Introduction to Optimization Group
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Transcript of Introduction to Optimization Group
1
A brief introduction
Prepared for:
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Who we are …
Optimization Group is a marketing analytics firm offering the following solutions:
Traditional and on-line focus groups
Traditional survey services (CATI and on-line)
Text mining analytics
Conjoint (trade-off) analysis
Data mining and modeling
Dashboard analytics
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Our People
– Technology “Automate and systematize complex data sets”• Systems analysts• Programmers• Database designers• Process engineers
– Marketing “Make data and analyses work in the real world”• Marketing research & consulting• Corporate brand management• Agency account service• Marketing & media database (applications focus)
Optimization Group consists of people
from two worlds:
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Our Global Experience
US
Canada
Brazil
Mexico
UK
France
Spain
Poland
Italy
Germany
India
China
Australia
South Korea
Japan
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Proprietary tools Unique Solutions
IdeaLoopz® Generating and optimizing ideas
Model Incite Finding the “marketing signal” in “noisy” data
Search Incite™ Context based text search
SiteCRM™ Brand website effectiveness
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IdeaLoopz
Components:
– brandDelphi™ online ideation system, based on
Rand Corporation geo-political (Delphi) research
technique
– IdeaMap® online concept and messaging
optimization, rooted in conjoint analysis
– Brand Impact Analysis identifies how brand
linkage “turbocharges” specific features and benefits
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IdeaLoopz: “The Diamond Principle”
Idea
Expansion
Optimized
Idea
Reduction
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Case Study: Blades Servers
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Sample
Definitions:
Company size segments were defined as follows: – Medium business = 250-999 employees– Enterprise = 1,000+ employees– Public sector = federal/state/local government, education, medical
IT Decision Maker:– Work in a IT function AND check at least one of the following as it relates to
their job:– Managing and maintaining the servers and storage environment at your site – Helping to set overall company/site strategy regarding servers and/or
storage– Evaluating and recommending new servers and storage products– Recommending or selecting the specific brand of servers and storage– Recommending or selecting the specific configuration of servers and
storage
Business Decision Maker:– Do not work directly in an IT function AND have influence over the server
and storage purchases at their company
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Check the ideas you
like (the basis for the
relevance score)
Then add your own idea
or build on one input by
someone else
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Next rate the ideas
you just checked (the
basis for the
importance score)
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Ideal Blade Server
Overall, respondents defined the ideal Blade server as…
Q1
Key Phrase(s) % of Ideas with Word/Phrase
Price/affordable/cost 15.7%
Large/capacity/room/space 11.8%
Service/support/warranty 9.8%
Reliability/quality 9.8%
Fast/quick/time 3.9%
Easy/friendly/simple 3.9%
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StarsNiche
Static Question Marks
RELEVANCE
IMP
OR
TA
NC
E
Idea Innovation Map
Filter on “Best Ideas”
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Q1: Stars - Potential Differentiators
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IdeaLoopz: “The Diamond Principle”
Idea
Expansion
Optimized
Idea
Reduction
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The Principles of IdeaMap
1. Rooted in conjoint…determines cause and effect
2. Based on fundamental communications theory
(stimulus response)
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Methodology Overview
Based on customer input from 1st Phase, team generated 9 “tight” attribute/benefit statements – Four categories of elements included:
• Brand/Price
• Servers
• Storage
• Better Together
Elements mixed and matched in an experimental design to form holistic concepts
Respondents evaluate concepts we analyze impact of each element
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Key Learning
Consistent with work in the PC space among
the B2B target, language that communicates
the ability to keep things running rose to the
top…
– Upgrade/add/replace without taking down infrastructure
– Lower operational expenses – setup time drops from 12
hours to less than 30 minutes
– 24x7 support before, during and after
– Work is transferred to a spare if blade fails
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Example of “Slicing and Dicing” the Data
Most motivating elements are shared regardless of
OS
Those with a VMS operating system find several elements significantly more motivating
– These elements have a “do more with less” theme
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Actionable Information for You
Idea
Expansion
Optimized
Idea
Reduction
What is on your
customers’ minds?
