Data Mining

3月 232018
 

We all have different learning styles. Some learn best by seeing and doing; others by listening to lectures in a traditional classroom; still others simply by diving in and asking questions along the way. Traditional face-to-face classroom instruction, real-time classes over the Internet, or self-paced instruction with exercises, SAS Education [...]

The post SAS introduces the blended classroom appeared first on SAS Learning Post.

2月 012018
 

Groups and organizations lauding artificially intelligent solutions are popping up everywhere with promises to create the next battlefield advantage using next generation weapons, gear, or satellites.  The term artificial intelligence (AI) splashes the headlines with promises that we're moments away from revolutionizing the battlefield. As a former intelligence analyst, I [...]

13 ideas for AI in military intelligence was published on SAS Voices by Mary Beth Ainsworth

5月 202016
 

If you're looking for higher pay and better opportunities, what career skills should you seek to acquire? You might think leadership or communication skills would top the list, but a recent study says otherwise. According to a massive study from MONEY and Payscale.com, SAS Analytics skills are the most valuable skills to […]

New study confirms: SAS most valuable career skill was published on SAS Voices.

4月 152016
 

As promised a couple of weeks ago, I am very happy to share Part 2 of a webcast series highlighting how SAS participates in the space of digital analytics for data-driven marketing with applications for personalization and attribution. Before launching the video, let me set some context for what you are about to see.

Why do we care about the intersection of digital analytics and personalization? Honestly, it is increasingly important to predict how customers will behave so you can personalize experiences with relevance. The deeper your understanding of customer behavior and lifestyle preferences, the more impactful personalization can be. However, digital personalization at the individual level remains elusive for most enterprises who face challenges in data management, analytics, measurement, and execution. As customer interactions spread across fragmented touch points and consumers demand seamless and relevant experiences, content-oriented marketers have been forced to re-evaluate their strategies for engagement. But the complexity, pace and volume of modern marketing easily overwhelms traditional planning and design approaches that rely on historical conventions, myopic single-channel perspectives and sequential act-and-learn iteration.

The majority of technologies in use today for digital personalization have generally failed to effectively use predictive analytics to offer customers a contextualized digital experience. Most are based on simple rules-based recommendations, segmentation and targeting that are usually limited to a single customer touch point. Predictive MarketingDespite some use of predictive techniques, digital experience delivery platforms are behind in incorporating predictive analytics to contextualize experiences using 1st-, 2nd- and 3rd-party customer data. In my opinion, I believe the usage of digital data mining and predictive analytics to prioritize and inform the marketing teams on what to test, and to analytically define segment audiences prior to assigning test cells, is a massive opportunity. Marketers are very creative, and can imagine hundreds of different testing ideas – which tests do we prioritize if we cannot run them all? This is where advanced analytics can help inform our strategies in support of content optimization, as it allows the data to prioritize our strategy, and help us focus on what is important.

Moving on to our second subject of interest, we transition to the wonderful world of marketing attribution. At the very core of this topic, modern marketers recognize that customers expect brands to deliver relevant conversations across all channels at any given moment. The challenge is to uncover the interactions that drive conversions through integrated measurement and insights. However, organizations struggle to employ a holistic measurement approach because:

  1. It's confusing to distinguish among the measurement approaches available.
  2. Marketers bombard customers with extraneous content.
  3. Today's misaligned data makes customer level measurement a very difficult task.

It seems like attribution has been a problem for marketers for a very long time. According to a popular quote by Avinash Kaushik of Google:

“There are few things more complicated in analytics (all analytics, big data and huge data!) than multichannel attribution modeling."

