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Business Intelligence (BI) is the process of collecting information from the different sources and preparing Business Reports, dashboards, scorecards, ad hoc query and automated alerts. It is the first step for the companies to make data driven decisions.
Business Analytics (BA) starts with the analysis of the BI report through statistical analysis & data mining, extends to predictive model building with historical data and further validates it with model testing.
Mr. Sabari is working as a chief Business Development Officer in an Educational Institution. A New online course is being introduced in the next 3 months. He already has a database of 1000000 potential customers with him which is collected during the past interaction and they are found to opt for such new courses. His objective is to find the right way to reach out to customers so as to maximise the profit.
He generally makes phone call to the complete database with the help of a team. He has estimated the overall profit and return on investment based on the past experience as given below.
Based on the business filters, eligible contactable Database: 1, 000, 000
Cost for targeting each person: Rs.10
Its expected 0.5% incremental customers will join course because of the campaign
Expected revenue per customer who join the course 2500
With current Approach (traditional)
Cost of Campaign = 1,000,000 * 10 = 10,000,000 = 10 Million
Expected Incremental conversions 1, 000, 000 * 0.5% = 5000
Expected Incremental Revenue = 5000*2500=12,500,000=12.5Million
Expected profit = 12.5 -10 = 2.5 Million
Return on Marketing Investment = Revenue – Cost/Cost = 12.5 – 10/10 = 25%
His friend Mr. Kumar who teaches a new course on Business Analytics walks into his office. Mr. Sabari shares what he is doing. Mr. Kumar suggests that he can increase the ROI using Business Analytics Methods. They re-work the cost with the input from Mr. Kumar.
Mr. Kumar suggests that not all 1000000 customers are the same and we can find a segment which will respond better and other segment which will not respond based on interest and publically available data. At the end of the day Mr. Kumar shares his calculation to Mr. Sabari with the following details.
Mr. Kumar used Segmentation to group the contact database into 3 different groups. Segmentation is the process of dividing the business market into eligible contactable sub groups based on same type of characteristics.
High Response Segment: 25% of customers with expected conversion rate of 1.3%
Medium Response Segment: 25% of customers with expected conversion rate of 0.4%
High Response Segment: 50% of customers with expected conversion rate of .15%
Based on this grouping and the cost to contact customer details, he draws up the profit and ROMI chart as follows.
Screen Shot 2017-10-10 at 10.21.34 PM
Mr. Sabari was pleasantly surprised at the increase in profits for less effort and 1/4th of the money spent in the estimation. He was convinced to try the method and follows this plan for enrolling students for the course. After running the campaign, he was surprised that the calculations held true and his team was satisfied, as they had to work less for better results. He wrote a thanking note to Mr. Kumar for his timely insights and praising.Source: https://en.wikipedia.org/wiki/Market_segmentation, www.k2analytics.co.in
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