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5 Benefits of Customer
               Decision Management


James Taylor
       CEO
Your Presenter – James Taylor
 CEO of Decision Management Solutions
 Works with clients to improve their
 business by applying analytic technology
 to automate & improve decisions
 Spent the last 9 years championing
 Decision Management and developing
 Decision Management Systems




                                       © Decision Management Solutions, 2012   1
Decision Management
Decision Management is the
  proven approach used to
      manage decisions
independently and effectively
   apply business rules and
     predictive analytics

                    © Decision Management Solutions, 2012   3
Decision Management Systems
     Agile




               Analytic




                                    Adaptive



                          © Decision Management Solutions, 2012   4
Decisions About
     Customers
Different Kinds of Decisions


 Strategic Decisions
 • Few in number, large impact
 • Should we acquire this company or exit this market?

 Tactical Decisions
 • Management and control, moderate impact
 • Should we focus on retention or acquisition? What’s the best positioning for us?


 Operational Decisions
 • Day-to-day decisions that affect one transaction or customer
 • Best offer for this customer? Retain this customer? Best script to cross-sell this one?




                                                             © Decision Management Solutions, 2012   6
Operational Decisions Are Everywhere




                          © Decision Management Solutions, 2012   7
Decisions Implement Customer Strategy




                          © Decision Management Solutions, 2012   8
Decisions Maximize Customer Value




                         © Decision Management Solutions, 2012   9
Decisions Scale For Large Impact


                                       Strategic
                                       Decision
                                       Tactical
                                       Decision
                                 Operational
                                  Decision



                           © Decision Management Solutions, 2012   10
Targeting Customers More
               Accurately
1:1 Marketing
 Next Best Action
 Cross-channel Marketing
 Markets of 1
 Personalization

 All ways to say that we
 must make consistent,
 accurate, customer-centric
 micro decisions about
 what to do next



                              © Decision Management Solutions, 2012   12
Personalization And Targeting
 The best response changes in each situation
   Analytically derived segments for targeting
   Prediction of responses, risk
   Rules to implement policies, regulations, scripting
   Customer’s own rules about preferences
   Rapid response, continuous evolution




                                        © Decision Management Solutions, 2012   13
Case study: Cable TV
Business challenges        Solution                    Benefits

1.2M households            Predictive analytics to     13-18% cross-sell hit
Many single-product        predict churn, cross-sell   rate on average
households                 Business rules use          Up to 40% cross-sell
Whole industry suffers     analytics and data to       success rate for some
from low loyalty and       drive dynamic scripts
                                                       Teams using the scripts
20%+ customer churn        Embedded in call center     have more sales
Increasing competition     application to improve
                           decision making             Reduced churn by 20-
and changing regulations                               30%
Reacting To Customers In
               Real Time
Reality Check



People don’t make
many of the
                        Systems do
decisions that affect
your customers



                           © Decision Management Solutions, 2012   16
Latency In Decisions Costs You


    Business
     event




               Decision latency



                                           Action
                                           taken




                                  © Decision Management Solutions, 2012   17
Analytics Must Drive Action

Operational
 Systems                            Decision
                                    Management
                                    Systems link
                   Decision         analytics to
                                    operational
                                    systems
  Analytic
  Systems
                              © Decision Management Solutions, 2012   18
Case: European Bank
Business challenges     Solution                          Benefits

1.7M customers          Churn, cross-sell, up-            Right offer at the
640 branches            sell, attrition and next          right time through
                        best action models                the right channel
Need to increase
sales, reduce churn     Analytic segmentation             20-30% campaign
                        Decision made for                 response
Changing interactions
with the bank                 every customer
4-5% campaign                 in every campaign
response




                                                   © Decision Management Solutions, 2012   19
Keeping Up With Rapid
      Business Change
Decisions Are High Change Components
 Regulations change   Change to keep making
                      compliant decisions
 Policies change      Change validation to track
                      eligibility requirements
 Competitors change   Change the discount to remain
                      competitive
 Markets change       Change the assessment to
                      manage risk
 Consumer behavior    Change to keep selecting the
 changes              right deal terms