The question is: Why is it challenging? SAS strongly believes three years later that we are living in a game-changing moment within digital analytics. Marketers are being enabled with approachable and self-service analytic capabilities, and this trend directly impacts our ability to improve our approaches to problems like attribution analysis. However, rules-based methods of attribution channel weighting continue to be far more popular in the industry to date, which contradicts the recent analytic approachability trend. The time has arrived for algorithmic attribution . . . Attribution

 

Did I whet your appetite? I hope so...please enjoy episode two of our two-part webcast series, now available for on demand viewing:

 

SAS for Digital Analytics: Personalization and Attribution [Part 2]

 

SAS Customer Intelligence offers a one-stop modern marketing platform to comprehensively support the objectives of predictive personalization and algorithmic attribution - from digital data collection, management, predictive analytics, omnichannel journey orchestration, delivery across online and offline channels, and measurement. On April 19 at SAS Global Forum 2016, SAS Customer Intelligence 360 will make its debut, and subjects like digital intelligence and predictive personalization will be primary topics. This new offering will drive unprecedented innovation in customer analytics and data-driven marketing, putting predictive analytical intelligence directly in the hands of digital and integrated marketers responsible for the customer experience.

If you enjoyed this article, be sure to check out my other work here. Lastly, if you would like to connect on social media, link with me on Twitter or LinkedIn.

tags: Advanced Analytics, customer intelligence, Data Mining, data science, Digital Analytics, Digital Attribution, Digital Intelligence, digital marketing, Digital Personalization, marketing analytics, Predictive Marketing, Predictive Personalization, segmentation

Introduction to SAS for digital personalization and attribution was published on Customer Intelligence.

3月 312016
 

Digital analytics primarily supports functions of customer and prospect marketing. When it comes to the goals of digital analysis, it literally mirrors the mission of modern marketing. But what exactly is today's version of marketing all about?Modern Marketing

Honestly, we've been talking about this for years. And years. We ALL know it's what we should be doing and conceptually it's very simple, but practically, it has been very hard to achieve. Why?

Even with great web analytics, there have always been critical missing insights, which meant we didn't know for certain what the next-best-interaction for each customer was at any point in time. In addition, the development of insights and the use of analytics to define high-propensity audience segments has been distinctly slow and batch-driven in nature, delaying relevant delivery of targeted interactions. So we may get the message right, but we probably don't deliver it in a timely, consistent way, which has a dramatic impact on customer responsiveness and marketing effectiveness.

So in today's connected, always-on, highly opinionated world, we need to be a little sharper in meeting our customer's basic expectations, never mind surprising, delighting, and impressing them. While the concept of customer-centricity continues to increase in importance, improving our analytical approach to support this premise is vital.

SAS recognizes today's modern marketing challenges with digital and customer analytics. It is our mission to enable marketers to benefit from approachable and actionable advanced analytics to make more powerful decisions within today’s complex and interconnected business environments. That sounds great, right? I sense some of you reading this are raising an eyebrow of suspicion at this very moment.

Practically speaking, we want to show you exactly what that means. On March 29th, 2016, we aired episode one of a two-part webcast series, and it is now available for on demand viewing:

SAS for Digital Analytics: Introduction & Advancing Segmentation [Part 1]

We genuinely hope the webcast provided a proper introduction to how SAS participates in the space of digital analytics for data-driven marketing, and please come back in a couple of weeks when we will post Part 2 in this series entitled: SAS for Digital Analytics: Personalization & Attribution [Part 2]

If you enjoyed this article, be sure to check out my other work here. Lastly, if you would like to connect on social media, link with me on Twitter or LinkedIn.

tags: Advanced Analytics, customer analytics, customer intelligence, data integration, data management, Data Mining, data science, Digital Analytics, Digital Intelligence, digital marketing, Integrated Marketing, marketing analytics, predictive analytics, Predictive Marketing, segmentation, web analytics, webcast

Introduction to SAS for digital analytics and segmentation was published on Customer Intelligence.

3月 232016
 

The business opportunity to intelligently manage customer journeys across their lifecycle with your brand has never been greater, but so is the danger of not meeting their expectations and losing out to savvier competitors. In my opinion, the current state of most digital analytic practices continue to be siloed, tactical, and narrowly fixated on channel-obsessed dashboard reporting. That might come across as presumptuous, but keep this in mind - customer-centricity is a hot topic at the C-Suite level, and your CMO has  stated (or will very soon) that your organization is transforming into a personalization super force that will be marketing to the segment of one. If that is the case, the category of digital analytics has got to step up its game!