– What are there problems?
– What would they like to
see?
What are the “hot
buttons”?
– How to position the idea
– How best to express it
– Messaging to target
segments
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Model Incite
Optimization Group’s outsourcing solution which
uses our proprietary genetic programming based
modeling software GMAX and other statistical
techniques and tools that your projects require.
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Classic Regression
$10 $9 $5
$4$7
$8
$3
$2$1
$60
5
10
15
20
25
30
35
40
45
50
0 1 2 3 4 5 6
RR
R
N
R
N
N
N
R
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Statistical View Of Data
Tools like SPSS would look at the potential relationship between the likelihood of fraud and:
> income
> filing status
> married status
> SIC Code (if business) (2 digit, four digit)
> Gross Revenue
> Date of filing
> etc.
The available universe of variables is limited to only the ones the modeler has input. The limits the potential for greater insight and predictability.
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One day while perusing the stacks at Powell's Technical, I came across an appealing title: Genetic Programming: On the Programming of Computers by Means of Natural Selection by John R. Koza. He posed an intriguing question:How can computers learn to solve problems without being explicitly programmed? In other words, how can computers be made to do what needs to be done, without being told exactly how to do it?
There is a brave, new way for computers to solve problems without being explicitly programmed and it is Genetic Programming (GP).
Koza's innovation represents an extension of the GA involving more complex structures—computer programs, rather than bit strings. Each program, like the bit strings of the GA, is measured for fitness, the most fit reproducing, the least fit dying off. Eventually, a program is found that solves the problem.
In short: One can harness the principles of Genetic Programming to create software that programs itself.
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Genetic Programming
$10 $9 $5
$4$7
$8
$3
$2$1
$60
5
10
15
20
25
30
35
40
45
50
0 1 2 3 4 5 6
X2
X1
R
R
R
N
R
N
N
N
N
R
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PARENT 1 PARENT 2
+ -
A + * X
B C Y Z
How GP works
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PARENT 1 PARENT 2
+ -
A + * X
B C Y Z
OFFSPRING 1 OFFSPRING 2
+ -
A X
Y Z
*
B C
+
How GP works
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Mining Key Data Variables
Data mining enables you to see the strength of individual
variables as well as powerful new combinations that help you
better understand your “Key” business drivers.
Variable LiftCommissions earned 375
High face amounts on policies 352
Mix of business sold 240Sales to first time customers 205
Ratio of policies issued to price quotes 200
Rate of underwriting approval 190Weeks since last activity 188
Multiple product sales to same client 170
High retention rate for policies issued 167
Policies denied in underwriting process 153
Lift is a measure of predictability.
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Targeting your best Prospects
2,068 “unknown” alums have the same predictive variables as the top 10%
of alums who have donated $500,000.
Decile $500K Active Past
Decile Total Donors Donors Donors Unknown
1 5,704 148 1,263 2,225 2,068
2 5,704 29 660 1,919 3,096
3 5,704 17 578 1,677 3,433
4 5,704 14 496 1,435 3,759
5 5,704 7 369 1,261 4,068
6 5,704 3 335 921 4,445
7 5,704 0 280 767 4,657
8 5,704 0 125 560 5,020
9 5,704 1 160 795 4,749
10 5,704 0 98 471 5,136
Total 57,044 219 4,364 12,031 40,431
In the first decile, there are 2,068 “unknown” alums who have the same
predictive characteristics as 148 alums who have donated $500K to the
organization.
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Customer Satisfaction Model
Our data mining revealed the variables that influence satisfaction.
New Data Combinations
Length of Time for
Call resolution
Getting through to
Cust. Service rep
Team: Durangos,
Thunderbolts
Overall satisfaction
W/rep
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Customer Satisfaction Window
1.40 1.60 1.80 2.00 2.20
Delivery Rating
0.300
0.400
0.500
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
B
C
D
E
F
GH
I
J
K
L
M
N
O
P
QR
S
T
U
V
The Customer Satisfaction Window contrasts the perception of the
company’s delivery rating in an area against that area’s importance to
overall satisfaction (GCSI). Here is a list of the areas included in the survey.
