PBT Consulting

HOW A DATA-DRIVEN APPROACH CAN ENGAGE CUSTOMERS AND BOOST MARKETING RETURNS

Digitally savvy consumers know there’s an abundance of choices when it comes to purchases. With high expectations, most will seek out appealing items with little regard to brand loyalty. Churn and attrition are at an all-time high.

The response for organizations sounds simple enough: Provide a consistently good, engaging customer experience, optimize it on a variety of devices and deliver it when customers want it. Why has it been so hard for organizations to do this?

The answer starts with the way companies operate on the back end. With multiple organizational silos, no online/offline data synthesis, rigid customer databases and other inflexible legacy systems, organizations only have a piecemeal view of the customer. It’s hard to take advantage of all the existing corporate customer data that’s available, much less the rich variety of external data. As a result, marketing efforts are fragmented. Communications are inconsistent and ineffective. And revenue growth is hindered.

By taking a technological approach that synchronizes marketing processes with the customer journey across multiple channels, organizations can achieve great results – in terms of revenue, customer advocacy and loyalty. First, they need to get a panoramic view of each customer. Then they can understand and anticipate customer behavior; orchestrate the next best action across any channel; and accurately measure results to inform future actions.

SAS recommends that you connect your marketing efforts with all the relevant data from customer interactions as well as back-end operations.  Then, through advanced customer and marketing analytics, you can deliver an integrated, omnichannel experience and truly compelling content. By responding to your customers on their terms – right content, right time, right device – you can keep them coming back for more and raise their value to your business.

Step 1: Synchronize Marketing Processes Based on a Comprehensive Understanding of the Customer

When marketing departments, call centers, service operations and merchandisers operate independently based on their own distinct views of the customer, both customer engagement and marketing efforts suffer.

Consider a scenario where a customer’s browsing history (showing his preferences or inferred interests) is in one database while offline point-of-sale data about the customer is in another database. If these databases are not connected, there’s a good chance you will have less relevant interactions with that customer than what the customer expects. Or you may see the “echo effect,” where you reach the customer through one channel but he responds through a different one – leaving you unsure how to attribute the response or plan your next offer.

Many organizations don’t use their existing corporate data to the fullest extent. They overlook opportunities to enrich customer data with information from service records, operations or contact centers. Many also fail to use external data sufficiently, missing chances to broaden their understanding of the customer with data from social media, open data, third-party data, etc. In an ad sales scenario, these proprietary data sets can present a unique differentiator in the marketplace and enable you to create highly targeted campaigns for your advertisers.

SAS Customer Intelligence solutions provide a panoramic view of the customer by consolidating all first-, second- and third-party data. From digital data to CRM information and call center records, SAS captures, integrates and transforms disparate data sources, breaking down multiple customer data silos. Built-in data management capabilities ensure that you can use your data effectively to engage customers, and boost ad sales. Use SAS to:

• Improve data quality where the data resides, regardless of whether it’s in a marketing or operational system. SAS profiles, standardizes, monitors and verifies data without moving it, which creates significantly faster, more secure processes. So you can speed up many marketing processes to run in real time and near-real time instead of weeks and months.
• Access the data you need, no matter where it’s stored – from legacy systems to Hadoop. You can create data management rules once and reuse them, for a standard, repeatable method of improving and integrating data – without additional costs.
• Be confident that your data is reliable and ready to use for analytics, whether you’re doing segmentation, content recommendations, next best offer, retention or lifetime value scores.
• Create a panoramic view of the subscriber that connects all touch points, contact history and online/offline interactions.

Step 2: Understand Customer Behavior and Fuel Content Engagement

Content is core to enticing and keeping consumers. You can attract the right customers by optimizing your content. But it’s just as important to optimize the customer’s overall experience. Using advanced techniques like text and predictive analytics, you can improve search engine optimization (SEO) for digital content, quickly categorizing content and text mining words, phrases and topics for customers.

Beyond SEO, you can profile and segment customers based on their historical behavior, profitability and lifetime value. Through a range of predictive analytic models, including affinity analysis, response modeling and churn analysis, you’ll know whether it’s a good move to combine digital and print subscriptions. You’ll recognize which content merits a fee versus which content you can monetize without a paywall.

