Predictive Analytics in Marketing
Predictive Analytics in Marketing Fuels Competitive Advantages for Businesses

Predictive Analytics in Marketing Fuels Competitive Advantages for Businesses

Client, staff member, and partner expectations have developed an overwhelming burden on business directors and heads to innovate by building new modes of value and communication. By utilizing predictive analytics, businesses can anticipate results, recognize prime opportunities, reveal unseen risks, predict the future, and perform in the here and now. Profitable businesses appreciate the power of applying predictive analytics across business systems, functions, and line-of-business offerings to keep up the competitive edge. SAP Hybris Marketing offers you the innate benefit of predictive analytics with functions such as segmentation, campaigns, and so on to bring the abovementioned goals to successful completion.

advantages of using Predictive Analytics

The major advantages of using Predictive Analytics in the Hybris Marketing Cloud include:

  • Embed and extend predictive results into applications
  • Optimize processes and performance
  • Detect patterns to initiate campaigns
  • Aggregate and correlate information
  • Catch the best trends for better ROIs
  • Faster and accurate outcomes
  • Scale and manage the end-to-end lifecycles

Why we need predictions in today’s advanced marketing automation

Though today’s marketing automation tools are far more advanced with their tracking and real-time capabilities as compared to the traditional marketing tools, studies prove that the addition of predictive analytics in marketing applications leads to the best/highest ROIs (as much as 250% as compared to regular campaigns).

advanced marketing automation

With the addition of the Predictive Analytics Library in the SAP Hybris Marketing system, you can now apply statistical means to discover designs and flow in historical data and employ the information to anticipate customer actions.

Quality master data for effective predictions

For the best predictions, provide as much detail on the contacts as possible; this helps the models to train better so that they can predict better. Any of the below information can help separate the groups:

  • Age
  • Gender
  • Marital status
  • Sales current year
  • Sales previous year
  • Change of sales between years
  • Latest contact details
  • Number of contacts/visits
  • Payment history
  • Outstanding payment

Predictive Analytics

Predictive Analytics in Hybris Marketing

Applications

Below are the few areas where you can use predictive analytics in Hybris Marketing:

  • Segmentation/Target Groups
  • Scores
  • Email Campaigns
  • Letters
  • Phone

Architecture & Components

SAP Hybris Marketing’s Predictive Analytics are built on APL (Automated Predictive Library), which is now part of SAP HANA system. The below diagram shows the detailed architecture and the associated components in the Hybris Marketing Cloud.

Architecture & Components

Segmentation with Prediction KPIs

Hybris Marketing’s market-leading segmentation capability allows users to segment their target markets with predictive Key Performance Indicators (KPIs) such as:

  • Profile scores/Top-Ranked Customers
  • Buying propensity
  • Cancellation propensity
  • Selected customers
  • Coverage of potential buyers
  • Predicted potential buyers

The predictive KPIs are established on predictive models that allow keeping count of customers. The goal is to communicate with a portion of customers in the best dimensions of the score, permitting the most advantageous number of potential clients, contrary to addressing a chance choice of customers.

The effects of predictive segmentation models can unequivocally be applied by campaign managers to perfect the magnitude of the target group and spontaneously communicate with every contact utilizing the most excellent channels with a customized message by – maybe – something like an e-mail, letter, or phone.

An example of a segmentation model using predictive KPI Buying Propensity is shown below:

Segmentation with Prediction KPIs

Predictive Analytics in Email Campaigns

Predictive analytics takes advantage of existent email campaigns and connects real-time behavior identification with historical customer information to develop automated, customized email campaigns. This helps the email campaigns to a great extent and –allows teams to send emails that convert more prospects into customers, and send emails that engage individual customers and reengage customers who haven’t purchased from you in a while.

Ultimately, these tactics help marketers save time and also gain more accurate results by sending the coupons and offers to their best prospects.

The below screenshot shows how Email Affinity scores can be used in Hybris Marketing Campaign Automation:

Hybris Marketing Campaign Automation

Profile Scores

All Hybris Marketing applications use predictive analytics that’s built and trained on profile scores.

The profile score is a formula to calculate a value for a given question; for example, how loyal is a customer in a standardized way? The value denotes the total score calculated for the given contact. Examples of these scores include loyalty scores, buying propensity, email sending time, and so on.

Hybris Marketing applications

The scores are to be calculated based on various inputs such as Master Data, Behavioral Data, Historical Data, and a combination of all these inserted in Rule Sets and Rules.