The antidote is digital intelligence which represents a strategic shift in approach to marketing analysis that uses insights from traditional and modern channels (we're talking online AND offline) to enable actionable, customer-obsessed analytical brilliance.

The era of the empowered customer is unraveling itself — trends in which consumers, not brands, own influence, backed by the rapid rise of digital. I strongly believe that no matter how important a company's products or services are with my life, the majority of brands I do business with continue to perform channel-centric analysis, and remain unaware of the different interactions I have with them across ALL channels. I don't care about your email or search marketing KPIs. What I care about is how you treat Suneel, no matter what device, channel, or platform I select to interact with you on.

Meanwhile, digital marketing spend continues to grow at a tenacious pace, cementing the importance of digital channels in managing the customer journey. Digital marketing is effective in all phases of the customer life cycle, ranging from acquisition, upsell/cross-sell, retention, and winback, proven by the ongoing shift of wallet share to online channels. While these are exciting times for omnichannel marketers, these more holistic approaches bring challenges. In today's fragmented digital landscape, long-established methods focused on web analytics and aggregated customer views are ill-equipped to keep pace with:

Digital interaction bread crumb trails

Customers (and prospects) interact with brands across an array of online channels and devices, creating new paths to generate incremental value associated with marketing-centric KPIs. However, customers expect personalized relevance in moments of truth, raising the bar for analytics and marketing execution. A brand's digital presence is much more than a website, such as social media, mobile applications, and wearable technologies. Conventional web analytics only track onsite behavior and lack the ability to comprehend tech-savvy customers in 2016.

The collapse of the digital silo

Brands typically construct offline and online interaction channels confined from one another, so let's reflect on that for a moment. Isn't it time we recognize that customer data is customer data, regardless of where the ingredients are collected? To deliver comprehensive customer insights, brands seek to merge digital and offline data sources together. Digital & customer analytics teams are attempting to work together, but their projects struggle due to a clash of approaches & culture. Some of the main drivers are:

  1. Data — Customers leave trails of information for marketers to chew on, and are available in structured, semistructured, and unstructured formats. There's no excuse anymore for brands to not be able to work with all three. Approachable technology exists to integrate multiple sources of online and offline customer data in meaningful ways to analyze and take action on.
  2. Skills — Have you ever sat in a meeting with data scientists and web analytic ninjas? It's like they speak two different languages, and communication between these two segments is critical for an organization to innovate in its commitment to customer analytics.
  3. Analysis — There is a reason why there is so much discussion around the application of advanced analytics. In many ways, digital marketing is ripe for analytical maturity, ranging across segmentation, attribution, and personalization. The discipline has proven its value to help differentiate a brand from its competition. When are the days of Data-Scientist“good enough” analytics going to end? Let's keep the science in data science, and stop succumbing to the false hype that sophisticated predictive marketing can be accomplished through black box, easy-button solutions.

Dynamic interaction management

Brands seek to react intelligently to shifts in consumer behavior in milliseconds, which makes the intersection of predictive analytics and data-driven marketing vital for orchestrating the customer journey. To reach your target audience in opportunistic micro-moments, the requirement of real-time actionable analytics with direct connections to personalization and marketing automation systems is the queen bee. The sole dependence on isolated, retrospective reports and dashboards of aging web analytic solutions has serious limitations in modern marketing.