                              © Decision Management Solutions, 2012   21
Decisions Management Stays In Synch
 Conventional Approach                                                                                                                     Decision Management
                                                                      Other Systems

          CRM
          System                                                                                              CRM
                                                                                                              System                                                     Decision
                                                                                                                                                                         Service



                                       Frequent code changes                          Infrequent code changes                                                                                             Other Systems
                                                                                                 so r t       ed=1:

   so r t       ed=1:                                                                            f or    I        y = I–I= y > 11;                 y –I t

   f or    I        y = I–I= y > 11;                 y –I t                                             p rin t(       y       –Id ,y) :

          p rin t(       y       –Id ,y) :                                                               if [1a     rrayI         y] < 1a      r r a y I y -1]) t

           if [1a     rrayI         y] < 1a      r r a y I y -1]) t                                          holder - [a          r r a y[ y -1] |

               holder - [a          r r a y[ y -1] |                                                    Ia r r a yl y           -1]) = 1    [y])

          Ia r r a yl y           -1]) = 1    [y])                                                      1a r r a           y     = holder

          1a r r a           y     = holder




 Programmers                                                                                 Programmers


                                                                                                                                                                    Frequent policy changes
 Policy Changes




                                                                                                                                                                       Business users
 Business users

                                                                                                                                                                                                        Smart (Enough) Systems, Prentice Hall June 2007. Fig 2.11




                                                                                                                                                                              © Decision Management Solutions, 2012                           22
Case: Beauty Retailer
Business challenges      Solution                          Benefits

Inflexible loyalty       POS rules-based                   Four-fold increase in
program                  calculation of loyalty            promotion agility
                         discounts
Costly and labor-                                          20% lift in sales in one
intensive campaign       Automated loyalty                 year
implementation           offers delivered through
                                                           Reduced costs
                         re-printable card
Confusing and time-
                                                           Improved customer
consuming for in-store   Business definition and
                                                           experience
staff                    management of
                         campaigns




                                                    © Decision Management Solutions, 2012   23
Agile, Industrial Analytics




                              © Decision Management Solutions, 2012   24
Ensuring Consistency In A
     Multichannel World
Consistency Across Channels




                                                Decision




                          © Decision Management Solutions, 2012   26
Case: Retailer
Business challenges     Solution                         Benefits

Grocery chains are      Tailored promotions              Increased revenue
battling for market     integrated with loyalty          Deep knowledge of
share                   program                          customers across
Customer loyalty is     Integrated system from           formats
essential for growth    back office to point of          More effective
Loyalty to the brand,   sale                             promotional campaigns
not a single store      Consistently compelling
format                  offers across channels




                                                  © Decision Management Solutions, 2012   27
Keeping Costs Down With
      Scalable Solutions
Decision Management Systems Scale




                                              Staffing ratios broken


 Manuals and reports replaced by
 recommendations and decisions



                                              Avoiding the “press 0” problem


           Always on, powerful self-service

                                                    © Decision Management Solutions, 2012   29
Better more profitable
customer relationships
Critical Questions, Customer Decisions
 What’s the next best action for this customer?
 What channel should I use to contact them?
 How do I retain this customer?
 Can I approve this customer’s request?
 Is this customer loyal?
 How valuable is this customer?
 What’s the best way to handle this problem?
 …
                                  © Decision Management Solutions, 2012   31
Customer Decision Management
 Better results    Existing customers are better value
                   Boost “share of wallet”

 More loyal        Customers treated like a number
 customers         eventually defect
                   Interaction quality is as important as
                   product quality
 Competitive       Only you have your customers’ data
 differentiation
                   No-one can treat your customers the
                   way you can

