Business Intelligence /Decision Models

1. Business Intelligence /Decision Models Dr. Richard Michon TRSM 1-040 Ext. 7454 rmichon@ryerson.ca www.ryerson.ca/~rmichon/mkt700

2. Outline • What this course is all about • Course specifics • Overview of Direct marketing, Interactive marketing, DB Mkt, CRM, BI and Data mining

4. Interactive Marketing Follows Technology Direct Mail Email Catalogue eCommerce ResponseCoupons DRTV WebInteractive Social Media

5. Interactive Marketinggoing Respectable Junk/Gizmos High End Fly-by-Night Blue Chips Games/ Porn Social Media

6. Evolution of Interactive Mkt Direct marketing Catalog marketing Data mining Direct mail Email marketing DRTV Telemarketing Call Centres CRM mCommerce Data analytics Interactive marketing Permission marketing Data science DB marketing eCommerce Business intelligence

7. Interactive Marketing Objectives • Acquisition • Cross-Sell and Up-Sell • Service and Support • Buzz Mkt / Viral W.O.M. • Loyalty / Engagement

8. Multichannel Retailing

9. Long Tail Effect Vol. & Demand C A B Assortment

10. Services Get rid of intermediaries, keep control and reduce costs

11. Media Alternate business channels and reduce costs

12. Non-Profits Nothing like trying!

14. MKT 700 Course Specifics • Business Intelligence and Decision Modeling

15. Ideal Candidates are Geeks, Nerds, and Market-oriented Data mining Artificial intelligence OLAP Data mart Database marketing Decision trees Fuzzy Logic Analytical CRM Neural nets CHAID and CART Knowledge discovery Kohonen Networks KDD Data warehousing Hadoop Decision rules Genetic algorithm Logistic regression NoSQL Big Data http://www.mastersinit.org/geeks-vs-nerds

17. Multidisciplinary Domain MKT IT Data Scientists

18. Course Material • Arthur M. Hugues, Strategic Database Marketing…4thd, 2012 • SPSS User Guides (Direct Marketing and Advanced Statistics) • Other Readings posted on website

22. SPSS Direct Mkt

23. Course Content DBEnvironment 2 CustomerProfiles - Decision Trees 8-9 Classification- RFM 5 - Clustering6 PredictiveModeling 8-11 Testing and Campaignmetrics 12 CRM/Interactive 1 Propensityto buy - Regression10-11 DataPreparation 3 LifetimeValue 4

24. Course Evaluation Percent Midterm exam 30% Final exam* 50% Lab Exercises** 20% Total 100% * Must pass ** No makeup

25. Grading F D- D D+ C- C C+ B- B B+ A- A A+* -2 0 -1 +1 +2 Z Score = (X – Mean) / SD * Approximate Scale

27. Analytical and Operational CRM

28. DBMkt, Analytical CRM,BI Technology, Data mining Putting terms in their proper context

29. DB Mkt D.Mail DRTV Email DirectResponse UpsellCross-sell Tele Mkt Database Mkt CRM CLV ROI Catalogue Service EngagementLoyalty Interactive Web/Mobile Social

30. Data Analytics DataQueries OLAP Data Visualization DBMS AnalyticalCRM Big Data Statistical Analysis KD BI AI Data mining Web MiningmMining

31. CRM/BI Architecture

32. BI Technology Toolbox

33. BI Technology Toolbox Databases Visualization OLAP Statistics Data Mining

34. Database technology

35. Online Analytical Process

36. Wrap up • Nature of Mkt700 • Evolution of database marketing • Operational and Analytical CRM • Applications for BI/Data Mining • DB\CRM Infrastructure • See Hughes’ reading topline in the next section

37. Next Week • IT Infrastructure and DBMS • Transactional data files • Marketing DB • Flat files and relational databases • Data integrity

38. Topline from chapters

39. Topline from Hughes’ Reading

40. Topline from Chapter 1-1How Database Mkt has changed • The purpose of database marketing is to create and maintain a bond of loyalty between you and your customers that will last a lifetime. • Modern database marketing is trying to re-create for large companies the loyalty enjoyed by the Old Corner Grocers who knew their customers by sight and name. • Customers today want recognition, service, friendship, and information. They listen, often, more to other customers than to what you are saying to them.  

41. Topline from Chapter 1-2 How Database Mkt has changed • Database marketing has changed significantly because of Web sites, e-mail, and mobile marketing. These have reduced the cost of communication, but they have presented a serious problem: there are too many messages. • Sending dynamically different messages to each customer is the goal, but the lift from customized content is less than the lift from frequent messages: frequency beats customization. • Electronic links within messages permit customers to do research and discover every product you have for sale as well as a tremendous amount of previously unobtainable data.

42. Topline from Chapter 1-3 How Database Mkt has changed • There are two types of database: operational and marketing. Companies must have both.

43. Topline from Chapter 2-1The “Vision of Things” • Direct mail is limited only by the cost of communication. Database marketing boosts profits by avoiding mailing to those who are unlikely to respond. • E-mail marketing has eliminated the cost of communication but created another problem: too many e-mails filling up in-boxes. • To create personal letters, Web sites, and personal e-mails, you need to store a lot of information about your customers and their preferences in your database.

44. Topline from Chapter 2-2The “Vision of Things” • Database marketing and Web sites are the only way to start a two-way dialogue in which customers are able to tell you what is on their mind and where you are able to react to their thoughts by varying your services and product mix.

45. Topline from Chapter 22-1The future of DBMKT • Database marketing grew out of direct marketing. • The first use was to save money on postage. The second use was to find out what people were interested in (from the database) and create dynamic content in direct mail. • Then e-mail came along and drastically reduced the cost of communication. • But the cost became so low that everyone began to send e-mails. In-boxes were overloaded with messages. • Billions of promotional e-mails are sent today that do not use the information in a marketing database.

46. Topline from Chapter 22-2 The future of DBMKT • Amazon came along with a different idea: build a massive customer database and a massive product database. Enlist a million suppliers to sell new and used products through the Amazon Web site. • Amazon sells more hard-to-find products than mainstream products—while being the largest e-commerce seller in the world. • Customer ratings and reviews are the most widely read part of any e-mail or Web site. To succeed, you must have them, and you must get customers to provide them.

47. Decision Rules • If R = X et M > Y, Apply treatment Z • If amount_12m > X or if total amount >= Y and promo code = Z, Select customer

48. Topline from Chapter 22-3The future of DBMKT • For 10 years, Borders was an Amazon partner. Then it decided to go it alone. Result: Borders is facing bankruptcy. • Database marketing is still essential for direct mail, which is still alive and well. • It is essential to support loyalty programs, business-to-business marketing, and financial services. • Profitable Web sites and e-mails greet returning customers—an essential part of their success. You cannot do this without a database.