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July 5, 2012

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You have 30 seconds to make the right decision. Your time starts…NOW!

by Katrina Read
You Have 30 Seconds to Decide

A customer calls the help desk and gets routed through to you.  They are not happy with the service they are getting from your company.  You have to decide whether to make them an offer to keep them, or let them leave to a competitor.  They may or may not be a profitable customer.  They may or may not accept one particular offer over another.  You may or may not have enough money left in the promotional campaign budget to make an offer.  You have 30 seconds to determine the fate of this customer relationship and the impact on your revenue targets.  Your time starts….NOW!

In this scenario, one call centre operator scrambles for their customer call centre application and executes a query to retrieve the customer’s transaction history.  They make an assumption that this customer will continue to spend the same amount in the future that they’ve spent in the past.  They randomly select an offer that marketing has created for this month in the hope that this customer might be interested.  They pray this offer hasn’t been offered too many times already today.  They make the offer, and leave it up to the Gods to decide whether this customer will stay with the company.  The customer may or may not agree to the offer and continue their contract.

But what if this customer is not likely to be profitable in the future?  What if this offer could have been given to a more profitable customer?  What if they aren’t interested, reject the offer, and out of frustration hang up and call the competitor?

A call centre operator, sitting in an office just around the corner from you, has the benefit of IBM Analytical Decision Management embedded in their call centre solution.  When the customer calls, the system notifies them of the customer’s history.  More importantly, they are shown the estimated lifetime value of the customer.  Using a combination of business rules, predictive models and optimisation techniques, the system makes a recommendation as to whether an offer should be made, and what offer is most likely to be accepted.  The customer is overwhelmed with how well the company understands their needs, accepts the offer, and hangs up with a beaming smile on their face.  The company prevents churn, retains high value customers, and increases revenue as a result.

So how does it work?

IBM Analytical Decision Management combines known business rules, predictive models, and optimisation techniques to provide a recommendation on the best course of action.  For example:

  • Business Rule:  Offers can only be made to customers over the age of 18.
  • Prediction:  The estimated lifetime value of this customer and the offer they are most likely to accept based on their demographic, purchase history and recent behaviours.
  • Optimisation:  Which offers should be made to which customers to maximise the revenue generated within our daily campaign budget.

By combining these different techniques, we are able to capture the experience and expertise of the organisation, coupled with the foresight of predictive analytics, and optimise the decision process to meet our desired outcomes – in this case retain high value customers and increase revenue within the constraints of the campaign budget.

You have 30 seconds to make the right decision, and the right decision is to invest in IBM Analytical Decision Management.  Ok, so you have more than 30 seconds to make this important decision, but your time still starts…NOW!

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