                                      © Decision Management Solutions, 2012   32
Case: Big Box Retailer
Business challenges     Solution                        Benefits

$30+ billion retailer   Marketing decision              Personalized
More than 500 US        engine                          recommendations,
and 100 international   Precisely targeted              in new categories
locations               recommendations                 Deeper customer
Needed to grow          Decision Management             relationships
basket size             System                          More visits, bigger
Expand categories         Data warehouse                baskets
1% response rates for     Predictive analytics          15-18% response
direct mail               Business rules                2,000% increase




                                                 © Decision Management Solutions, 2012   33
Questions?
Thank You

Sign up for our newsletter, check out
              recordings and more at
   decisionmangementsolutions.com

                    James Taylor, CEO
    james@decisionmanagementsolutions.com




                                            35

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5 Benefits of Customer Decision Management

  • 1. 5 Benefits of Customer Decision Management James Taylor CEO
  • 2. Your Presenter – James Taylor CEO of Decision Management Solutions Works with clients to improve their business by applying analytic technology to automate & improve decisions Spent the last 9 years championing Decision Management and developing Decision Management Systems © Decision Management Solutions, 2012 1
  • 4. Decision Management is the proven approach used to manage decisions independently and effectively apply business rules and predictive analytics © Decision Management Solutions, 2012 3
  • 5. Decision Management Systems Agile Analytic Adaptive © Decision Management Solutions, 2012 4
  • 6. Decisions About Customers
  • 7. Different Kinds of Decisions Strategic Decisions • Few in number, large impact • Should we acquire this company or exit this market? Tactical Decisions • Management and control, moderate impact • Should we focus on retention or acquisition? What’s the best positioning for us? Operational Decisions • Day-to-day decisions that affect one transaction or customer • Best offer for this customer? Retain this customer? Best script to cross-sell this one? © Decision Management Solutions, 2012 6
  • 8. Operational Decisions Are Everywhere © Decision Management Solutions, 2012 7
  • 9. Decisions Implement Customer Strategy © Decision Management Solutions, 2012 8
  • 10. Decisions Maximize Customer Value © Decision Management Solutions, 2012 9
  • 11. Decisions Scale For Large Impact Strategic Decision Tactical Decision Operational Decision © Decision Management Solutions, 2012 10
  • 13. 1:1 Marketing Next Best Action Cross-channel Marketing Markets of 1 Personalization All ways to say that we must make consistent, accurate, customer-centric micro decisions about what to do next © Decision Management Solutions, 2012 12
  • 14. Personalization And Targeting The best response changes in each situation Analytically derived segments for targeting Prediction of responses, risk Rules to implement policies, regulations, scripting Customer’s own rules about preferences Rapid response, continuous evolution © Decision Management Solutions, 2012 13
  • 15. Case study: Cable TV Business challenges Solution Benefits 1.2M households Predictive analytics to 13-18% cross-sell hit Many single-product predict churn, cross-sell rate on average households Business rules use Up to 40% cross-sell Whole industry suffers analytics and data to success rate for some from low loyalty and drive dynamic scripts Teams using the scripts 20%+ customer churn Embedded in call center have more sales Increasing competition application to improve decision making Reduced churn by 20- and changing regulations 30%
  • 16. Reacting To Customers In Real Time
  • 17. Reality Check People don’t make many of the Systems do decisions that affect your customers © Decision Management Solutions, 2012 16
  • 18. Latency In Decisions Costs You Business event Decision latency Action taken © Decision Management Solutions, 2012 17
  • 19. Analytics Must Drive Action Operational Systems Decision Management Systems link Decision analytics to operational systems Analytic Systems © Decision Management Solutions, 2012 18