Given the investment and revenue at stake for most brands, it is increasingly important to champion support of the development and continuous optimization of digital channels. Simply put, analytical sophistication lives at the center of that process. Yet most organizations continue to approach digital analytics focused on discerning traffic sources and aggregated website user behaviors. Given the intricate complications and aspirational promise of digital marketing, brands should consider modernizing and maturing their approaches to customer analytics because:

  • CX matters: Customers don't care about the challenges related to identity management across multiple visits (or sessions), browsers, channels, and devices. Does your web analytic platform support your team's abilities to recognize and track customers, not clicks or hits, across the fragmentation of touch points? With careful consideration towards the areas of data management, data integration, and data quality, analyzing customer-centric (or visitor-centric) digital activity on their journeys to making (or not making) a purchase with your brand is absolutely feasible.
  • "Good enough" analytics must end: Digital analytic teams must graduate from machine gunning their organizations with traffic-based reports that summarize the past to producing predictive insights that marketers can interpret, and take action with. I'm always impressed by web analytic teams that produce an array of historical reports with beautiful visualizations, segmenting and slicing away at their tsunami of clickstream data. However, how much impact and relevance to the business can this approach have? Customer-centricity demands that we re-engineer our thinking, and make the shift from reactive to predictive marketing analytics.
  • There's nothing exciting about siloed channel analysis: To deliver the elusive and mythical 360 degree view of customer insights, it turns out you don't need magical wizards like Gandalf or Albus Dumbledore by your side. Have you ever wondered why web analytic software doesn't allow you to perform data stitching with offline data sources? How about data mining and predictive analytic capabilities? Well, it boils down to how digital data is collected, aggregated, and prepared for downstream use cases.

Web analytics has always had a BIG data challenge to cope with since it's inception in the mid 1990's, and when the use case for analysts is to run historical summary reports and visual dashboards, clickstream data is collected and normalized in a structured format as shown in this schematic:

Data Aggregation for Web Analytics

This format does a very nice job of organizing clickstream data in such a way that we go from big data to small, more relevant data for reporting. However, this approach presents challenges when performing customer-centric analysis which requires data stitching across online and offline data sources. Why you ask? Because you cannot de-aggregate data that was designed for channel and campaign performance summarizations. Holistic customer analysis, from a digital viewpoint, requires the collection and normalization of granular, detailed data at an individual level. Can it be done? Of course it can.

Multi-source data stitching, data mining and predictive analytics require a specific digital data collection methodology that summarizes clickstream data to look like this:

Data Aggregation for Advanced Analytics

Ultimately, the data is collected and prepared to contextually summarize all click activity across a customer's digital journey in one table row, including a primary customer key to map to all visits across channels and devices. The data table view shifts from being tall and thin, to short and wide. The more attributes or predictors an analyst adds, the wider the table gets. The beauty of this approach is it allows marketers and analysts to be curious, add more data sources, and allow algorithmic analysis to prioritize what is important, and what isn't. This concept is considered a best practice for advanced customer analytics.

  • Beware of blind spots: As time passes, customers in every industry are progressively sharing more data about themselves through existing and emerging digital outlets, such as mobile applications, wearables, and other connected technology. The opportunity to ingest and analyze these new sources should excite any marketer who claims to be data-driven. However, does your web analytics platform allow you to analyze these new digital touchpoints? A brand's ability to absorb, integrate, analyze, and derive marketable insights from emerging data sources is key in this new paradigm to avoid being blindsided by customers and the competition.

The path to digital intelligence from traditional web analytics needs to cover the diversity of data, advanced analytic techniques, and injection of prescriptive insights to support decision-making and marketing orchestration. Digital intelligence is a transformation for web analytic teams — making it a competitive differentiator if executed well. It aims to transform brands to become:

  1. Customer-centric rather than channel-centric: As customers and prospects weave across an ocean of marketing channels and connected devices, digital intelligence supports the integrated analysis of interactions in concert, rather than with disconnected channel views. In addition to visibility across all channels, analysis is highly granular to identify, track, and prioritize next-best-actions for individuals. In other words, hyper-personalization to the segment of one!
  2. Focused on enterprise goals as opposed to departmental: To enable omnichannel analytics, digital intelligence is highly dependent on customer data management capabilities across all data types – structured, semistructured, and unstructured. This includes fusing interaction and behavioral data across all digital channels with first-party offline customer data, as well as second- and third-party data (if available). This enriched potpourri of data must be prepared to feed the analytical ninjas that sit within the marketing organization, line of business or centralized customer intelligence team, because it is their job to exploit this stream of information and generate insights for the organization as a whole.
  3. Enabled for audience activation and optimization. The mission of digital intelligence is the direct application of analytics to generate data-driven evidence that helps business stakeholders make clearer decisions. The potential of data mining exponentially increases with richer customer data to support segmentation, personalization, optimization, and targeting - in other words, connecting data and analytics to the delivery of relevant content, offers, and awesome experiences.
  4. Analytical workhorses: The incredibly fast-moving world of digital interactions and campaigns mean that marketers desperately need quicker analysis. Waiting days or weeks for reports and research equates to failure. Digital intelligence delivers efficiency at a pace that more nearly matches users' decision-making schedules.