Lowest Leverage
A Easy to Get Started
B Sales Person Support
C Easy Installation
D Quality soft/training
E Easy Info Access
F Pick-up Reliability
G Helpful Driver
H Professional Driver
I Easy Tracking
J Delivery Reliability
K Package Condition
L CSA Helpfulness
M Easy Claims Resolution
N Fair Claims Resolution
O Accurate Invoices
P Timely Invoices
Q Easy Acct. Maint.
R Easy Supplies
S Easy Website
T Easy Paperwork
U Easy Customs clear.
V Easy Preparation
Some Potential
Cost of Entry
Highest Leverage
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Customer Satisfaction WindowThe Customer Satisfaction Window contrasts your “ability to deliver”
customer satisfaction variables against the “expected value” of those
variables.
Highest leverage
Lowest
leverage
Some
potential
Cost of entry
20 40 60 80
Ability to Deliver
-0.100
0.000
0.100
0.200
Mo
dele
d
Exp
ecte
d V
alu
e
A
B
C
D
E
F
G
H
I
J
K
L
Customer Satisfaction Window
A Time to Answer
G Number of Transfers
I Overall Rep Quality
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Monetizing Customer Satisfaction
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Case Study: GMAX™ and ROMI
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Objective
Develop model and understanding of relationships between marketing expenditures and sales
Direct Mail
Catalog
Print Ads
Emails
Online Advertising
Advertising
Pricing
Customer Awareness
Customer Experience
Sales
Market Share
Total Sales $
Client
Controlled
Attitudinal
Outcomes
Sales
Outcomes
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Print Costs
While print costs appear in the GMAX model, the relationship
is not clearly seen in graphical analysis of print costs by
themselves
Print Out of Pocket
400000300000200000100000
AL
L E
nte
rpri
se
400000000
300000000
200000000
100000000
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Marketing Communications Variable Tree
Share of voice, print, online, and direct mail allhave an affect on sales Sales
Shipments
Prod B
Share of voice
Prod A
Share of voice
Out of pocket
Direct
Out of pocket Online costs
Note how Print has an impact by itself AND in combination with Direct Mail
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Typical ROMI Output
Estimated Sales Impact per $ Invested
Type of Data Total Sales (Direct + Indirect)
Direct Mail $330 -350
Online Advertising $54
Catalog Out-of-Pocket $ $124
Print Varies by CPM “tier”
Overall (SOV) Varies
Email $82
Pricing - 1% change $22MM-$26MM
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ROMI Model
20000000.00 30000000.00 40000000.00 50000000.00
Predicted Sales Using Model
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
A
A
A
A
A
A
A
A
A
A
A
AA
A
A
A
Using this model to predict sales does a very good job of matching the actual data
R-Square = 0.62
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ROMI Simulator
Commercial Education Hospitality
Value of +1 pt in Awareness $11,777,724 $4,611,587 $847,189
Share impact 0.22% 0.35% 0.19%
Value of +1 pt in Consideration $42,152,400 11,212,500$ 2,849,408$
Share impact 0.78% 0.86% 0.63%
Value of +1 pt in ITB $53,394,000 $12,653,368 $4,506,830
Share impact 0.99% 0.97% 1.00%
Linear Effects
Value of +1 point change
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ROMI Benefits
Identify the marketing levers which
contribute to sales– And those which don’t
Calibrate the impact to guide marketing
investment decisions
Conduct “what if” analyses– How much should I spend to achieve $X sales?
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Search Incite™
Context based search technology
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Typical Keyword Search
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Search Incite Results
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Search Incite consists of three components:
Data
Query
Ontology Algorithm
- Developed by a team of
experts over 3 ½ years (over 30 man years of work)
- Over 50,000 linguistic
elements
- Up to 500 keywords and
phrases relevant to each knowledge domain
- Customizable, scalable
and upgradeable to adapt to your changing needs.
