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BeyeNETWORK:Segmentation+ScoringModel+TextMining+SocialNetworkAnalysis=ForceMultiplier!

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Segmentation+ScoringModel+TextMining+
SocialNetworkAnalysis=ForceMultiplier!
byDerickJose
OriginallypublishedAugust19,2010
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ThewordForcemultiplier,inmilitaryusage,referstoanenableroracombination
ofenablers,whichmakeagivenforcemoreeffectivethanthatsameforcewouldbe
withoutit.Similarly,inabusinesscontext,thepredictivepowerofcustomerbehavior
modelingisstrongerwithacombinationofsegmentation,scoringmodels,
unstructuredtextminingandsocialnetworkanalysis.Whenusedincombination,
thesetechniquesdelivergreatervaluethanwhenusedinisolation.Usingpostpaid
churnpredictionmodelinginthetelecomindustryasanexample,thisarticle
exploresthethemeofcombiningmultipletechniquestodeliveracompletepredictive
model.
Inthetelecomindustry,thereisaconstantriskofcustomersturningtoadifferent
carrier.Inordertoensurethattheyminimizeattrition,mostoperatorshavea
recurringscoringmodelwhichscorestheircustomersbasedontheirlikelihoodto
switchcarriers.Forexample,thefollowingindicatessomeoftheimportantpredictor
variables,whichstronglyinfluencethelikelihoodthatanexistingpostpaidcustomer
willchurn.

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Thereare4levelsatwhichthisscoringmodelcanbecreatedasillustratedbelow:

Eachoftheabove4levelsofscoringmodelmaturityareillustratedbelow:

Stage1:ChurnScoringUsingScoringModel

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AtStage1maturityinscoringmodels,anorganizationcanbuildagenericscoring
modelusinglogisticregressionasanexample.Oncethemodelisstatistically
significant,customerscanbescoredandatargetedcampaigncanberunforthe
decileshowingthosecustomerswiththehighestpropensitytoswitchcarriers,with
thegoalofpreventingthisfromhappening.
Thefollowingprocessflowdiagramgivesahighlevelviewofthescoringprocessfor
customersatStage1maturity.

Stage2:SegmentBasedScoringModel

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OrganizationsinStage2ofthematuritymodelforscoringcustomersideallyruna
behavioralsegmentationmodeltoseeiftheinfluencersofchurnarepredicatedon
thebehaviortheyexhibit.Forexample,customersaresegmentedbasedontheir
activity(callbehaviorratioofnighttimecallsvs.daytimecalls,SMSvs.Internet
usage),paymentbehavior,andriskdimensions,andthenacustomizedscoring
modelisappliedforeachbehavioralsegment.Thisisillustratedintheflowdiagram
below.

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Stage3:Segment+TextMiningBasedScoringModel

OrganizationsinStage3ofthematuritymodelforscoringcustomersideally
leverageunstructuredinformationaboutacustomer.Togiveanexample,thereare
inboundcallsreceivedatcallcentersaskingaboutfeaturesofaproduct,complaints
aboutabillingerror,etc.Also,thereareoutboundcallsfromthecallcentersto
customersurgingthemtopayontimeoruseacomplimentaryproduct.Theserich
conversationtranscriptsareoftennotminedforinsights.Inthiscase,atextmining
processwhenfedwiththesecallcentertextscansynthesizekeywordsandthemes.
Thesecanthenbeoverlaidonthebehavioralsegmentstoenrichtheunderstanding
ofthecustomersbehavior.Also,asetofkeychurnwatchwordscanbedeployed.
Forexample,ifthewordbillingerrorappearsinmorethan6inboundconversations
inthelast3months,itcanbeasignificantpredictorforchurnmodels.Theoverall
processmapincorporatingbehavioralsegmentation,textminingandscoringmodels
isillustratedbelow.

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Stage4:Segment+TextMining+SocialNetwork
AnalysisBasedScoringModel

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OrganizationsinStage4ofascoringmodelcanconstructsocialnetworkgraphsfor
everycustomerifthedataexists.Forexample,bylookingatcallpatternsinthe
telecomindustry,onecanreverseengineerthesocialnetworkofthepostpaid
subscriberandflaghisnetworkinfluence.Thesocialnetworkinfluenceofa
subscribercanbeonemorebehavioraldimensionthatcanbeconsideredwhile
buildingthescoringmodel.

Asdemonstrated,byslowlystackingmultipletechniquesontopofoneanother,
organizationsinthetelecomindustrycanincrementallyenrichthechurnscoring
model.Thissameapproachcanbeappliedtoanalyticalmodelsinotherindustries
includingconsumerpackagedgoods,travelandtransportation,insuranceand
banking.
Toconclude,hereareafewkeypoints:

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1.Segmentation+ScoringModel+TextMining+SocialNetworkAnalysis=
ForceMultiplier!
2.Thenexttimeamodelisbeingbuilt,itpaystoaskthefollowingquestions:
A.CanIboostthepredictivepowerofmycustomerbehaviorscoring
modelbycombiningsegmentationortextminingorsocialnetwork
analysiswithit?
B.CanIoverlaycertainkeywatchlistwords,whicharebetter
predictorsofbehavior,andbootstrapthemodelefficiency?
C.Canacustomersinfluenceinthesocialnetworkplayaroleinhis/her
treatmentstrategieseventhoughpurchase/revenuebehaviormaybe
low?
SOURCE:Segmentation+ScoringModel+TextMining+SocialNetworkAnalysis=
ForceMultiplier!
DerickJose
DerickJoseisthevicepresidentofAdvancedAnalytics/Researchwithin
MindTree'sData&AnalyticSolutions(DAS)Group,oneoftheworldslargest
informationmanagementpractices,whichofferscustomersaonestopshopto
capture,analyze,enhance,andviewtheirbusinessinformation.TheDAS
practicecombinesMindTreesprovenanalytics,businessintelligence,
informationmanagementandresearchservicesforcustomersintheconsumer
packagedgoods(CPG),retail,financialservices,insurance,travelandmedia
markets.Derickhas20yearsofexperiencespanningconsulting,advanced
analyticsandbusinessintelligencesolutions.Hehasworkedextensivelyinthe
CPG,banking,telecomandretailindustries.Derickcanbecontactedat
Derick_Jose@mindtree.com.
Editor'sNote:MorearticlesandresourcesareavailableinDerick's
BeyeNETWORKExpertChannel.Besuretovisittoday!
RecentarticlesbyDerickJose
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