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to work
Good business sensebut where
do you begin?
January 2012
Table of contents
An in-depth discussion
January 2012
14
Predictive analytics:
Businesses want to do it,
but few know where
to begin
An in-depth discussion
An in-depth discussion
An in-depth discussion
To illustrate this point: A physician was struggling with the fact that
some of her patients were not taking the medications she prescribed
for them because they believed they could not afford to purchase
them. As a result, before going to work, she took the time to log on to
the website of a large pharmacy chain and print out a list of popular
generic drugs that were covered by that chains low cost prescription
plan. She subsequently would check this separate list upon creating
prescriptions to inform her patients they could, in fact, afford their
medications after all. Why were patients and their doctors not able to
access this information automatically? The chains covered drug list
was not integrated with the mobile medical and drug decision support
software for doctors used to verify drug dosage and interactions
prior to writing prescriptions. Therefore, when it came time to write
prescriptions, physicians who had not made a personal effort to inform
themselves (as our physician did) had no way of knowing whether or
not a specific drug was covered within the chains plan. Since the right
information was not made available at the point of decision, patients
likely paid too much for their medication or simply did not fill the
prescriptionsneither of which were optimal outcomes. The situation
has since improved since the chains low cost prescription drug list has
been integrated into the drug decision software application.
Resolving delivery problems or last-decision-mile issues such as this is
critical to a successful analytics initiative.
An in-depth discussion
Good data visualization can communicate the information that drives smart
decisions. Above we just touched on
the importance surrounding the lastdecision mile, where analysts should
ensure timely and appropriate information for decision makers. That said,
it is never easy to convince decision
makers to deviate from their modus
operandi. Specifically, convincing
them about the efficacy of a solution
based on predictive analytics and
getting them to approve change typically takes more than an R-squared or
a mean absolute percentage.
Relationship of client market spend to cost per call and number of calls
450
400
$350K spend
350
Cost per call
300
$250K spend
250
200
150
100
700
800
Model I
10
900
1,000
1,100
7) How important to
ongoing success is
prototyping, piloting and
scaling?
Truth be told, Thomas Edison did
not invent the light bulb. Rather,
he commercialized it! Edison took
a working concept and developed
hundreds of prototypes, rapidly tested
them, and then figured out improvements that were required to scale the
invention for commercial use. This
took into account both economics and
manufacturing.
An in-depth discussion
11
The following example illustrates the importance of the prototype, pilot and scale approach.
To illustrate the complexity of these projectsa real-world example: One of our healthcare clients wanted
to institutionalize a data-driven culture within its sales organization. Specifically, they requested our help in
identifying and focusing sales efforts on high potential customers. However, they also faced two problems that,
if unresolved, would get in the way of a successful national rollout: First, there were skeptics among the sales
personnel who did not trust the modela situation that would make it difficult for the company to enact any
suggested changes. And 2) change management blind spots existed in the companys current decision making
process whichcoupled with de facto processes that govern the day-to-day activitieswould be difficult to
incorporate into the strategic initiative, given that they are not always perceptible or documented.
We recognized that an understanding of the reality of how things are getting done helps to anticipate roadblocks
and align all processes to achieve a more successful strategy that everyone in the company could believe in. So,
we set out to identify and focus sales efforts on high potential customers and resolve these two stumbling block
issues. First, we developed a prototype of a predictive scoring model that identified high potential customers.
Then we mapped the results of that model to existing efforts, which showed that greater than 50 percent of the
sales forces time was being used ineffectively, and that there was money left on the table. We designed a pilot
with the following objectives:
Prove the validity of the predictive model
Create evangelists from the sales team of the pilot regions
Identify the big-data gaps and establish a process of continually refining (CRM) data
Establish and refine the key performance metrics to report to senior management
Understand the key questions and concerns of the sales team in adopting the system.
During the pilot phase, we collected a great deal of rich quantitative and qualitative data. That data not only
conclusively proved the value of the predictive models impact, but it also provided us with insights to incorporate
into the rollout process. To cite two examples: some customer addresses were not updating in the data warehouse, and sales managers wanted to understand the factors behind the predictive customer score before they
felt comfortable using it. Scaling the pilot required cross-organization coordination and strong program management to ensure that the pilots lessons learned were incorporated in the rollout. Positive word-of-mouth regarding
the solution, and minimal impact on day-to-day business were also priorities.
Finally, we designed the compensation rules and reporting metrics around feedback garnered during the pilot,
which helped us to build a system that achieved buy-in from sales force leadership.
Our client saw a significant uplift in revenue after the first three months of rollout. By that time, the sales organization had come to appreciate the value of a data-driven approach, to the extent that they hired a team to support
other sales analytics initiatives.
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An in-depth discussion
13
15
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