Overview of the Life Time Value and Segmentation work OptimalBI and Powershop did together.

1. LOVING YOUR CUSTOMERS,
BY UNDERSTANDING THEM BETTER
SAS NZ Conference
18 February 2014

2. CHRIS PROUT
SHANE GIBSON
POWERSHOP
OPTIMALBI
CUSTOMER INSIGHT MANAGER
MAKES CUSTOMERS HAPPY

3. QUESTION 1 :
ARE WE MAKING OR LOSING MONEY ON A
CUSTOMER
QUESTION 2:
IF WE ARE LOSING MONEY WHAT BEHAVIOR DO WE
NEED TO CHANGE TO MAKE MONEY

4. A STORY OF
LIFE TIME VALUE
CUSTOMER SEGMENTATION
AND HOW IT WAS DELIVERED

5. MAKE DATA ACCESSIBLE
MAKE THE DATA TELL A STORY
MAKE THE STORY VISIBLE

6. ABOUT POWERSHOP AND THEIR DATA

7. SEGMENTATION
LIFETIME VALUE BUILDING BLOCKS

8. DESCRIBING A CUSTOMER
VISUAL SEGMENTATION
VISUAL DISCOVERY

14. USING SAS TO CREATE THE STORY

15. ENTERPRISE GUIDE
HARNESS THE WEALTH OF UNIQUE
CUSTOMER BEHAVIOR DATA

16. ENTERPRISE MINER / RPM
LIFE TIME VALUE AND SEGMENTATION
MODELS
IDENTIFYING CUSTOMER BEHAVIOR

17. VISUAL ANALYTICS / INFOGRAPHIC
SHOW RESULTS OF THE MODELS
VISUALLY

18. MODEL BUILDING BLOCKS

20. LIFETIME VALUE
HISTORICAL VALUE
FUTURE VALUE
250
200
150
VALUE
100
50
0
2010
2011
2012
-50
-100
-150
LIFETIME VALUE
2013
2014

21. SAME CALCULATIONS = DIFFERENT ANSWERS
COST TO SERVE CALCULATION

22. The annual average monthly Cost To Serve:
• Customer $950/month
• Consumer $970/month

23. SAME CALCULATIONS DIFFERENT ANSWERS
BEHAVIOR
Segmentation was done at a customer level. This allowed us to use behavioural demographics to
characterise the segments.
CALCULATED VARIABLES
All other variables have been calculated for both consumer and customer.
THE POWER OF SAS
SAS allowed us to calculate at both levels and pick one as our business default

24. VISUALISATION IS EVERYTHING

25. AVG LTV
SEGMENT
1
2
3
4
5
Grand Total
AGCL
458.01
300.29
141.21
331.05
906.79
711.57
BOPE
900.12
134.49
30.32
402.30
814.17
363.48
CTCT
394.77
347.61
660.21
215.70
193.83
37.01
EZYN
444.29
983.31
836.89
916.78
520.78
15.39
GENE
583.13
284.27
247.72
575.16
600.65
440.82
GENH
124.71
136.25
11.88
430.15
60.43
355.81
GEOL
55.83
591.25
458.06
496.29
398.64
552.13
HNET
632.14
933.46
10.67
357.06
106.31
104.73
MEEN
572.54
762.98
447.82
367.90
777.30
507.99
MERI
755.54
282.27
913.39
142.65
145.55
725.23
PRME
834.69
674.02
802.77
496.99
944.49
241.12
PSNZ
601.11
113.96
68.99
907.61
960.14
180.86
PUNZ
574.01
468.47
248.96
997.26
876.39
242.68
SIMP
765.22
218.85
532.30
574.52
807.28
230.17
TRUS
663.66
893.55
398.03
974.38
265.09
855.49
UNKN
776.13
19.41
30.17
487.85
338.22
992.43
Grand Total
9,135.89
7,144.45
5,839.39
8,673.64
8,716.04
6,556.92

26. SEGMENTATION

29. CHURN DRIVERS

31. WE ONLY FOCUSED ON THE TOP CHURN
DRIVERS

33. UNDERSTAND THE CUSTOMER

34. RESIDENTIAL customer
Relatively HIGH cost to serve
LOW user generating HIGH revenue
LOYAL Powershop brand
HIGHLY engaged
Purchaser HIGH number of specials
Pays the HIGHEST unit price

36. SAS VISUAL ANALYTICS

37. POWERSHOP HAS A UNIQUE CULTURE

39. UNDERSTAND YOUR CUSTOMER

40. POWERSHOP MOVE FAST & NEED TO PROVE
VALUE FAST

41. SAS VISUAL ANALYTICS
FAST
Deployed in the Amazon cloud, up and running in days rather than weeks or months
VALUE
Small monthly costs rather than massive upfront costs
PROVE IT
If SAS Visual Analytics doesn’t deliver value, it can be turned off easily

42. POWERSHOP DON’T LIKE LOCK-IN

43. NO BLACK BOXES
TRANSPARENT MODELS
SAS EM, RPM and EG were used to provide visible and self documenting code. No black box base
SAS code was harmed in the delivery of this project.
TRANSPARENT DELIVERY
Powershop got all the EM/RPM projects, EG projects, SAS code and documentation so they could run
it themselves. They only call us when we can add more value.
MENTORING
Personalised onsite mentoring after the project was delivered. Ensured Powershop got up-to speed
gradually and as needed.

45. START SMALL, DELIVER QUICK, SHOW THE
VALUE