  • 20. Case: European Bank Business challenges Solution Benefits 1.7M customers Churn, cross-sell, up- Right offer at the 640 branches sell, attrition and next right time through best action models the right channel Need to increase sales, reduce churn Analytic segmentation 20-30% campaign Decision made for response Changing interactions with the bank every customer 4-5% campaign in every campaign response © Decision Management Solutions, 2012 19
  • 21. Keeping Up With Rapid Business Change
  • 22. Decisions Are High Change Components Regulations change Change to keep making compliant decisions Policies change Change validation to track eligibility requirements Competitors change Change the discount to remain competitive Markets change Change the assessment to manage risk Consumer behavior Change to keep selecting the changes right deal terms © Decision Management Solutions, 2012 21
  • 23. Decisions Management Stays In Synch Conventional Approach Decision Management Other Systems CRM System CRM System Decision Service Frequent code changes Infrequent code changes Other Systems so r t ed=1: so r t ed=1: f or I y = I–I= y > 11; y –I t f or I y = I–I= y > 11; y –I t p rin t( y –Id ,y) : p rin t( y –Id ,y) : if [1a rrayI y] < 1a r r a y I y -1]) t if [1a rrayI y] < 1a r r a y I y -1]) t holder - [a r r a y[ y -1] | holder - [a r r a y[ y -1] | Ia r r a yl y -1]) = 1 [y]) Ia r r a yl y -1]) = 1 [y]) 1a r r a y = holder 1a r r a y = holder Programmers Programmers Frequent policy changes Policy Changes Business users Business users Smart (Enough) Systems, Prentice Hall June 2007. Fig 2.11 © Decision Management Solutions, 2012 22
  • 24. Case: Beauty Retailer Business challenges Solution Benefits Inflexible loyalty POS rules-based Four-fold increase in program calculation of loyalty promotion agility discounts Costly and labor- 20% lift in sales in one intensive campaign Automated loyalty year implementation offers delivered through Reduced costs re-printable card Confusing and time- Improved customer consuming for in-store Business definition and experience staff management of campaigns © Decision Management Solutions, 2012 23
  • 25. Agile, Industrial Analytics © Decision Management Solutions, 2012 24
  • 26. Ensuring Consistency In A Multichannel World
  • 27. Consistency Across Channels Decision © Decision Management Solutions, 2012 26
  • 28. Case: Retailer Business challenges Solution Benefits Grocery chains are Tailored promotions Increased revenue battling for market integrated with loyalty Deep knowledge of share program customers across Customer loyalty is Integrated system from formats essential for growth back office to point of More effective Loyalty to the brand, sale promotional campaigns not a single store Consistently compelling format offers across channels © Decision Management Solutions, 2012 27
  • 29. Keeping Costs Down With Scalable Solutions
  • 30. Decision Management Systems Scale Staffing ratios broken Manuals and reports replaced by recommendations and decisions Avoiding the “press 0” problem Always on, powerful self-service © Decision Management Solutions, 2012 29
  • 32. Critical Questions, Customer Decisions What’s the next best action for this customer? What channel should I use to contact them? How do I retain this customer? Can I approve this customer’s request? Is this customer loyal? How valuable is this customer? What’s the best way to handle this problem? … © Decision Management Solutions, 2012 31
  • 33. Customer Decision Management Better results Existing customers are better value Boost “share of wallet” More loyal Customers treated like a number customers eventually defect Interaction quality is as important as product quality Competitive Only you have your customers’ data differentiation No-one can treat your customers the way you can © Decision Management Solutions, 2012 32
  • 34. Case: Big Box Retailer Business challenges Solution Benefits $30+ billion retailer Marketing decision Personalized More than 500 US engine recommendations, and 100 international Precisely targeted in new categories locations recommendations Deeper customer Needed to grow Decision Management relationships basket size System More visits, bigger Expand categories Data warehouse baskets 1% response rates for Predictive analytics 15-18% response direct mail Business rules 2,000% increase © Decision Management Solutions, 2012 33
  • 36. Thank You Sign up for our newsletter, check out recordings and more at decisionmangementsolutions.com James Taylor, CEO james@decisionmanagementsolutions.com 35