SAS Customer Intelligence offers a one-stop modern marketing platform to comprehensively support the mission of digital intelligence - from digital data collection, management, predictive analytics, and marketing delivery across online and offline channels. On April 19 at SAS Global Forum 2016, SAS Customer Intelligence 360 will make its debut, and digital intelligence will be a primary topic. This new offering will drive unprecedented innovation in customer analytics, putting predictive analytical intelligence directly in the hands of digital marketers, business analysts, and data scientists. In the last few months, industry analysts have previewed and validated our abilities in advanced and customer analytics.

We are very excited for the future and potential of digital intelligence. The question is...

Are you excited?

 

If you enjoyed this article, be sure to check out my other work here. Lastly, if you would like to connect on social media, link with me on Twitter or LinkedIn.

tags: customer intelligence, Data Mining, data science, Digital Analytics, Digital Intelligence, marketing analytics, personalization, predictive analytics, Predictive Marketing, segment of one, web analytics

Web analytics vs. digital intelligence - what's the difference? was published on Customer Intelligence.

1月 262016
 

I begin this blog post with one goal in mind. I want to raise awareness on the subject of customer and marketing analytics, and why this field is exploding in interest and popularity. Let's begin with a primer for the uninitiated, and lay down some definitions:

Customer Analytics: The processes, technologies, and enablement that give brands the customer insight necessary to provide offers that are anticipated, relevant and timely.

Marketing Analytics: The processes and technologies that enable brands to assess the success of their marketing initiatives by evaluating performance using important business metrics, such as ROI, channel attribution, and overall marketing effectiveness.

If you aren't a fan of textbook definitions, here is a creative alternative:

Still not on board? Here's my perspective on the subject:

Customers are more empowered and connected than ever before, with access to information anywhere, any time – where to shop, what to buy and how much to pay. Brands realize it is increasingly important to predict how customers will behave to respond accordingly. Simply put, the deeper your understanding of customer buying habits and lifestyle preferences, the more accurate your predictions of future buying behaviors will be.

Marketers need to be enabled to benefit from approachable and actionable advanced analytics to make more powerful decisions within today’s complex and interconnected business environments.  In my mind, the big picture boils down to one, two or three core enablers, based on your organization's goals and preferences:

Image 2

 

 

 

 

Marketing analysts tasked with making sense of customer data, big or small, have to migrate through a complex maze of myths and realities about technology platforms, advanced analytics solutions and, most importantly, the magnitude of customer analytics efforts. On the surface, it appears that customer analytics is a well-entrenched discipline in many organizations, but under the hood, old problems persist around data integration and data quality while new ones emerge around the real-time application of insights and the ability to rein in digital data for customer-based analysis.When I speak with clients, there are two key themes that I continually hear:

  1. Data is a big challenge. As customer interactions with brands increase and diversify, brands need to integrate data effectively in order to provide the contextual and real-time insights their customers are growing to expect. Haven't you grown tired of saying we spend 80 percent of our time on data management related tasks, and 20 percent on analysis?
  2. Analytic talent is hard to find. Brands struggle to find individuals with the right analytic skills to meet the challenges they are facing today. Without the talent to unlock actionable insights, modern customer analytics cannot meet its potential. (Given my public affiliation with The George Washington University's M.S. in Business Analytics program, I'd recommend checking it out if you are hunting for quality talent.)