- Inference engine
- Based on Search Incite’s
intelligent sort algorithm
- Combines linguistic
analysis with automatic pattern matching
Index
How Search Incite Works
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Ontology Development
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Content Selection
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AMEX Verbatim Comments
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Isolating Problems
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Automated Corrective Action
Specific words, terms, phrases and issues can be
programmed for automatic intervention/handling.
PC PCPC
Police Dept Intranet
WebServer
CALEA Accreditation
Program Standard Manual
Server
Intranet Server can be hostedinternally or remotely dependingon security, IT infrastructure, andresponse time requirements
Search Incite Hardware Overview
Transfer
ProtocolF
irew
all
54
SiteCRM™
Measuring Brand Website
Effectiveness
(In partnership with crmmetrix)
5555
Site Exposure
On Site Entry
SiteCRM™
Entry Survey
Probably will
purchase
SiteCRM™
Exit Survey
Definitely
will purchase
Re-contact survey 1 week
after website visit
Purchased
Brand
On Site Exit
ROI (Purchase Tracking) Module
Purchased the brand within past 7 days
Spent $4 on most recent purchase
Media Impact – website visit influenced 50%
Estimated Web Influenced Revenue = $2.00
TV
Packaging
WOM
SearchOnline Ad
Typed URL
Offline Media
Media Pull
Lift In Purchase IntentLift In Brand Health Purchase Impact=Estimated ROI
Estimated Web Influenced Revenue (aggregated)– Monthly
Total Unique Visitors/Month = 65,000
Average Estimated Web Influenced Revenue / Visitor = $2.00
Total Estimated Web Influenced Revenue = 65,000 x $2.00 = $130,000
Total Interactive Marketing Spend / Month = $105,000
Estimated ROI = 23.8%
Illustration showing the flow of website visit experience of a single visitor
Business Impact (Sales) Measurement
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VISITOR QUALITY
VISITOR
QUALITY
Who are you attracting
to your website?
Six
Dimensions
SITE
PERFORMANCE
Is the site performing to
my visitors
expectations? What are
the improvements I
need to make to the
website? Are the
visitors accomplishing
their goal for coming to
the site?
BRANDING
IMPACT
Is the visit to the
website driving a
positive change in
opinion for the brand?
Is the content of the
website building a
strong brand
perception?
BUSINESS
IMPACT
Is the website driving a
lift in purchase intent?
Is it driving offline
purchase?
And brand
recommendation?
CAMPAIGN
EFFECTIVENESS
Which campaign
increases Purchase
Intent?
Which campaign drives
offline purchase?
Does the campaign
engage visitors?
CRM IMPACT
Is the website building
customer relationships?
How many of my visitors
registered for the
newsletter?
Is the content of the
website building a
positive brand
perception?
The Six Dimensions analysis, developed by crmmetrix, aims to help marketers identify what
to leverage, in order to turn your website into a powerful marketing engine.
6 Dimensions of Brand Website Effectiveness
57
What’s keeping you up at night?
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Contact Information
Jeff Ewald
T: 248.459.1194
Kenn Devane
T: 917.208.4649
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Intersecting marketing, science and technology™
Search Incite Software Overview
User
htm
l via
aja
x
Ontology Editor
DocumentManager
Custom Views& Reportsfor Results
DocumentSearch
Search Incite Web 2.0 SAAS/ASP Interface
Core DB
Ontology
DocumentStore
Search Incite'sIntelligent Sort Algorithm
Filter Algorithm
DocMetaData
Database Management System
Search Incite Pre-Indexer Background
Process
Customer Specific
Filter Logic and
Triggers
AutomaticImport
DBIDBI
User Auth. Filter(role/permissions)
Organization &User ManagerWeb
Browser http
External Applications SAAS/ASP Interface
Notification Queue(Email/XMPP)
DBI DBI
3rd Party
E-Mail DBI
xml-rp
c
smtpimap
Other DBMS
DocumentWarehouse