Kelloggs Special K presentation UCD Smurfit
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Project developed for the module eCRM, directed by Prof. Dr. Philippe Baecke. The project consists in a logistic regression analysis of the Dunnhumby database to improve the predicted coupon redemption rate. Tool used: Excel, KNIME for data mining.
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Kelloggs Special K presentation UCD Smurfit
- 1. Increasing Profit by Improving Predicted Coupon Redemption Group 6 Aparna Sosale | Melanie Kaiser | Lara Zaccaria | Tove Perlhede | Christer Lundmark
- 2. Strategic targeting to narrow down the most valuable customers. Increase ROI WHY PREDICTIVE MODELLING? • To support business decisions with strong, actionable insights gathered from customer data. • To highlight future possibilities for better investment opportunities. 1 Optimal number of people to send the coupons to
- 3. BENEFIT OF PREDICTIVE MODELLING 2 14.5% 25% 39% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% RANDOM MODELLING HUMAN JUDGEMENT PREDICTIVE MODELLING
- 4. 3 Removing Insignificant Variables Examined Ideas Low P-Value Significant Variables If formulaNew Variables PROCESS OF MODEL CREATION
- 5. FINANCIAL BENEFITS 4 Total No. of Customers to Target 15,000,000 Total No. of Targeted Customers Cost to Target Per Customer Total Cost to Target Average Prediction Total No. of Redeemed Customers Gross Profit from Redeemed Coupons Gross Profit from Redeemed Customers Net Profit Return-on-Investment 2,250,000 € 0.15 € 337,500 39% 886,500 € 0.90 € 797,850 € 460,350 36.4% 1,800,000 € 0.15 € 270,000 43% 766,800 € 0.90 € 690,120 € 420,120 55.6% 3,000,000 € 0.15 € 450,000 35% 1,050,000 € 0.90 € 945,000 € 495,000 10% 15% 12% 20%
- 6. 6 €420,120 €439,335 €443,475 €459,900 €460,350 €489,600 €495,000 56% 50% 46% 46% 36% 28% 10% 0% 10% 20% 30% 40% 50% 60% € 380,000 € 400,000 € 420,000 € 440,000 € 460,000 € 480,000 € 500,000 € 520,000 12% 13% 13.5% 14% 15% 17% 20% ROI NETPROFIT CUT-OFF Net Profit Return on Investment (ROI) FINANCIAL BENEFITS
- 7. RESULTS OF DIFFERENT CUT-OFFS 5 Maximum ROI 12% 12% (55.6%) 20% (€495,000) Beyond 15% Net Profit increases, ROI decreases Best Cut- Off Maximum Profits
- 8. MODEL IMPROVEMENT Increase ROI Cut-Off Most valuable customers ‘Special K Last Time Bought’ Day & Time Redeemed cou- pons of category cereals. 6 Other Special K Products • This will lead to the ultimate short-term goal to an increase in profit and Special K cross-sales.
- 9. Personal Shopper Sally Future of Virtual Assistants Good Morning Philippe! Would you like to shop today? RETAIL OF THE FUTURE
- 10. 9 THANK YOU!