Time-to-Event Modeling – The Way to Sophisticated Marketing
In today’s world we as consumers are constantly bombarded with marketing messages -- through SMS, phone calls, web interface, credit card statement, email ... the list goes on. There’s so much noise that in many countries regulators are taking action against companies that are seen as overly aggressive with their outbound marketing.
However, the majority of outbound marketing campaigns have minimal impact because they make the same offer to everybody. Most people are annoyed by generic offers. But if they get an offer that exactly matches their needs at a better price, well, that’s a different story. Such a targeted offer will not annoy them either since they would have purchased those products any way.
One key to this highly targeted marketing is, knowing not only what consumers might want to buy, but when. FICO has developed a very clever analytic process for this, which has already been used in our retail marketing solutions. It’s called Time To Event Modeling or TTE Modeling. FICO scientists analyze the behavior patterns of customers and come up with thousands of marketing models, then use these models to develop optimized offers for each individual customer customized for a particular point of time in the future.
Banks could apply the same analytic process to their credit card and other transaction data, producing tremendous value both to customers and the financial institutions. Customer satisfaction and revenue can grow tremendously and marketing spend can be reduced significantly since the offer take-up rate could be very high. While the offers will reach the customers through all the standard channels, they will be more likely to meet an interested recipient, not someone quick to hit the delete key.
Predictive analytics and optimization coupled with the power of technology can revolutionize the way we are doing marketing campaigns today. For banks looking to grow and compete, this is good news.