November 15, 2005 SDF Eric Zankman

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Case Study for Reaping Higher Profits and Retention
By DJ Cline

On Tuesday, November 15, 2005, at the Business Intelligence SIG, Eric Zankman presented a case study for reaping profits and retaining customers.

After graduating from MIT, Mr. Zankman, earned an MBA from the Haas School of Business at UC Berkeley. Moving to Bank of America as an Operations Research Consultant, Zankman developed customer management strategies for marketing, retention, and credit risk. He worked the next 12 years at American Management Systems (AMS), as Analytics Practice Leader, Coordinator of CRM Knowledge Center, and Senior Subject Matter. He crafted marketing and retention strategies, developed credit policies, and optimized customer service operations for large organizations.

Eric Zankman is now a customer management consultant with a record of improving profitability for some of the largest US and international firms by applying data mining, predictive modeling, customer segmentation, experimental design, and optimization.

Gathering data is no longer the problem, making sense of it is. Despite big spending in business intelligence and customer analytics, applying insights on the customer life cycle and maximizing it into a return on investment is difficult.

Zankman can tell you what customers want and what you can do about it. He is able to determine which customers are worth pursuing. His case study worked for a telecom, but will work anywhere there are customers. The telecom wanted to identify low risk, loyal customers, but had no customer analytics process to do it.

Before starting, he got IT involved, made sure the data was cleansed (scrubbed) by experienced data migration specialists, insured a dedicated analytical staff and budget, and made it clear that this was an evolving process.

He discussed the key components of customer analytics. They created a datamart from customer billing and collections data. They built 12 predictive risk models forecasting from three months of payments. They then segmented customers between low or high risk. They developed target strategies toward desirable customers. He discovered that offending low risk customers makes them high-risk and are best left alone. Chronic high-risk customers ironically seem easier to work with. They designed champion/challenger strategy tests in low, medium and high-risk matrix, comparing how well customers paid versus how much they owed. They performed cost benefit trade-offs by actually tracking the cost of each strategy like calling versus mailing a customer. They could then quantify the business benefits with a measurable reduction in delinquencies by over 15 percent.

The results were happier low-risk customers, lower recovery costs and higher profitability. The client was so happy about the result that they have worked with Zankman to present his findings around the country.

DJ Cline
Copyright 2006 All rights reserved.