There are two types of scores:

  • Rule-Based Scores: Rule-Based scores are based on best practices. This means that the rule sets are defined based on company policy, experience, and best practices. A rule set has various rules and every rule includes various conditions. The Score Builder application is used to build rule-based scores.
  • Propensity Scores: Propensity scores are based on predictive modeling and are data-driven. This means that the predictive model is trained on historical data to detect patterns in customer behavior. The Predictive Studio application is used to build propensity scores.

Score Builder application (to build rule-based scores)

Score Builder application

Rule-Based Scores

Propensity Scores

segmentation applications

We can use these scores as attributes in segmentation applications:

Hybris Rule-Based scores

Predictive Studio (to build Rule-Based scores on the Hybris Marketing Cloud)

Predictive Studio is used to create, train, and maintain predictive models for the calculation of Key Performance Indicators (KPI). These predictive KPIs can be used in multiple applications; for example, they can be used in segmentation or email campaigns.

The below list of tasks can be achieved with the help of Predictive Studio on the Hybris Marketing Cloud:

  • Filtering According to Ownership
  • Filtering According to Model Status
  • Searching for a Model
  • Creating a Model
  • Processing an Existing Model
  • Deleting Predictive Models
  • Defining and Publishing a Predictive Model
  • Fitting a Predictive Model

Steps/Best practices to create a predictive model

  • Define a predictive model in Hybris Marketing
  • Define an applicable scope; ex: Country or Region. The available attributes for an applicable scope are defined in Customizing
  • Define the context of the model, select a predefined predictive scenario; for instance, Buying Propensity, which includes the data source, the use case, and the applicable algorithms (implementation methods) for the predictive calculation
  • Select a Campaign for Success Measurement
  • Create a Model Fit
  • Set the status to “In Preparation”
  • Enhance the model (Edit an existing model) with model fits and scope
  • Create a model fits with different implementation methods, different sets of predictors, and cross validation
  • Start model training to train the model. Check for training results such as Predictive Power, Prediction Confidence, Initial No. of Predictors, No. of Selected Predictors, Reference Products as Predictors, and No. of Kept Predictors
  • Chose the best fit to publish the model. Use Lorenz Curves or The Box Plot to check for the best fit
  • Publish the model
  • To restrict the validity of the model, define a set of countries and regions as scope for which the model was valid
  • To withdraw a published model, set the status to “Complete”
  • Describe the model properly by using the Key Information and Notes facet to add the description and personal notes about the model

Below are some screenshots for you to see what Predictive Studio looks like in the Marketing Cloud application:

Predictive model in Hybris Marketing

Success Measurement

predictive calculation

Predictive Studio

Different sets of Predictors

Predictive Scenario Settings in the backend (in Hybris Marketing On-Premise)

Prior to creating a predictive model in the front end, the predictive scheme has to be elucidated in IMG customizing. A predictive scenario describes the framework of the predictive model, which contains the data origin, the use case, and the appropriate algorithms (implementation means) and others.

All IMG activities related to predictive scenarios can be defined in:

IMG > SAP Hybris Marketing > Data Management > Predictive Scenarios

The primary group of predictors can be described in Customizing for SAP Hybris Marketing thus: Predictive Scenarios > Define Predictive Data Source

The front-end UI settings can be defined thus: Predictive Scenarios > Define Settings for Display of Predictive Scenarios on UI

Predictive Scenario Settings

The predictive data source is called to by the script-based estimation view sap.hana-app.cuan.cpred.demo.datafoundation/CA_CPRED_BANKING_DS_PAR. It provides the business data for the training set, which contains data that describes the actual customer behavior. It is then used to detect patterns and trends for future prediction. The cross-authorization and preparation of predictive models are established on a group of SQL script procedures, which are applied to call PAL functions to be employed for predictive calculation.

Again, as per SAP’s future road map, this is just a beginning and we will see more focus and more applications coming soon that will be closely associated with predictive analytics.

My take on predictive analysis in marketing and more

It’s only going to get more crowded with predictive analytics out there. If you are a larger business, know that smaller businesses can and will also start to take advantage of precitive analytics too. If you are a smaller business, know that you can compete with some of your larger competitors with predictive analytics. However, the singular method by which you will attain an amazing outcome is by developing an appealing customer experience that could only come from you – not by copying someone else.

Are you using predictive analysis? If so, how’s it going? If not, why? Let me know by writing to me at info@knacksystems.com.

Author: Kalyan Chakravarthi

Kalyan is a Hybris Marketing Consultant and SAP CRM Architect with over 11 years of experience working with both solutions. Being an SAP-certified professional and associate, he has successfully implemented Hybris Marketing and SAP CRM for several customers. Kalyan has been working with Hybris Marketing for the past three years and has traveled to five countries for global solution roll-outs. He has done his Masters in Business Administration from Andhra University Campus with double specialization in Marketing and HR.

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