGINE
ENGINE
ENTERPRISE SERVICE BUS (ESB)
For thorough review read
the IBM Red Guide:
Smarter Analytics: Driving
Customer Interactions with
the IBM Next Best Action
Solution
Let’s Make a Trade Video