To me, these themes point to a workflow entitled the marketing analytics lifecycle:

Image 3

 

 

 

 

 

 

With the growing importance of customer analytics in organizations, the ability to extract insight and embed it back into organizational processes is at the forefront of business transformation. However, this requires considerations for where relevant data resides, the ability to reshape it for downstream analytic tasks (predictive modeling vs. reporting), and how to take action on the derived insights. Furthermore, there are the roles of different people within the organization that need to be considered:

  • Marketing Analyst/Technologist
  • Data Scientist/Statistician
  • Marketing Manager
  • Supporting IT Team

Customer analysis touches all of these roles, and to enable this audience comprehensively, all aspects of the marketing analytics lifecycle must be supported. To directly address this, I want to to highlight what SAS is doing to help our clients meet these challenges.

Marketing Analytics Lifecycle Stage #1: Integrate and Prepare Data

Customer analytics is highly dependent on the quality of the ingredients we feed into analysis. Now, the digital marketing industry has been taken by storm by the emergence of Digital DMPs, like Oracle BlueKai, Neustar, and Krux, who aim to provide marketers support in programmatic ad buying and selling. Marketers and publishers are learning that harnessing their first-party data; developing single and consistent identities for their consumers across devices and systems, like email and site optimization; and gaining access to second-party data are mission critical. However, the subject of data mining and predictive analytics has largely been ignored by the Digital DMP space. Brands who want to exploit the benefits of advanced analytics have additional considerations to support their data management challenges. The following video highlights how SAS helps manage and prepare data of all sizes, from 1st party customer data to clickstream and IoT, specifically for analytics:

 

Some of you might be questioning the value of this, so let me offer a different perspective. Over the past few years, I have developed a personal frustration of attending various marketing conferences and repeatedly observing high-level presentations about the potential of analytics. Even more challenging has been the recent trend of companies presenting magical (i.e., "easy-button") black-box marketing cloud solutions that address every imaginable analytical problem; in my opinion, high-quality advanced analytics has not reached a point of commoditization, and remains a point of competitive differentiation. Do not be mislead by sleight-of-hand magic!

Marketing Analytics Lifecycle Stage #2 & #4: Explore Data, Develop Models, and Deploy

What types of marketing challenges are you attempting to solve with customer analytics? Srividya Sridharan and Brandon Purcell are two leading researchers in the space of customer insights, and recently released a report entitled How Analytics Drives Customer Life-Cycle Management recommending the deployment of various analytical techniques across the customer life cycle to grow existing customer relationships and provide insight into future behavior. Highly recommended reading! Let's review some of the most common problems (or opportunities) we view at SAS with our clients.

Image 4

Within each of the categories, a myriad of analytic techniques can be executed to assist and improve your brand's abilities to address them. The following video is a demonstration of how I used SAS Visual Statistics and Logistic Regression analysis to understand drivers by marketing channel of business conversions on a website or mobile app. The benefit of understanding these data-driven drivers is to influence downstream marketing personalization and acquisition campaigns. In addition, capabilities related to group-by modeling, deployment scoring and model comparison with other algorithmic approaches are highlighted.

 

 

Big digital data, scalable predictive analytics, visualization, approachability, and actionability. Stay thirsty my friends, because it is our clients who are expressing their needs, and SAS is stepping up to meet their challenges!

If you would like to learn more on how we address other marketing and customer analytic problems, please click on any of the following topics:

  1. Personalization
  2. Attribution
  3. Segmentation
  4. Acquisition
  5. Optimization

With that said, we have one final stage of the lifecycle to review.

Marketing Analytics Lifecycle Stage #3: Explain Results and Share Insights

An individual's ability to communicate clearly, succinctly and in the appropriate vernacular when presenting analytical recommendations to a marketing organization is extremely important when focused on driving change with data-driven methods. I recently wrote a blog post on this topic entitled Translating Predictive Marketing Analytics, and if you're tired of reading, here's another video - this time focused on explaining the results of analytical exercises in easy-to-consume business language.

