From Customer Insights to Action

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From Customer Insights to Action Ruurd Dam, November 2015

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In a world of connected people and things … 1,820TB of Data created 168 Million+ emails sent 25 Billion Connected "Things" in use in 2020* 98,000+ tweets 13,2 Billion consumer devices 217 new mobile web users 698,445 Google searches 3,5 Billion Cars 2.5 Billion social network users in 2018 11Million instant messages *Source: Gartner World Economic Forum 695,000 status updates # Source: Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 2

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… the new data landscape is the centerpiece of digital change …… Mobile IoT New Data Landscape No limit to volume No limit to structure No limit to analyzing No limit to timing Social Media Cloud Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 3

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Worldwide we see a four strategic ‘data plays’ for businesses and organizations Reporting (looking back) Insights (predictive, prescriptive) Business 3 Insights 4 Insights-as-a-Service Platform BI factories, MDM Existing Data Landscape Technology 1 2 Big Data New Data Landscape Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 4

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Today we will do a deep dive into 3 out of 7 Insights & Data Principles 1 2 3 Embark on the Journey to Insights within your Enable your Data Landscape for the Flood coming from Connected People and Things Master Governance, Security and Privacy of your Data Assets 6 7 Business and Technology Context 4 Develop an Enterprise Data Science Culture 5 Unleash Data and Insights as-a-service Make Insight-driven Value a Crucial Business KPI Empower your People with Insights at the Point of Action Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 5

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Master Governance, Security and Privacy of your Data Assets Data is an invaluable asset. You need a high-performance data organization that embraces privacy and security, is equipped to meet both current and future enterprise needs and mirrors the dynamics of the enterprise. Lack of strong data management and governance mechanisms is one of the greatest obstacles to the success of insight-driven business. 54% no IT-business joint projects for Big Data initiatives 54% 47% scattered pockets of 53% no top-down resources / follow a approach for Big Data decentralized model for strategy development analytics initiatives 47% 53% H U R D L E S Source: Capgemini Consulting Report – Cracking the data conundrum: How successful companies make Big Data operational. HOW TO GET THERE ? ORGANIZATION Big Data Operating Model Establish a Define policies robust governance framework Set up the technological base for Big Data initiatives and procedures for management of data assets Develop Big Data competencies Industrialize & mature your data processes & organization, using industry best practices, to increase productivity, agility & manageability Develop a healthy risk appetite to ensure endto-end security and privacy of your data assets, while staying outcome-focused Engineer a governance mix that fits your culture, balancing central and de-central, top-down and bottom-up Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 6

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EU Privacy regulations: are data blessing or curse? • Save people life’s • Better maintenance • Higher traffic security • Bigger yields • Invest smarter •……. • Invasion of privacy • Lack of transparancy • Monetization of data •… •… •….. ..however..we are strange people…. Source: Wij zijn Big Data, Sander Klous, Nart Wielaard Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 7

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The answer to privacy has perhaps something to do with profit ánd people and planet.. Achmea geeft premiekorting voor data van klant, FD, vandaag Source: Wij zijn Big Data, Sander Klous, Nart Wielaard Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 8

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Develop an Enterprise Data Science Culture Data science unlocks insights. Making everybody in the enterprise a bit of a ‘data scientist’ requires nothing less than culture change. An organization that has a data science -led culture, can truly become insight-led Data science – a relatively unknown area Skills and competencies are scarce A data-embracing culture does not come naturally, even when it’s part of the strategy Value of analytics often stays purely conceptual - to the uninitiated HOW TO GET THERE ? CULTURE Define Objectives & Levers Data Prep Selection & Cleansing Simulation optimization & Evaluation Deployment solution within the system Systematically build and acquire the required data science capabilities Data inventory collection & Understanding Modeling Design & development H U R D L E S Provide hands-on experience with analytics - in real action – to get stakeholders involved and committed Combine business acumen, analytical skills and technology expertise SOLUTIONS Enterprise Data Science Framework To change the enterprise mindset to leverage data science Analytics Accelerator Speeding up business value through affordable real-time analytics Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 9

