How is this lecture+workshop going to help you ?

● Data is the key , one who can handle data , creates value and gets recognition

● Differentiating factor for you in your organization , compete with your peers

● First hand experience of how ML is used in Industry ( Any industry , any

organization )

● Your starting point to the DS / ML journey , DS / ML is very nascent in the industry

● Case and Competitions ( DS , ML , AI ) are buzzwords and finds eyeballs

● Lateral / Final Interviews

What would we be doing today ?

PART 1 : How is data used in organizations ? ( 40 Mins )

● Maturity Model
● Industry examples from Go-MMT

PART 2 : How is data and Machine Learning used in Marketing ( 40 Mins )

● Segmentation
● Targeting
● Up Sell
● Customer value
● Pricing
● Churn

PART 3 : D-I-Y : Machine Learning Workshop on using data to analyze customer churn ( 90
mins )
PART 1 : How is data used in organizations ?
Data Maturity Model in Organizations
 Home Product Listing Product Details Payments Post Booking

Home page
Product Ranking -
personalization - Offers affinity & Paymode
Clustering , Promotions
Probability of click Ranking - based on personalization
Regression ( SVM ,
on offers / sections ( user
RF )
Regression )

Right channel to Product Proactive

contact , Channel Recommendation - Smart Routing - communication vs
Reviews tagging
affinity ) - Collaborative Classification passive
Classification filtering communication

Segmentation - Image classification Offers

Fare Prediction Re-Targeting
Clustering and tagging personalization

Search - Caching of Dynamic Filters :

Collaborative Dynamic pricing Purchase Intent
results ( RF ,
filtering Scoring
Classification algos)
PART 2 : How is data and Machine Learning used in
Marketing
Marketing 101

Segmentation

● Define cohorts and segment of users

Targeting

● Find ways and channels to target

Positioning

● Set the right messaging and communication on right channel

Pirates Metrics ( AARRR ) for Customer LifeCycle
Pirates Metrics ( AARRR ) for Customer LifeCycle
Customer Life Cycle in Marketing , answers Marketeers Seek .
What constitutes customer Data ?
Contact Interaction
Customer Products Service
Channels Data

Channel Type (
Demographics Type Handles time Purchase
Online , store etc )

SMS , Notification ,
Income Price CSAT / NPS Filed Complaint
Direct , Search

Android , iOS ,
Device Quantity , SKU Resolution rates Delivery of product
Website

Age Buying time stamp Response flag Mode of contact Payment failed /
succeed

Frequency of Refund failed / time

Gender Frequency
purchase to refund

Location Response frequency Tweet / Post in social

media

Paymode and much

more Referred friends
Why Segmentation ?

● 1. What customer segments are the most profitable?

● 2. How do specific products perform within various customer groups?

● 3. What channels are the most profitable?

● 4. What opportunities exist to expand cross-category customer spending?

● 5. Which customers I should include in my campaign to maximize response

rates?
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RFM - Recency - Frequency - Monetary

What is RFM ?

● Takes Recency , Frequency and Monetary aspects for a user purchase

● Algorithm assigns a relative rank for every user in a scale of 1- 5 for every

parameter

● In the end every user is assigned an RFM score ( Eg 551, 212, 513 )
RFM - Recency - Frequency - Monetary

How do we use RFM to create segments ? R -Studio Demo

Customer Segment RFM R F M Description Target
Segment

Power users Champions 4-5 4-5 4-5 Bought recently, buy often and spend the most Engagement

HAPPY Customers Loyal 2-5 3-5 3-5 Spend good money. Responsive to promotions Engagement
customers

BECOMING MORE ENGAGED Potential 3-5 1-3 1-3 Recent customers, spent good amount, bought more Engagement
loyalists than once

BRAND NEW USERS New 4-5 <= 1 <= 1 Bought more recently, but not often Repeat
customers purchases/conversions

SHOWING INTEREST Promising 3-4 <= 1 <= 1 Recent shoppers, but haven’t spent much Repeat
purchases/conversions

AVERAGE USAGE Needs 2-3 2-3 2-3 Above average recency, frequency & monetary Repeat
Attention values purchases/conversions

OCCASIONAL VISITORS About to 2-3 <= 2 <= 2 Below average recency, frequency & monetary Don't lose
sleep values

FORMERLY ACTIVE USERS At Risk <= 2 2-5 2-5 Spent big money, purchased often but long time ago Don't lose

FORMER POWER USERS Cannot lose <= 1 4-5 4-5 Made big purchases and often, but long time ago Don't lose
them

INACTIVE USERS Hibernating 1-2 1-2 1-2 Low spenders, low frequency, purchased long time Don't lose
ago

Lost Users Lost <= 2 <= 2 <= 2 Lowest recency, frequency & monetary scores Reactivate
Customer Lifetime Value ( CLTV )

- Top 1% customers in e-commerce is

worth up to 18 times more than average
customers

- Customer Lifetime Value is a monetary

value that represents the amount of
revenue a customer will provide the
business over the lifetime of the
relationship.

- Helps is deciding how much to spend on

the users during acquisition and
retention
ML based segmentation ( Clustering )

K-Means clustering

- Uses various numerical attributes of

customer data to create customer
clusters

DEMO on R - Studio
Channels to contact
Finding users with high purchase intent and selecting right channels to contact

● E-Mail , SMS , notifications , social media ads , retargeting ads , chat

● Use historical data on past customer behavior on response to contact and
build a intent score using any of the best models
● Use the channel which has the highest probability to response
● Use the score to select channels
○ Use the call based sales approach for high value international flights
drop off from the review / payment page
Cross-Sell and Up-Sell
35% of what consumers purchase on Amazon and 75% of what consumers watch on Netflix come
from product recommendation algorithms

● What are the different other products we can sell to a user

who has brought product X ?
● What are the complementary products we sell to a user
who has brought product X ?

Machine Learning algorithms used .

- Collaborative filtering , Content based filtering

- Matrix decomposition
- Deep Learning algorithms like [ Self Organizing Maps ,
Boltzmann Machines ]
- Clustering
- Others..
PART 3 : D-I-Y : Machine Learning Workshop on using data to analyze customer churn ( 90 mins )
ML Algorithms
ML Algorithms
Steps in Building a Machine Learning Model

● Identify Business Problem

● Talk to stakeholders and Identify Data
● Fetch Data
● Clean Data
● Data Analytics
● Modelling
● Model Accuracy
● Try different Models
● Try models with different parameters
● Find the best suited model for the problem and data in hand
● Model deployment and A/B testing and measuring metrics
● Calibrate Model
● Measure Model drift
Primer on Model Performance ( Classification )

Precision : Of the users classified as Churn what

percentage is actual Churn

Recall : Of the users who actually Churned , what

percentage were classified accurately as churn

Simple Video on Precision , Recall and F-Score https://www.youtube.com/watch?v=j-EB6RqqjGI

References :

1) Blog : Towards Data Science

2) Blog : Data Science central
3) Udemy course : Machine Learning A-Z by Krill Ermenco
4) Book : Data Science with R by Dr. Graham Williams
5) Images : Google search