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SAS Talks
May 10, 2012
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Speakers
Stacy Hobson
Director, Customer Loyalty and Retention
SAS Institute
Bart Baesens
Associate Professor, K.U. Leuven (Belgium)
K.U.Leuven (Belgium)
My Research Team
process mining
business process management
data mining
Jochen.DeWeerdt@econ.kuleuven.be
data quality in a credit risk
management context
data quality and decision
making
data quality metrics
Helen.Moges@econ.kuleuven.be
Thomas.Verbraken@econ.kuleuven.be
Overview
Markov assumption
Local versus Network variables
Featurization
Empirical Findings
Conclusions
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Edges
Different kinds of relationships, e.g., colleagues, friends,
patients, disease, contact, reference,
Weighted based on, e.g., interaction frequency,
importance of information exchange, intimacy,
emotional intensity,
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Anti-Money Laundering
Nodes are bank accounts
Edges are money transfers
Viral marketing
Nodes are customers
Edges are messages
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Time
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Network model
Takes into account the network information
Collective inference
Determines how the nodes mutually influence each other
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G
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Weighted
network
E
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Raw
CDRs
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Results: Finding 1
Network models boost performance and profit
compared to a local model
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Results: Finding 2
Non-Markovian network effects incorporating the
impact of higher order neighbors leads to improved
predictive power and profit!
Incremental profit increase
compared to first order network
effects
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Results: Finding 3
Network models detect other types of churners
compared to traditional models!
Fraction of the churners detected by the
network models (as a function of the
selected fraction of customers, ranked
according to their predicted probability to
churn), that are NOT detected by the
local model
Different curves represent different network
models (induced by different techniques)
Synergy opportunities!
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Network
model
0.13
0.24
0.54
0.34
0.68
0.18
0.92
0.22
0.84
0.29
32
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References
VERBEKE W., DEJAEGER K, MARTENS D., HUR J., BAESENS B., New insights into churn prediction in the
telecommunication sector: a profit driven data mining approach, European Journal of Operational
Research, forthcoming, 2011.
DEJAEGER K., VERBEKE W., MARTENS D., BAESENS B., Data Mining Techniques for Software Effort
Estimation: a Comparative Study, IEEE Transactions on Software Engineering, forthcoming 2011.
MARTENS D., FAWCETT T., BAESENS B., Editorial Survey: Swarm Intelligence for Data Mining, Machine
Learning, Volume 82, Number 1, pp. 1-42, 2010.
VERBEKE W., MARTENS D., MUES C., BAESENS B., Building customer churn prediction models with
advanced rule induction techniques, Expert Systems with Applications, Volume 38, pp. 2354-2364,
2011.
BAESENS B., MUES C., MARTENS D., VANTHIENEN J., 50 years of Data Mining and OR: upcoming trends
and challenges, Journal of the Operational Research Society, Volume 60, pp. 16-23, 2009.
GLADY N., CROUX C., BAESENS B., Modeling Churn Using Customer Lifetime Value, European Journal of
Operational Research, Volume 197, Number 1, pp. 402-411, 2009.
MARTENS D., BAESENS B., VAN GESTEL T., Decompositional Rule Extraction from Support Vector
Machines by Active Learning, IEEE Transactions on Knowledge and Data Engineering, Volume 21,
Number 1, pp. 178-191, 2009.
GLADY N., CROUX C., BAESENS B., A Modified Pareto/NBD Approach for Predicting Customer Lifetime
Value, Expert Systems With Applications, Volume 36, Number 2, pp. 2062-2071, 2009.
BAESENS B., SETIONO R., MUES C., VANTHIENEN J., Using Neural Network Rule Extraction and Decision
Tables for Credit-Risk Evaluation, Management Science, Volume 49, Number 3, pp. 312-329, March
2003.
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FYI
Acknowledgments
Jerry Oglesby, Director Global Academic Program & Global
Certification Education Division
Larry Stewart, SAS Education Vice President
Sean OBrien, Director, Business and Curriculum Development
Bob Lucas, Statistical Training and Technical Services Director
Karen Washburn, Business Knowledge Series Manager
Patsy Poole, Project Manager
Hillary Kokes, former Business Knowledge Series Manager
Lieve Goedhuys, former Academic Program Manager,
SAS Institute Belgium-Luxembourg
All the other great SAS folks for the excellent collaboration
during the past years!
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Q&A
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Additional Resources
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Advanced Analytics for Customer Intelligence Using SAS
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