douglas gray warren lieberman blue star veritec€¦ · research market 1940-50’s + research...
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MoneyBall Meets Travel
Advances, Successes & Lessons Learned
Douglas Gray, MSOR, MBAChief Solutions Officer
Blue Star Infotech
Warren Lieberman, PhDFounder & President
Veritec Solutions
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Analytics is Mainstream in Baseball & Popular Culture
Sabermetrics
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MoneyBall Crosses Sports & Borders!
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Analytics is Mainstream in Business Media
THE WALL STREET JOURNAL
FINANCIAL TIMESBloombergBusinessWeek
TheEconomist
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Analytics has become Mainstream in Travel & Hospitality over 25+ years
AmericanAirlines
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Databases1970-80’s
Data Warehousing 1980-90’s
Business Intelligence 1990-2000’s
Analytics2005-10
66
TB Data
Evolution of Analytics
Operations Research
1940-50’s +MarketResearch
1920’s+
� Predictive & Marketing Analytics� Customer Intelligence & Social Media� Cross- & Up-sell Loyalty & Retention� Customer Profiling, Segmentation,
Targeting, Consumption Propensity, & Lifetime Value
� Pricing Optimization/Revenue Management� Operational Analysis & Optimization
Mathematics,Probability
1700’s +
Statistics1900’s +
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Databases1970-80’s
Data Warehousing 1980-90’s
Business Intelligence 1990-2000’s
Analytics2005-10
77
TB Data
Evolution of Analytics
Operations Research
1940-50’s +MarketResearch
1920’s+Mathematics,
Probability1700’s +
Statistics1900’s +
� CHAID, CART, & Latent Class Models� Linear & Logistic Regression� Time Series Analysis & Forecasting� Simulation & Scenario Analysis� Mathematical Programming� Big Data & Social Media� Text Analytics & Data Mining� Pattern Recognition & Trend Analysis
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Check-in
Casino
Restaurant& Bar
Mall
Pool &Spa
Shows
ODSData
Warehouse
AnalyticsEngines
Customer Profile
Customer Segment
DemographicsPsychographics
PreferencesCross- & Up-sell
Propensity & CLVRetention
Mobile Marketing & Promotional Optimization
Dynamic Pricing & Revenue Optimization
PCI & WiFi
Network
Analytics, Mobility & Loyalty Programs inHospitality & Gaming
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Analytics, Mobility & Loyalty –Measuring the Impact
Market Share Growth36% (1998) 43% (2004)
Same Store Sales Gains 23/24 QuartersFailed to Meet R & P (1991-97)
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Strategy Consulting & Professional
Services
Enterprise Applications
Vacations GDS Booking Engines
Commercial Software Product
Development
Mobility
Applications
Native & Browser
Business Intelligence &
Analytics
Systems Integration
Cloud Hosting
Managed Hosting
Travel & Hospitality
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� Pioneers in YM & OR at AA, RCCL� Revenue Management� Pricing Optimization� Models & Algorithms
� Demand Forecasting� Inventory Management
� Consulting� Applications Development
� Pioneers in OR at AA� Strategy Assessment &
Roadmap� BI & Analytics Practice� Data Management
Infrastructure� Data Warehousing� Data Governance
� Systems Integration
Announcing a New Partnership
Travel Analytics
Partnership
� Analytics Strategy & Consulting� Enterprise Solutions Development
� Revenue Management� Pricing Optimization
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“We were into Analytics before Analytics was cool”
1980s – ’90sWarren & Doug
2002 – A’s True Story2011 – MoneyBall, Movie
Starring Brad Pitt & Jonah Hill
AmericanAirlines
DecisionTechnologies
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Keynote SpeakerPricing & Revenue Management Pioneer & Expert
in Travel & Hospitality
Warren Lieberman, PhDPresident
Veritec Solutions
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Motivation Action
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Analytics: Part Art, Part Science
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Analytics: Appropriate Art and Science
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So What is this “Art of Business?”
① Asking the right questions
② Framing the opportunity
③ Communication
3 Elements
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Business Science: Basic AnalyticsMany Items available for sale
4%
17%
79%
Few Items for Sale (< 10% of Stock)
5%
14%
81%
No Promotion
Controllable Promotion
Affiliation Discount
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Business Science: Complex Analytics
0.0
5
10
15
30
15 30 45 60Rate Increase Percentage
Mon
ths
Ret
aine
d
Data points represent individual customers
Colors represent different locations
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Business Science: Non-Intuitive AnalyticsProfits increase despite significant
drop in sales andrevenue!
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Three Phases of Analytics: Where is Your Company?
Phase 1: Descriptive Reporting
� Provides access to current and historical information
� Analysts use judgment to assess meaning and what to do
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Three Phases of Analytics: Where is Your Company?
Phase 2: Predictive Reporting
� Anticipatory� Forecasts of future
conditions
� Analysts use judgment to assess meaning and what to do
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Three Phases of Analytics: Where is Your Company?
Phase 3: Prescriptive Reporting
� Offers Guidance� Incorporates forecasts of
future conditions
� Analysts use experience and knowledge to evaluate recommendations and decide what to do
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It all Begins with a Systematic Approach
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A Systematic Approach to PricingEvaluate performance of current prices
- Characterize situations where they perform well or poorly
Identify specific opportunities- Market segment, customer type(s), geography, utilization, etc.
Estimate and Implement more profitable prices- Use distribution channels and communicate actions as appropriate
Evaluate impact of revised pricing structure
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Technology Makes Real Time Pricing a Reality: It’s a New Game!� Customized, personalized offers can be created at a level that has never before
been possible
� Example: Combining mobile phone GPS technology with customer purchase history drives incremental profits – doing this well requires the right analytics!
� Long-term success requires relevant offers
� Value, not noise
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Powerful Analytics Enable Extracting Actionable Information From Data
http://www.informs.org/ORMS-Today/Public-Articles/December-Volume-38-Number-6/Disjunctive-Mapping
ORMS Today – December 2011Michael Raskin and Warren Lieberman
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The Art of Business: Within Your Reach!
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Concluding Thoughts
Actions Speak Louder than Words
But
Analytics and Analyst ExpertiseExtract Maximum Value from Data,
So Actions Achieve your Goals
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Thank You!
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Contact Information
Doug Gray
Chief Solutions Officer
Blue Star Infotech
Mobile:+1 480.621.0004
Email: [email protected]
Web: http://bsil.com
Warren Lieberman, PhD
President
Veritec Solutions
Tel: +1 650.620.0000
Email: [email protected]
Web: http://veritecsolutions.com