Analytics is all about analyzing data for better insights and decisions. Intuitively, it seems that more data analysis should equal better business results like higher revenues, lower costs, higher profitability and productivity. A recent study on “data-driven decision making” conducted by researchers at MIT and Wharton provides empirical evidence that “that firms that adopt data-driven decision making have output and productivity that is 5-6% higher than the competition”.
With this background, Oracle recently commissioned a study through Forrester Research to determine the total economic impact and potential ROI for Oracle’s Real-Time Decisions (RTD) platform. This article presents some of the interesting facts from the Forrester study.
For people not familiar with RTD, Oracle's Real-Time Decisions (RTD) platform combines both rules and predictive analytics to power solutions for real-time enterprise decision management. It enables real-time intelligence to be instilled into any type of business process or customer interaction. RTD was chosen for the study precisely for its ability to influence business decisions based on defined rules and more importantly insights derived through real-time data analysis.
The customer chosen for this study, a large financial services company has offices in all 50 states with over 20,000 employees and millions of customers. This company derives a significant portion of revenues via the online channel and hence RTD plays a major role in influencing the customer acquisition and retention process.
The results – A three year risk adjusted ROI of 986% with over $100 million in additional revenue generation. The numbers are astonishing by any measure so let’s dive deeper to understand how the customer achieved such amazing benefits.
- Increased Closure rate & incremental deal size: Imagine a Financial Services provider doing business with millions of customers over the web. If only every interaction could be tailored to the right offering for the individual customer need, this is exactly what the provider did. Using RTD’s predictive analytics capabilities, in real-time, the financial services provider was able to tailor its offerings to best meet the customer needs. The results an approximately 0.8% lift in closure rate in Year 1 which increase to 1% in Year 2. Besides, by targeting the right offering to match the customer needs and not the cheapest offering the provider was able to increase the average deal size by $10 in Year 1 and by $12 in Year 2. These two initiatives yielded roughly $54.4 million and $41.1 million in additional revenues over 3 years.
- Post cart abandonment follow-up campaign revenue: Another RTD initiative focused on sending personalized follow-up emails to potential customers who asked for the quote but didn’t buy (abandoned their cart). Using RTD’s rule based and real-time predictive analytics models, the provider customized things like email subject, email body and even the time of the day the emails were send to better suit the individual prospect profile. The results – an astonishing 1% point lift in the conversation rate compared to the control group who received static message resulting in $56.4 million in additional revenue over 3 years.
- Another point worth noting is that the benefits like uplift in closure rate and higher average deal size continued to improve year over year. Obviously, some of this continuous improvement is based on better hypothesis testing and campaign refinement work undertaken by the decision management team. But more importantly, RTD’s predictive models are getting better with time i.e. the RTD system continues to learn and improve with time.
In conclusion, the Forrester study confirms beyond doubt the power of RTD in particular and data mining based automated decision management systems in general. Besides the Financial Services provides there are number of customers like a leading Credit Card provider and Ecommerce site of a large retailer who are using RTD to improve customer interactions and deliver additional revenues. We believe that the demand for solutions like RTD will continue to increase with trends like big data, automation and increased competition and as more and more businesses began to use analytics as a competitive differentiator. You can learn more about RTD here.