SAB Banking Co.Optimizing Campaign Resources through Segmentation

Bhaskar Nandina, Kristen Smith, Sandra Folkesson, Ye YuanDecember 16, 2015

Expensive and Inefficient Campaign Deemed a Failure

SAB Banking Co. has been running non-targeted direct marketing campaigns.

The campaign achieved an 8.83% response rate and cost €1.2 million

SAB Management set goal of 15% response rate for success from new customers..

Tasked to Analyze Campaign and

Define SegmentsEconomic Downturn –

Need to Efficiently Gain Customers

Term Deposit Subscription Campaign

Failed Response Rate

Analyze Data - Identify Patterns

Define Segments – Future Campaigns

Prospect and Socio-Economic Data

Age

Job

Time spent on the ‘last’ call

Number of times we called them

How we called them

Euro Lending rate

Consumer Price Index

Consumer Confidence Index

The Average Customer

40 years oldSpeaks for an average of 4.3 minutes on every call

Receives a call at least twice before answering

Combine Methods for Optimum Results

CLUSTERINGDECISION TREE REGRESSION ANALYSIS

Estimate Duration Identify Economic SegmentsModel Decisions

Duration and Lending Rate are Best Predictors for Success

87.57% say “yes” when call lasts longer than 8

minutes

93.78% say “no” when European Lending Rate > 3.37% and call lasts less

than 8 minutes

Node 1Balanced Data

50% Yes & 50% No

Node 2No Training: 68.58%

No Validation: 66.78%

Node 4Yes Training: 65.36%

Yes Validation: 69.05%

Node 5No Training: 93.78%

No Validation: 94.82%

Node 3Yes Training: 87.57%

Yes Validation: 86.58%

Duration

<471.5 or Missing >= 471.5

European Lending Rate

>= 3.27or Missing<3.27

Longer Durations and Lower Lending Rates Drive Success.

Impact of Economic Factor: 99.36% Failure Rate when European Lending Rate >3.27% and the call lasts less than 8 minutes

Node 1N = 35563

No: 91.17%

Node 2N = 30833

No: 95.67%

Node 4N = 7381

No: 83.93%

Node 5N = 23452

No: 99.36%

Node 3N = 4730

Yes: 38.16%

Duration

<471.5 or Missing >= 471.5

European Lending Rate

>= 3.27or Missing<3.27

Impact of Duration: 38.16% Success Rate when call lasts 8 minutes or longer

Regression is not Actionable

Unable to predict customers whose duration will be greater than 8

minutes.

Relationships Exists

Low – Predictability

R-Square = 0.0135

Explains only 1.35% Variation in Duration

Significant at 0.0001 significance level

Contacted by Cell Longer Duration

More Previous Contacts Shorter Duration

All Socio-economic Variables Statistically Significant

Insights from Regression

The Three Natural Segments

Non-Hierarchal Method to cluster data into 3 groups which explain 66% of the variation in the data

Group 1Group 2

Group 3

Name of observation or cluster

Sem

i Par

tial R

Squ

ared

Hierarchal Clustering reveals 3 groups

Success Rate Varies with Segments

Period No. of People Contacted No. of People responding “yes”

Favorable 1,582 590

Unfavorable 26,947 1,311

Moderate 7034 1,240

Unfavorable Period

Moderate Period

Favorable Period

Count of Records

Lower European Lending Rate during Favorable Period

Period Range of European Lending RateFavorable 0.634% to 1.085%

Moderate 1.303% to 3.81%

Unfavorable 3.853% to 5.045%

Average Euro Lending Rate

Unfavorable Period

Moderate Period

Favorable Period

EUROPEAN LENDING RATE

0.80

4.837

1.303

Occupation affects DurationAv

erag

e Ti

me

spen

t to

say

YES

Moderate PeriodFavorable Period

Unfavorable Period

Economic Periods Effects Success Rate by Occupation

Count of Records

Count of Records Count of Records

Cellphone Contact Appears More Promising

Success Rate was higher for Cellular Contact > Telephone Contact

Unfavorable

Moderate

Favorable

Count of Records

Target Segments that Achieve Higher Success

UNFAVORABLE PERIODCluster 2

FAVORABLE PERIODCluster 1

MODERATE PERIODCluster 3

Cellular

RetiredEntrepreneur

AdminBlue Collar

Services

Success Rate of 41.31%

(Avg. 37%)

Cellular

RetiredStudent

HousemaidUnemployed

Admin. Self-Employed

Technician Management

Success Rate of 23.44%(Avg. 18%)

Cellular

RetiredStudent

Self-Employed Entrepreneur

Success Rate of 6.68%

(Avg. 5%)

COU

NT

COU

NT

COU

NT

Achieving Success Efficiently

Previous Campaign Targeted Campaign

Number of Customers

35,563 6,915

Success Rate 8.83% 19.69%

Hours Spent 2,539 525

Targeting for Success

Campaign Targeting based on Economic Conditions

Cellular Contact over Telephone Contact

Less than 6 calls to each customer

Optimize Duration of Call based on Job Function

Train Call Center • Focus on quickly identifying consumer characteristics • Creative techniques to reach optimum durations

Next Steps

Focus group On “successful” people from the group for each period and

understand factors that make them take a loan deposit. Focus on successful groups

Retired and students were our best groups with success rates during every period of the economic change but they were the least contacted during the campaign.

Gather additional information including variables such as: Time of the call, Income, Credit Limit, Etc. Enable prediction of duration

THANK YOU!