Predictive Analytics World
San Francisco, February 19, 2009
The Unrealized Power of Data
Andreas Weigend
people & data
© people & data | www.weigend.com
Andreas S. Weigend, Ph.D. 韦思岸教授
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© people & data | www.weigend.com
Outline


Q: Current bottleneck for you in your business? (Scarce vs abundant)?
Historical perspective
Business, Data and Communication

Current trends
From Transaction Economics to Relationship Economics
The Customer Data Revolution: Shift in Customer Expectations

Implications: From CRM to CMR
Customer Managed Relationships

Applications to business: Marketing 2.0

Why predictive analytics: Relevance

How to do it: PHAME
Problem – Hypotheses – Action – Metrics - Experiments
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© people & data | www.weigend.com
Business, Data, and Communication

1970’s


“Experts” learn a language the
computer understands
1bn people poking at stuff
100M people producing stuff
Digitizing back office
10M people

1980’s

Front office interacts with back office
100M people
2000’s


Peer-production and collaboration

Customers interact with customers
Now
Discovery in addition to search

Serendipity: Discover what not searched
People in addition to pages

1990’s

Customers interact with firm
Search: 1bn people poking at stuff

Social commerce
Mobile in addition to PC, and paper)

Continuous partial attention
Model current situation plus history

Sensing
3
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Amount of data

Overall : About 100GB per person on the planet
Doubling every 1-2 years
Mainly user generated

Example: Youtube
15 hours of video uploaded every minute

Example: Flash
1bn installs
4
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My behavior
•
IMMI

Listening into your
room
every 30 seconds,
for 10 seconds.
5
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Current trends

Market research
Combine surveys with click data

Assumption heavy  Data rich model
Relationships
Interactions
Transaction
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The Customer Data Revolution

1. Sniffing the digital exhaust
Mainly implicit data, some explicit data
What is new? More data sources, esp. location data

2. Individuals talk about themselves
Mainly explicit contributions

3. Individuals reveal relationships with others
Directed, asymmetrical, multidimensional (not binary!)

The Customer Data Revolution: Shifting expectations
Attitude of individuals to their information
Economics of data
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Wishlist
8
| +1 650 906-5906 | +49 174 906-5906 | +86 138 1818 3800
© people & data | www.weigend.com
Outline

Historical perspective
Business, Data and Communication

Current trends
From Transaction Economics to Relationship Economics
The Customer Data Revolution: Shift in Customer Expectations

Implications: From CRM to CMR
Customer Managed Relationships
Customer value
E-Business  Me-Business
Who pays whom?

Applications to business: Marketing 2.0
9
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© people & data | www.weigend.com
Marketing 2.0

Broadcast  1:1 Marketing?

Social marketing

Implications for predictive analytics: redefining CLV
Intrinsic / individual
External / network component

Applications to business
Amazon’s “Share the Love”
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
downcasting
© people & data | www.weigend.com
Conversations
Conversation / Communication
Between whom?
Company
Individuals
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Leverage the social graph
Example: New communications service

US phone company with deep experience with targeted marketing

Sophisticated segmentation models based on experience, intuition, and data
e.g., demographic, geographic, loyalty data
Hill, S., F. Provost., and C. Volinsky.
Network-based Marketing: Identifying likely adopters via consumer networks.
Statistical Science 21 (2) 256–276, 2006
.
•
•
4.82
(1.35%)
2.96
(0.83%)
1
0.4
(0.28%)
Non-NN 1-21

(0.11%)
NN 1-21
NN 22
NN not
targeted
Response increases by a factor of 4.82 by marketing to nearest neighbors (NN)
From 0.28% based on segmentation, to 1.35% based on social graph
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© people & data | www.weigend.com
Recommendations 2.0
•
People

•
Friends

Data

Specific people you know
Clicks
Purchases
Viral marketing

Peers

Fans (G-star)

Experts
Forward, tell a friend
Relationship

Fashion bloggers
Annotate
Attention

Search
Intention

Location
Situation

Product data
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| +1 650 906-5906 | +49 174 906-5906 | +86 138 1818 3800
© people & data | www.weigend.com
Outline

Historical perspective
Business, Data and Communication

Current trends
From Transaction Economics to Relationship Economics
The Customer Data Revolution: Shift in Customer Expectations

Implications: From CRM to CMR
Customer Managed Relationships

Applications to business: Marketing 2.0

Why predictive analytics: Relevance
Respect

How to do it: PHAME
14
© people & data | www.weigend.com
| +1 650 906-5906 | +49 174 906-5906 | +86 138 1818 3800
You want to be PHAME-ous!
•
PHAME

Problem

Hypotheses

Action

Metrics

Experiments
15
| +1 650 906-5906 | +49 174 906-5906 | +86 138 1818 3800
© people & data | www.weigend.com
Summary

Historical perspective
Business, Data and Communication

Current trends
From Transaction Economics to Relationship Economics
The Customer Data Revolution: Shift in Customer Expectations

Implications: From CRM to CMR (Customer Managed Relationships)

Applications to business: Marketing 2.0

Why predictive analytics: Relevance

How to do it: PHAME

Web: www.weigend.com

Phone: +1 650 906-5906
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