There are many ways to look at the customer. One way to identify life events is to look at a customer’s behavioral patterns. This can be done through the Art of Analytics, which presents data as works of art to give the information new meaning. “The Burning Leaf” is one example of an artwork that looks at significant variations in customers’ weekly spending patterns. This Art of Analytics piece was born out of a Teradata engagement with a global bank.
The Analytics Behind the Art
The Burning Leaf was built across different technologies. Teradata Aster integrated and processed rich transactional accounts and credit card spending data. The Change Point Detection (CPD) algorithm identified the change points in a time series, and R produced the visualization.
The graph is read from left to right. Each line in the graph represents spending habits of an individual customer. Like a customer-spending time series, each rise or dip on the graph represents a deviation from the customer’s average weekly spending.
A significant rise represents a potential life event and the point in time when this event occurred, such as school fees, a new baby, a major purchase (car, house deposit, expensive holiday, etc.). Once a large jump or fall is identified, it triggers the event classification procedure to approach the customer with a targeted offer.
Most customers have less than eight major changes in a year, although a few have 10, which created the “tail” to the right of The Burning Leaf. The system does not have to trace the entire yearly transactional history of a customer; it only needs to react when a change is detected.
Beyond Eye Candy
The Art of Analytics goes beyond being a striking visual. The art can bridge the gap between the technical domain of data science and the business users who need to take action on the analytic insights that are produced. It acts as a powerful marketing tool and is instrumental in helping to grow and attract businesses.
The art breaks the ice, eases customers, and starts conversations with organizations about data and how it relates to their business problem. The reaction to an Art of Analytics picture ranges from “I never thought data could look like this” to “I never saw my business through this perspective” to “I want this for my business.”
Unlock Sales Opportunities
Understanding life events provides a more complete picture of who customers are, where they are in their life journey, and their financial needs. Any major life event can trigger a sales opportunity. A marriage, kids enrolling in a private school or going to college, buying a house, having a child, or travelling overseas are all points along the customer lifecycle that are ripe for a targeted sale.
To identify events for up-sale or cross-sale offers, companies must have visibility across the entire customer lifecycle; from the first touch point until the present day. Moreover, the events library as well as the ability to expand, analyse, and act upon it needs to be accessible to the business throughout an entire organization.
An ability to act on these insights develops stronger business relationships with customers, encourages and rewards loyalty, improves NPS scores, and pinpoints which particular financial products are most appropriate at any given point in time. In the end, all of these will lead to a higher customer lifetime value and increased profits.
Click here to read Dr. Bokareva's blog on why a holistic approach is the "missing piece" to analytics. She also explains how a low risk, consultative engagement for business analytic use cases can accelerate time to value across a range of businesses.
Watch a video with Dr. Bokareva, to hear her explain Burning Leaf in greater detail.