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Getting you there. Marketing leads Optimization at Fortis RBB Evolution of an analytical CRM strategy : from product-oriented approach to customer-centric approach SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 1 Agenda – Fortis introduction Retail Banking Belgium Analytical & Predictive Marketing – Building blocks necessary for optimization – Required analytical skills – Industrialize response rate calculation – Translate the marketing plan & strategy into an optimization algorithm – The optimization process – Some results – Benefits & drawbacks – Questions SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 2 Estimate Evaluate Automate Innovate Fortis RBB Analytical & Predictive marketing – Fortis is an international provider of banking and insurance services to personal, business and institutional customers. We deliver a total package of financial products and services through our own high-performance channels and via intermediaries and other partners… Fortis Retail Banking Belgium … … Marketing Marketing Intelligence … – Analytical & Predictive marketing is a team dedicated to transform marketing needs into reality by using data mining techniques and state-of-the-art solutions SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 3 … Estimate Analytical & Predictive marketing Evaluate Automate Innovate Building blocks necessary for optimization – Build an analytical team with people having the required skills – Industrialize your process to compute response rate automatically for each customerproduct pair – Understand the business issues and convince management to solve it in a scientific way – Translate the marketing plan & strategy into an optimization algorithm – Integrate the solution in our marketing environment Analytical dream team Automate response rate calculation Convince Management SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 4 OR Translation Estimate Integration Evaluate Automate Innovate Required analytical skills Generated business value by aCRM Business Oriented & Computing & Data mining +/- : Product/need driven solution Feedback by product/need Optimization Predictive Model Business Oriented & Computing +/- : Subjective approach No feedback loop Profiling Model Business Oriented & Computing & Data mining & Operational Research +/- : Customer centric solution Marketing plan solution Automatic feedback loop OLAP Queries Complexity SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 5 Estimate Evaluate Automate Innovate Industrialize response rate calculation : the process Model Normalisation Model construction Business definition Metadata Model transfer Monitoring Results Score 1 DMI Admin Industrialisation Score database Score 2 Customer Data mart Score 3 SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 6 Estimate Evaluate Automate Innovate Industrialize response rate calculation : The score database Score database Done automatically every month Id customer 1 1 … 1 2 … 2 … 1000001 1000001 … 1000001 … id score Model 1 Model 2 Id customer 1 2 3 4 … 1000001 … T(Score 1) High DateScore Score T (Score) 31/12/2003 10% High 14/10/2004 2% low Model p Model 2 14/10/2004 14/10/2004 Model p 14/10/2004 3% low Model 1 Model 2 31/12/2003 14/10/2004 6% Meduim 1% low Model p 14/10/2004 5% low High low T(Score 2) low low Medium low Medium low SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 7 15% Medium 1% low … T (Score p) Medium low High low low Estimate Evaluate Automate Innovate Translate the marketing plan & strategy into an optimization algorithm • The business context : • A marketing plan focused on sales objectives and customers’ satisfaction • The translation : • Generate the best leads (offers) maximizing our expected sales revenues respecting the product mix strategy and contact strategy • A lot of customers with different needs and different service usage • Appetite scoring • A lot of marketing campaigns foreseen • Integrate every contact in only one optimization • A limited budget, resources availability and time to act • Respect Constraints Maximizing + Constraints problems SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 8 Operational Research solutions Estimate Evaluate Automate Innovate Translate the marketing plan & strategy into an optimization algorithm The operational algorithm at hand : • The “natural” solution Linear programming with SAS OR : The SAS LP procedure is used to optimize a linear function subject to linear and integer constraints. Specifically, the LP procedure solves the general mixed-integer program of the form : Max c’x Subject to : A1x ≥ b1 and A2x = b2 and A3x ≤ b3 l≤x≤u • The difficulties : decision variables (xijc : propose the product j to the customer i by the channel c) are binary and there are plenty of them : # customers * # product proposed * # channel the number of possible combination where to search the best solution was about : ± 2 (12 000 000) : not reachable with standard computer • The retained solution A mixed integer programming approach (Linear + Binary Integer Programming) + a lot of SAS macro permitting us to industrialize the all process. SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 9 Estimate Evaluate Automate Innovate Translate the marketing plan & strategy into an optimization algorithm – A function to maximize : of leads value = Hit RatioLead * DLTVLead = [xijc*P (Productj=1|customeri contacted by channelc) * DLTVij] – Constraints : # leads allowed for our contact manager, maximum # leads per customer, minimum and maximum # leads per product, contact strategy Customer Sample for a small customer base Product’s Lead value of leads value = 5 leads in total composed by : 2 red, 1 black, 1 yellow, 1 dark grey + Max 1 lead per customer SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 10 MAXIMUM While respecting all constraints Estimate Evaluate Automate Innovate Optimization Process : Leads generation and self learning Offer Life time Value Lead generators Marketing Plan Sales capacity Max leads customer Leads value Optimization Optimized Leads Feedback loop to align optimization to reality Hit ratio SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 11 Contact & Sales Estimate Evaluate Automate Innovate Some results Acquisition : Product X Hit Ratio (production between : begin date to end date + 1 month) 14,0% 12,0% The score band 19 generates three times more sales than a 14 10,0% 8,0% Tr 6,0% 4,0% 2,0% 0,0% 12 13 14 15 16 17 18 19 Scorebands : 19 = top5%, (18+19) = top 10%, …. , 0 = worst 5% SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 12 Estimate Evaluate Automate Innovate Benefits and drawbacks – Benefits – The leads distributed follow a general strategy and no isolated campaigns anymore, take care of our customers and take into account max profitability for the bank. – An efficient algorithm was quickly developed with SAS OR software – All the constraints and creative ideas of the marketers have been implemented “easily” – The true hit ratio of campaign is directly entered into the optimization process – Boosting the consciousness of the importance of propensity score and linking better predictive modeling with marketing campaigns – Low cost development – Drawbacks – Maintenance is time consuming – Not integrated in one package with nice reporting capabilities (as it is in SAS MO, …) SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 13 Estimate Evaluate Automate Innovate Getting you there. Thank you SAS Belux Forum 2008 | Manuel Piette | 24 May 2017 | 14