 

As I close this blog post, I want to leave you with a few thoughts. For your brand's customers, technology is transparent, user-enabling, and disintermediating. The journey they embark with you on is fractured and takes place across channels, devices, and points in time. The question becomes – are you prepared for moments of truth as they occur across these channels over time? Customer analytics represents the opportunity to optimize every consumer experience, and revisiting a point I made earlier, the deeper your understanding of customer buying habits and lifestyle preferences, the more accurate your predictions of future buying behaviors will be.

If you enjoyed this article, be sure to check out my other work here. Lastly, if you would like to connect on social media, link with me on Twitter or LinkedIn.

 

tags: Business Analytics, business intelligence, customer analytics, customer intelligence, Customer Lifecycle Management, Data Mining, Digital Intelligence, marketing analytics, Marketing Attribution, personalization, Predictive Marketing, segmentation

The analytics of customer intelligence and why it matters was published on Customer Analytics.

1月 192016
 

Marketers have used segmentation as a technique to target customers for communications, products, and services since the introduction of  customer relationship management (i.e., CRM) and database marketing. Within the context of segmentation, there are a variety of applications, ranging from consumer demographics, geography, behavior, psychographics, events and cultural backgrounds. Over time, segmentation has proven its value, and brands continue to use this strategy across every stage of the customer journey:

  • Acquisition
  • Upsell/cross-sell
  • Retention
  • Winback

Let's provide a proper definition for this marketing technique. As my SAS peer and friend Randy Collica stated in his influential book on this subject:

"Segmentation is in essence the process by which items or subjects are categorized or classified into groups that share similar characteristics. These techniques can be beneficial in classifying customer groups. Typical marketing activities seek to improve their relationships with prospective and current customers. The better you know about your customer's needs, desires, and their purchasing behaviors, the better you can construct marketing programs designed to fit their needs, desires, and behaviors."

Moving beyond the academic interpretation, in today's integrated marketing ecosystem, SAS Global Customer Intelligence director Wilson Raj provides a modern viewpoint:

"In an era of big data, hyperconnected digital customers and hyper-personalization, segmentation is the cornerstone of customer insight and understanding across the modern digital business. The question is: Is your segmentation approach antiquated or advanced?"

This provides a nice transition to review the types of segmentation methods I observe with clients. It ultimately boils down to two categories:

  1. Business rules for segmentation (i.e., non-quantitative)
  2. Analytical segmentation (i.e., quantitative)

Let's dive deeper into each of these...

Business Rules For Segmentation

This technique centers on a qualitative, or non-quantitative, approach leveraging various customer attributes conceptualized through conversations with business stakeholders and customer focus groups to gather pointed data. This information represents consumer experiential behavior, and analysts will assign subjective segments for targeted campaign treatments. Although directionally useful, in this day and age of data-driven marketing, it is my opinion that this approach will have suboptimal results.

Analytical Segmentation

Within this category, there are two approaches marketing analysts can select from:

  1. Supervised (i.e., classification)
  2. Unsupervised (i.e., clustering)

Supervised segmentation is typically referred to as a family of pattern analysis approaches. Supporters of this method stress that the actionable deliverable from the analysis classifies homogeneous segments that can be profiled, and informs targeting strategies across the customer lifecycle. The use of the term supervised refers to specific data mining (or data science) techniques, such as decision trees, random forests, gradient boosting or neural networks.  One key difference in supervised approaches is that the analysis requires a dependent (or target) variable, whereas no dependent variable is designated in unsupervised models. The dependent variable is usually a 1-0 (or yes/no) flag-type variable that matches the objective of the segmentation. Examples of this include:

  • Product purchase to identify segments with higher probabilities to convert on what you offer.
  • Upsell/cross-sell to identify segments who are likely to deepen their relationship with your brand.
  • Retention to identify segments most likely to unsubscribe, attrite, or defect.
  • Click behavior to identify segments of anonymous web traffic likely to click on your served display media.

