Pointers in Analytics Application

WHAT ARE BUSINESS ANALYTICS?

Business analytics (BA) is a set of disciplines and technologies for solving business problems
using data analysis, statistical models and other quantitative methods. It involves an iterative,
methodical exploration of an organization's data, with an emphasis on statistical analysis, to drive
decision-making.

DATA TO BUSINESS VALUE – DATA EXTRACTION

FRAMEWORK
• Data Sources
• Raw Data • Extract Load Transform
• Data Insights • Data Warehouse
• Business Actions • Analytics Application

DATA WAREHOUSE CRISP-DM

• Extract Load Transform • Business Understanding

• Extract Transform Load • Data Understanding
• Data Preparation
• Modeling
• Evaluation

What is Marketing?
“Marketing is creating, communicating, delivering and exchanging offerings that have value for
customers, partners and society at large” – American Marketing Association

Typical Challenges in Marketing

• Product or service does not attract the customers

• Organizations do not know if their campaign is effective
• Organizations have no brand loyalty
• Product or service is easily outdated or cannot keep up with trends
• Advertising costs cannot be justified
• Pricing is dictated only by margins only or competitor’s
How analytics improves marketing? Analytics always involved DATA.

CUSTOMER ANALYSIS

- Dividing your customers into groups of similar items called clusters or segments
Basis for clustering can be the ff data points:

• Demographics – age, gender, civil status, income, occupation etc.

• Geographics – province/ city/ municipality, zip code, urban, semi-urban/ urban / rural etc.
• Behavior – purchase history, total revenue, total profit, customer lifetime value etc.,
• Psychographics – personality profile, attitudes, values, etc.,
• Channels – through agent, phone, online app, in store, etc.

Intelligent Marketing with Analytics Product

➢ Target the right customers

➢ Design campaign based on customer segments
➢ Understand what makes your customer loyal
➢ Spot trends, forecast considering new factors
➢ Correlate successful campaigns with sales and other customer KPIs
➢ Find optimal price points per customer segment targeted by products

Strategic Marketing is Analytics Based

➢ Segmentation ➢ Retention
➢ Awareness ➢ Monetization
➢ Acquisition ➢ Engagement

Segmentation

➢ Understand who to target and who to retain

➢ Identify high value segments

Awareness

➢ Targeted ads, campaigns by segments

➢ Allocation of ad spend on most effective channel
Acquisition

➢ Customize acquisition strategy by segment

Retention

➢ Behaviors per segment define retention strategy

➢ Differentiated treatment based on segment value

Monetization

➢ Determine price sensitivity and elasticity

➢ New insights define new ancillary offerings

Engagement

➢ Management of customers by segment and not by product

➢ How customers are reached depend on segment

Application of Analytics Techniques

➢ Text Mining – is the analysis of data contained in a natural language.

➢ Sentiment Analysis - refers to the use of natural language processing, text analysis,
computational linguistics, and biometrics to systematically identify, extract, quantify, and
study affective states and subjective information
➢ Cluster Analysis - or clustering is the task of grouping a set of objects in such a way
that objects in the same group are more similar to each other than to those in other
groups.
➢ Regression Analysis - s a set of statistical processes for estimating the relationships
among variables.

Other Marketing Analytics Techniques

Market Basket Analysis - is a data mining technique used by retailers to increase sales by
better understanding customer purchasing patterns. It involves analyzing large data sets, such
as purchase history, to reveal product groupings, as well as products that are likely to be
purchased together.
Click Through Rate (CTR) Analysis - compares the number of times someone clicks on your
content, to the number of impressions you get (how many times thread was viewed). CTR
appears as an important metric in email, display, social and paid search campaigns.

Customer Segmentation

Customer segmentation involves grouping existing and potential customers based on shared
characteristics.

RFM Analysis

A marketing analysis tool used to identify a firm’s best clients based on the nature of their
spending habits.

➢ Recency How recently a customer has made a purchase

➢ Frequency How often a customer makes a purchase
➢ Monetary How much money a customer spends on purchases

Market Basket Analysis

is a data mining technique that analyzes patterns of co-occurrence and determines the

strength of the link between products purchased together.

K-Means Clustering Algorithm

➢ K-means clustering is one of the simplest and popular unsupervised machine learning
algorithms.
➢ A cluster refers to a collection of data points aggregated together because of certain
similarities.
➢ You’ll define a target number k, which refers to the number of centroids you need in the
dataset. A centroid is the imaginary or real location representing the center of the cluster.
Apriori algorithm is an influential algorithm that is generally used in the field of data mining &
association rule learning. It is used to identify frequent item sets in a dataset & generate an
association-based rule based on the item sets.

Using Association Rules

Rule Evaluation Metrics –

Support(s) – The number of transactions that include items in the {X} and {Y} parts of the rule as
a percentage of the total number of transactions. It is a measure of how frequently the collection
of items occur together as a percentage of all transactions

Support - 𝜎(X+Y) / total

Confidence(c) – It is the ratio of the number of transactions that includes all items in {B} as well
as the number of transactions that includes all items in {A} to the number of transactions that
includes all items in {A}.

Conf(X=>Y) = Supp(X∪Y)/Supp(X)

Lift - The lift of the rule X=>Y is the confidence of the rule divided by the expected confidence,
assuming that the item sets X and Y are independent of each other. The expected confidence is
the confidence divided by the frequency of {Y}.

Lift(X=>Y) = Conf(X=>Y)/Supp(Y)

WHAT ARE OPERATIONS?

Operations is the work of managing the inner workings of your business so it runs as efficiently
as possible. This can help streamline costs, allowing you to do more with less and reducing the
need to secure small business loans. Whether you make products, sell products, or provide
services, every small business owner has to oversee the design and management of behind-the-
scenes work.
RETAIL BUSINESS

➢ The daily goal is to stock the items customers want at a price they’re happy to pay.
➢ Perfecting the inventory

RESTAURANT

➢ Food businesses have even more challenging inventory problems than retailers, since
their product is perishable.
➢ At a restaurant, operations apply not just to foodstuffs, but also purchasing, preparation,
and the costs of food, beverage, and labor.
➢ Will also be concerned with customer service and customer experience at your restaurant.

WHAT ARE OPERATIONAL ANALYTICS?

Operational analytics is about using real-time data for daily decisions. Relevant business
information flows from many sources into tools that analyze that data and identify problems and
opportunities. This actionable data is then used by teams to inform their decision-making.

EXAMPLES OF REAL-LIFE OPERATIONAL ANALYTICS IN ACTION

Customized experiences: Amazon uses data on past purchases and product views to tailor what
a user sees with each page visit. Nissan tracks ecommerce sites to determine what car models
and colors are popular in geographic regions. The Land O’Lakes food company uses data
analytics and AI to set prices.

Preventive maintenance: Shell uses predictive analytics to determine the functional life of drilling
machine parts. Understanding when components will fail saved the company millions in inventory
storage costs. Duke Energy, an electrical utility based in North Carolina, implemented a predictive
analytics program employing sensors in 50 power plants. When a turbine began returning unusual
vibration, maintenance staff discovered loose bolts, potentially saving millions from a complete
malfunction.