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Data Science is the interplay of data, business process, technology and statistics 1 Business Skills Industry/Vertical expertise and Customer focused 2 Domain / Functional Expertise (DCX, Sales, Customer Service, Marketing) 3 Business Analysis 6 Research Skills Ability to build Prototypes (Presales engineer) 7 Machine Learning / Modeling 8 Statistics /Mathematics 4 Solution Design 9 Pre-sales skills/ Presentation and Communication 10 Data profiling Technology Skills Data Preparation and Mining tools (e.g. SAS Base, EG, R, SQL) 12 Visualization and design (Microstrategy, Tableau, SAS VA 13 Ability to perform data science on Big Data, Hadoop (Pivotal/Cloudera) 14 Digital Analytics (Adobe, Google Analytics, IBM digital analytics) Simulation and optimization 5 11 Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 10

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Empower your People with Insights at the Point of Action All organizations are a series of decision points, both at the macro and micro level. Empower your people with timely insights to make those decisions better and transform your business. Mastering ‘Insights Inside’ is the essence of the journey. Making the right insights available at the right time at the right place to the right person is critical Perception of the digital transformation ambitions and challenges may not be uniform across all business units Organizations face the scarcity of data science, deep sector knowledge & technological expertise HOW TO GET THERE ? INSIGHTS Identify insights to incite action on the spot to drastically improve customer experience, optimize operations and reinvent business models Understanding of how insights can be seamlessly integrated at the point of action is rare Make sure you leverage your market and industry expertise at the business side to select key Insights H U R D L E S Never stop your quest for insights: Build on your experience to find more and better opportunities Validate the value of your selected Insights by piloting them quickly – right at the point of action Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 11

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Customer Value Analytics (CVA) – to make a fact based and decisive impact on customer journeys Awareness Information Activation Advice/Need Lead Generation/ Campaign Management Pre-qualification & Customized Offering ACQUIRE Acquire new customers by implementing innovative customer sourcing/profiling models Acquisition Cross Sell/Up Sell GROW SHARE OF WALLET Transactions Digital Channel Migration Receive Service Customer Service Explore/ Experience Promotion AVOID FADING AND ATTRITION Retention Global Swedish Retailer Retain customers by identifying churn drivers and building churn propensity models Renew Increase profitability of the existing customer base by building cross sell, up sell or next best action models More selling, more effective marketing and improved customer experience Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 12

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CVA is the science and art of converting data into insight that can be used to drive a great customer experience The five stages of analytics maturity Competitive Advantage “What is the next best action for a customer?” “How likely is a customer to respond to my offer?” “How frequently and recently are customers buying?” “I can explore my customer data, but is it correct?” “Why do the performance reports from my teams disagree?” Prescriptiv e Analytics Predictive Analytics Descriptive Analytics Reporting Value extracted from Information Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 13

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With clients we make a first selection of applicable use cases using Customer Value Analytics prioritization matrix High # Insights & Data Capability 36 Phase 2 38 34 24 28 BUSINESS VALUE 18 22 17 25 Phase 3 12 40 42 4 3 2 11 26 27 28 29 30 31 32 33 13 14 15 16 17 5 30 10 18 7 26 19 20 21 22 1 Low Difficult Store Segmentation Trip Mission / Market Basket Shopper Insights Test & Control Identification Retail Labs (R&D) Assortment Optimization Brand & Pkg Switching Out-of-Shelf Analytics 12 13 14 35 39 43 21 20 9 6 31 16 37 41 27 23 Program ROI 24 Shopper Targeting 4 5 6 7 8 9 10 11 32 19 15 23 Standardized Reporting Ad-hoc Analytics Household Segmentation (Protect, Recover, Develop Strategies) 3 29 8 1 2 Phase 1 # Insights & Data Capability EASE OF IMPLEMENTATION Plan-o-gram optimization, Development & Space Management New Product Introduction / Adoption Replenishment Planning Top Shopper Identification Product Affinities Household Exclusivity & Loyalty Digital Analytics (e-com, social media etc). Campaign Analytics Customer Lifetime Value Customer Churn Cross Sell / Up Sell 25 Sweepstakes Net Value Cost Analysis Exclusivity & Loyalty Effective Pricing Promo Decomposition Household Segmentation Category / HH Targeting Assortment Optimization Product Lifecycle Management 34 Loyalty Analytics 35 36 37 38 39 Customer Group Analysis Neural Net Demand Forecasting SC Network Optimization Promotion Decomposition with ROI Vendor Performance 40 Working Capital Analytics 41 Store Layout Optimization 42 Predictive Asset Maintenance 43 Recruitment Effectiveness Easy Business Value Levers: Increase Sales, Reduce Cost, Improve Working Capital Ease of Implementation Levers: Data / Tool readiness, dependency on 3 rd party, organizational readiness & alignment etc Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 14