After applying these techniques, analysts can deliver a visual representation of the segments to help explain the results to nontechnical stakeholders. Here is a video demonstration example of SAS Visual Analytics within the context of supervised segmentation being applied to a brand's digital traffic through the use of analytical decision trees:

 

Critics of this approach argue that the resulting model is actually a predictive model rather than a segmentation model because of the probability prediction output. The distinction lies in the use of the model. Segmentation is classifying customer bases into distinct groups based on multidimensional data and is used to suggest an actionable roadmap to design relevant marketing, product and customer service strategies to drive desired business outcomes.  As long as we stay focused on this premise, there is nothing to debate.

On the other hand, unsupervised approaches, such as clustering, association/apriori, principal components or factor analysis point to a subset of multivariate segmentation techniques that group consumers based on similar characteristics. The goal is to explore the data to find intrinsic structures. K-means cluster analysis is the most popular technique I view with clients for interdependent segmentation, in which all applicable data attributes are simultaneously considered, and there is no splitting of dependent (or target) and independent (or predictor) variables. Here is a video demonstration example of SAS Visual Statistics for unsupervised segmentation being applied to a brand's digital traffic (including inferred attributes sourced from a digital data management platform) through the use of K-means clustering:

 

Keep in mind that unsupervised applications are not provided training examples (i.e., there isn't a 1-0 or yes/no flag type variable to bias the formation of the segments). Subsequently, it is fair to make the interpretation that the results of a K-means clustering analysis is more data driven, hence more natural and better suited to the underlying structure of the data. This advantage is also its major drawback: it can be difficult to judge the quality of clustering results in a conclusive way without running live campaigns.

Naturally, the question is which technique is better to use in practice – supervised or unsupervised approaches for segmentation? In my opinion, the answer is both (assuming you have access to data that can be used as the dependent or target variable). When you think about it, I can use an unsupervised technique to find natural segments in my marketable universe, and then use a supervised technique (or more than one via champion-challenger applications) to build unique models on how to treat each cluster segment based on goals defined by internal business stakeholders.

Now, let me pose a question I have been receiving more frequently from clients over the past couple of years.

"Our desired segmentation strategies are outpacing our ability to build supporting analytic models. How can we overcome this?"

Does this sound familiar? For many of my clients, this is a painful reality limiting their potential. That's why I'm personally excited about new SAS technology to address this challenge. SAS Factory Miner allows marketers to dream bigger when it comes to analytical segmentation. It fosters an interactive, approachable environment to support working relationships between strategic visionaries and analysts/data scientists. The benefit for the marketer campaign manager is the ability to expand your segmentation strategies from 5 or 10 segments to 100's or 1000's, while remaining actionable within the demands of today's modern marketing ecosystem. The advantage for the supporting analyst team is the ability to be more efficient, and exploit modern analytical methods and processing power, without the need for incremental resources.

Here is a video demonstration example of SAS Factory Miner for supersizing your data-driven segmentation capabilities:

 

I'll end this posting by revisiting a question we shared in the beginning:

Is your segmentation approach antiquated or advanced?

Dream bigger my friends. The possibilities are inspiring!

If you enjoyed this article, be sure to check out my other work here. Lastly, if you would like to connect on social media, link with me on Twitter or LinkedIn.

 

tags: Clustering, CRM, Data Driven Marketing, Data Mining, data science, Decision Trees, marketing analytics, personalization, segmentation

Analytical segmentation for data-driven marketing was published on Customer Analytics.

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When SAS Scotland gave students 48 hours to build a prototype computer system to help increase police effectiveness, nine teams accepted the challenge. The venue was the University of Glasgow's Hackathon, one of the largest student hackathons in the UK, attracting 200 attendees. SAS Scotland has co-sponsored the event for the past three […]

From Hackathon to Demo Day, students showcase clever solutions was published on SAS Voices.

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On the first day of Big Data Analytics my colleagues sent to me: A data scientist discussing a decision tree On the second day of Big Data Analytics my colleagues sent to me: Two business analysts and A data scientist discussing a decision tree On the third day of Big Data Analytics my […]

The twelve days of big data analytics was published on SAS Voices.