Marketing Analytics

Session I
 Marketing Churn
Churning - Customers become “churners” when they discontinue their subscription and
move their business to a competitor. The churn rate or rate of attrition, is the percentage of
customers who discontinue their subscriptions to a specific service within a given time
period.
To sustain in any competitive market, a company must maintain growth rate (number of
new customers acquired within same timeframe) higher than churn rate. So churning is
always a major concern for companies whose customers can easily switch to their
competitors.
Examples include credit card issuers, insurance companies and telecommunication
companies.

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 Marketing Funnel
The marketing funnel is a method designed to
track the stages consumers traverse through that
eventually leads to buying decision.
It also lets you know what the company needs to
do to help influence consumers at each stage e.g.
follow-up telephone calls or sending positive
press reviews.

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 Funnel Analysis
Funnel analysis means analyzing a well-defined flow on company’s
website, e.g. registration, browsing, checkout process, lead
generation etc e.g. E-commerce websites
• Conversion rate - What percentage of users who hit the
registration page are registering?
• Dropoff rate – What percentage of users left a conversion process
(funnel) without completing it?

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 What is Analytics
Analytics is processing recorded data by means of
mathematics, statistics and predictive modeling to find
meaningful patterns out of it. It can uncover correlations
and patterns to help answer the following types of
questions:
• What happened?
• How or why did it happen?
• What’s happening now?
• What is likely to happen next?

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Analytics is the use of:
data,
information technology,
statistical analysis,
quantitative methods, and
mathematical or computer-based models
to help managers gain improved insight about their
business operations and make better, fact-based
decisions.
Business Analytics (BI) is a subset of Data Analytics
Types of Analytics

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 Descriptive Analytics
Encompasses the set of techniques that
describes what has happened; examples:
– Data queries
– Reports
– Descriptive statistics
– Data visualization (including data dashboards)
– Data-mining techniques
– Basic what-if spreadsheet models
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 Diagnostic Analytics

Diagnostic analytics is a form of advanced

analytics that examines data or content to
answer the question, “Why did it happen?”

It is characterized by techniques such as

1. Drill-down

2. Data discovery

3. Data mining

4. Correlations 9
 Predictive Analytics
• Consists of techniques that use models constructed from past
data to predict the future or ascertain the impact of one variable
on another
• Survey data and past purchase behavior may be used to help
predict the market share of a new product.
• Past data from Deep water horizon will act as a case study to
predict what would be the causes of failure in similar sites and
can predict failure of any countermeasure like blowout preventor

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 Predictive Analytics

Techniques used in Predictive Analytics:

• Linear regression

• Time series analysis

• Data mining is used to find patterns or relationships

among elements of the data in a large database;
often used in predictive analytics
• Simulation involves the use of probability and
statistics to construct a computer model to study the
impact of uncertainty on a decision
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 Prescriptive Analytics

Optimization models: Models that give the best decision subject to

constraints of the situation
Model Field Purpose
Portfolio models Finance Use historical investment return data to
determine the mix of investments that yield the
highest expected return while controlling or
limiting exposure to risk
Supply network Operations Provide the cost-minimizing plant and distribution
design models center locations subject to meeting the customer
service requirements
Price markdown Retailing Uses historical data to yield revenue-maximizing
models discount levels and the timing of discount offers
when goods have not sold as planned

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 Prescriptive Analytics
Simulation optimization: Combines the use of probability and
statistics to model uncertainty with optimization techniques to find good
decisions in highly complex and highly uncertain

Decision analysis: Used to develop an optimal strategy when a

decision maker is faced with several decision alternatives and an
uncertain set of future events

Employs utility theory, which assigns values to outcomes based on the

decision maker’s attitude toward risk, loss, and other factors

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The Spectrum of Business Analytics

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Simple Analytical Report

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Complex Analytical Report

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 Marketing Analytics
Marketing analytics is a method to measure, manage and
analyze marketing performance to maximize its
effectiveness and optimize return on investment (ROI).
• It gathers data across all marketing channels and
consolidates it into a common marketing view.
• Using this common view, marketing executives can
extract analytical insights that can provide invaluable
assistance in managing company’s marketing efforts
effectively.

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 Why marketing analytics
• Increase sales and decrease operational cost
• Reduce churn and fraud
• Improve risk management
• Improve visibility into core operations, internal
processes and market conditions
• Identify trends and establish forecasts
• Analyze customer loyalty
• Build predictive models for fraud detection and
customer exits

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 Benefits of marketing analytics
• 360 degree view of the organization
• Identify hidden patterns, and relationships in the
data
• Support business strategy and planning
• Identify opportunities to optimize costs across the
value chain
• Predict demand in networks
• Provide better insights for improved decision making
• Equip the organization to have cross-channel
communication
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 Predictive analytics in marketing
In traditional advertising, sales person would call every lead they
had acquired to attain conversion. So there would be no scientific
method to predict which of the available leads will turn into a sale,
which resulted in huge wastage of time and resources.
But today, companies have sophisticated tools like predictive
analytics. It utilizes data mining i.e. analyzing large chunks of
available information and machine-learning (a type of artificial
intelligence that helps computers learn on their own) algorithms
to identify the leads that have high chances of turning into
potential customers and thereby come up with the most accurate
prediction about their future course of action.

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 Predictive analytics flow
When a company implements predictive analytics software
in marketing, it traverses through following path –
• The software can track detailed sales interactions and
other historic data of past successful business leads to
locate any possible pattern.
• This historic data can be –
– number of inbound calls
– duration of calls
– interactions over email
– meeting / site visit
• By analyzing above data, software builds a predictive
model and apply it on current leads to predict future
course of action. 21
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Questions

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