Everyone’s talking about big data, machine learning, and AI when it comes to customer experience, customer retention, and profitability. If you want to begin using advanced analytics but don’t know where to start for predictive analytics ROI, here’s a quick guide to get you in the door. Here are three great starter projects using IBM SPSS Modeler that can deliver quick wins for common problems, using your existing data.
Project 1: Reduce customer churn for predictive analytics ROI
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Start with a project focused on customer churn because the data is relatively easy to understand, and you may uncover insights you can use immediately. Given customer acquisition cost (CAC), it’s less expensive to keep customers than acquire new ones. So, you may also see greater returns on your time investment here. ROI is also created by adding up the small values regained across thousands, or millions, of customers, and using the right predictive analytics tools.
Develop and test numerous predictive models based on a range of algorithms
The key is to build numerous predictive models and evaluate them side by side using a test set of data. This iteration helps you fine tune the attrition model that works best for you. You can accomplish this with many different machine learning platforms. It is up to you if you prefer to code in Python or R, or would rather use a drag-and-drop interface with a powerful engine under the hood. Since you’ll be building and testing many attrition models, consider tools that help you to explore and rapidly iterate.
Use your model to score all your customers and identify the greatest attrition risks
Next, you’ll take your customer data and score it through the model. If you’ve used properly prepared historical data to build the model, and your model has good explanatory power, the output will look toward the future by predicting which customers are likely to leave. With these insights, your marketers can engage at-risk customers with targeted incentives to stay.
In another post, we’ll show you a quick walk-through of how IBM SPSS Modeler, one of the premier predictive analytics platforms, makes it easy to create a churn model to improve attrition and predictive analytics ROI.
Project 2: Increase cross-sell or up-sell
This project is a great next step as it leverages data structures and propensity modeling similar to the churn project. You’ll start with similar inputs, but instead of targeting churn, your dependent variable (or target) is whether or not a customer represents a successful cross-sell from a particular marketing campaign.
- Identify attributes of customers from successful cross-sell campaigns in the past.
- Develop a model to pin-point current customers with similar attributes.
- Predict who you need to focus on using a confidence score developed from your model.
Cross-sell and up-sell modeling can have an immediate impact on your bottom line. You’ll get insights on how to tailor marketing communications for different channels and customer segments. By targeting the right message to the right customer at the right time, you have a better chance of improving marketing effectiveness, and increasing the value of existing customers.
Project 3: Achieve other business objectives with predictive analytics
Your next project might vary depending on the needs of the business, but you can also capture predictive analytics ROI in the following ways:
- Optimize account collections. Create a predictive model to prioritize which customers are more likely to pay, enabling your company to focus collection efforts on more receptive customers to maximize revenue.
- Maintain or increase customer loyalty. Loyalty is increasingly hard to achieve, so it can be valuable to understand which customers are most loyal, and how differing experiences and customer journeys led them there. Harness these insights to identify specifically what’s working well so you can replicate, and even innovate, ways to exceed expectations.
- Predict the behavior of new customers. How will new customers perform in the first 90 days or the first six months? You don’t know their past, but you do have data on how you acquired them. You can build models that predict those most likely to purchase again, respond to additional offers, or be at risk of leaving.
- Fraud detection. Reduce risk and build ROI by detecting fraud faster, quantifying how it happens, and then refining business processes to more effectively prevent fraud.
Modeling fun for everyone
The key to predictive analytics ROI is choosing the right projects. Your company doesn’t need a PhD in math to use predictive analytics tools. In fact, the opposite is true; the best modelers are those with a solid understanding of your business objectives, who can also understand what to do with the insights you’ll gain. You can start building predictive models and achieve real ROI quickly. If you do have a data science expert on staff, IBM SPSS Modeler allows for advanced customization and also interfaces with R, Python, and other predictive analytics platforms.
As big data offers many valuable possibilities, predictive analytics is fast becoming an inevitability for all industries. The early adopters will be poised to surpass the competition because the ROI is quick and accumulates at scale. Companies that don’t want to be left behind should start now, and start simple.
How Beyond the Arc can help — Machine Learning & AI
Our team includes experts in data science, passionate about making decisions and taking action based on data. We specialize in using machine learning to deliver predictive analytics ROI.
Take advantage of a complete predictive analytics platform — as an authorized reseller and certified IBM Business Partner, Beyond the Arc can provide IBM SPSS Modeler software, training, and hands-on model building and consulting.
Interested in learning more about how to deploy AI? Let’s start a conversation.