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An Insights Driven Journey is “to think big, start small and grow fast” 2 1 0 PALLASCapgemini selecting use cases Business & Data Value Proof of Value 8 weeks 3 weeks 1 day 'Fail fast, fail early' A Silicon Valley mantra Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 15

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Marketing Analytics & Campaign Management for UK Retail Client The objective was to design an analytical platform that could enable business and statistical analysts to mine data and derive insights for new marketing campaigns BUSINESS / DATA CHALLENGES     The client, wanted to enhance their marketing analytics and campaign management platform for two of their inhouse brands Current campaign management platform lacks analytical capability and can run only basic campaigns. Campaign tracking and response modeling is also limited No integrated source of marketing and customer information. Several disparate sources Analytical insights and models to be integrated with campaign management platform SOLUTION      Integrated platform to design campaigns, allocate budgets, coordinate implementation and measure response IBM SPSS for analytics; IBM UNICA for campaign management, Oracle 11g for Marketing DB Analytic enablers to build Response models, Churn models and share of wallet analysis Analytic enablers in building behavior analysis for effective target segment identification Analytic enablers to design end to end campaign management platform Tools used  Model Development – IBM SPSS Modeler  Model Deployment – Oracle, IBM Unica Campaign BENEFITS      New platform will drive market position by enabling Cross-functional data available in one place Analytics and data mining to understand customer behavior Complex campaign design and management Effective and efficient delivery of analytics and campaign management services via Capgemini’s Right Shore framework High level architecture design for the new environment Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 16

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Propensity Models and facilitated Event-Based Marketing to identify Home & Car Insurance Prospects for a leading Norwegian Insurer The objective was to predict the propensity of a Bank/Pensions customer to purchase home or car insurance products in order to enhance the conversion rate of cross-sales efforts BUSINESS / DATA CHALLENGES  Data insights around the profile of existing home and car insurance customers vs. non- customers SOLUTION   No. of Customers (1000s) by Gender 22% 78% Male 17% House Insuranc 11% e 83% 89% Hypothesis testing based on variables that reflect the customers’ decision journey The propensity to purchase was calculated in the form of probability for each customer using binary logistic regression N=1 Customer does not have Car/Home Insurance  A set of 8 distinct logistic regression models that predicted the probability for each Bank and Pensions customer to purchase a home or car insurance product The model indicated that 35% of noncustomers could be potential purchasers of home or car insurance products Customer has Car/Home Insurance N=0  Feature Importance Holders Female Model Accuracy Non-Holders No. of Customers (1000s) by Age 21 Group 9% % 30 % 40 % <= 28 Car Insuranc e BENEFITS 28 - 44 Data Cleaning & Structuring Missing Value Treatment Active Only Customers Predicted NonCustomers Predicted Customers Model Performance Analysis 3 0.8 2.5 0.75 2 Hypothesis Testing Non-Customers 62% 35% 1.5 1 Customers 1% 2% 0.7 0.5 0.65 Lift (Training) 0.6 Lift (Testing) ROC 0.55 0 0.5 Before I/A Grouping After I/A Grouping After Dropping Vars After Dropping Vars 2After Dropping Vars 3 Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 17

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Digital Analytics helped a leading Global CPG player achieve a 2x improvement in online campaign reach and effectiveness The objective was to monitor online visitor behavior through real-tile listening and help the client team to finetune its online messages and content. This helped the client to improve the campaign reach and engagement BUSINESS / DATA CHALLENGES   The client was undertaking multiple online campaigns across its micro site and social media channels for the a marketing event spanning 4 days. The Analytics team had to work closely with the client’s media-buying, creative and brand teams to analyze real-time online visitor communication and suggest appropriate response strategies SOLUTION   The methodology involved creation of customized profiles for the micro site using Google Analytics & configuration of social media listening tools to capture visitor behavior on the micro site (with a lag) and on social media channels (realtime) The listening tools also identified potential influencers on a real time basis BENEFITS      The analysis enabled the client to finetune website content in real-time and thereby engage better with their target audience The analysis identified which segments and geographies responded best to the campaign The analysis helped the client allocate more content to sites with higher traffic and also coordinate channel integration Resulted in 2.5x increase in reach and 2x increase in engagement levels Resulted in lowest cost per engagement for online channel relative to traditional media channels Presentation Title | Date Copyright © Capgemini 2015. All Rights Reserved 18

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Thank You

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