To keep your marketing efforts fresh, you’ll need to continually supply models with updated data as you interact with customers and prospects. For example, your models should include purchase transaction data, online data from website users, direct marketing response data and more.

Figure 1 - Decision Tree to quickly idenify variables that can best predict iPad usage and high versus low user populations (Click Image To Enlarge)

Through advanced analytics, you can use these models to predict behavior and: 

• Identify how different customer segments are most likely to respond to specific content, campaigns or marketing actions. Your approach will be based on analytically driven, granular segmentation of both known and unknown customers.
• Reach the target population that’s most likely to respond positively to certain content, campaigns and other marketing activities. With predictive modeling, you can understand and predict the behavior of each targeted group.
• Improve economic outcomes using optimization to make the most of each individual customer communication. Take into account resource and budget constraints, contact policies, the likelihood of customers responding, and more.

Step 3: Automate and Synchronize Customer Engagement Across Channels

Once you’ve determined which analytics approach is best, you’ll need to automate your engagement activities with customers. SAS Marketing Automation helps you to quickly define target segments, prioritize selection rules, choose appropriate communication channels, schedule and execute campaigns, analyze results, and make adjustments to improve future campaign performance.

Use SAS to orchestrate data-driven marketing activities across all of your channels. So you’ll be able to present customers with the best, most profitable offers to keep them engaged or to win them back from competitors. Analyze – in real time – how people get to your site and what they do while there. Then present them with engaging content at precisely the right moment. Use SAS to:

• Build an omnichannel marketing environment so you can align outbound and inbound marketing tactics across all channels.
• Develop event-triggered campaign tactics to ensure timely, relevant marketing strategies.
• Know the next best action to take for each customer by incorporating analytics into your marketing execution efforts.
• Track the effectiveness of all marketing activities and monitor campaign results in real time.
• Reduce your reliance on IT for campaign creation and deployment with an easy-to-use interface. 

With a complete view of the customer, a deep understanding of behavior and automated engagement efforts, you’ll be able to make decisions that resonate for customers and invigorate your marketing efforts. For example, if you know a customer checks email every Friday, you’ll send her an email on Friday – because you’ll know that’s the best way to reach her. You’ll also be able to decipher between premium content versus content that should be free. You’ll know what will hook your customers, whether they’re using your services for the second time or the hundredth time.

Today’s customers demand value and expect a consistent experience regardless of the channel or device they’re using. SAS positions you to meet these ultra-high customer expectations at every touch point.

Figure 2 - A marketing campaign response measurement dashboard (Click Image To Enlarge)

Step 4: Effectively Measure Campaign Performance and Attribution

It’s hard to understate the importance of accurate, useful measurement. Combining SAS Reporting capabilities with SAS Visual Analytics – a visualization and exploration suite built to handle big data – it’s easy to examine the effectiveness of your marketing campaigns and tactics based on your budget and success metrics. Use response attribution modeling to understand the customer’s conversion path, and to know where to assign marketing credit. Then you can create future marketing mix optimization models, test/control strategies, predictive models and marketing campaigns.

With adaptive, agile marketing, you can test your offers and content quickly, on a small scale, and nurture continually richer customer interactions. Then get rapid feedback to show you when and how to modify the customer’s experience to get the most impact. Plus, you’ll have easy access to campaign reports and dashboards so you can track and manage campaigns across all of your channels.

Figure 3 - Campaign and offer performance reports are integrated with revenue metrics and demographic indicators (Click Image To Enlarge)

COMMENTARY:  

A New Definition of Data-Driven Marketing

What is data-driven marketing, how can event marketers effectively use it to drive conversions, and why does it matter? For decades marketers were forced to launch campaigns while blindly relying on gut instinct and hoping for the best. That all changed with the digitization of business and an increasingly demanding and digitally connected consumer. Now more than ever, there is a greater urgency to develop data-driven marketing campaigns as organizations have come under increasing pressure to deliver results or ROI for their marketing spend. To be successful in this landscape, a modern marketing campaign must integrate a range of intelligent approaches to identify customers, segment, measure results, analyze data and build upon feedback in real time.

While almost every area in marketing has been folded into the digital marketing ecosystem, in-person events have remained elusive to today’s modern marketer. In fact, when it comes to tracking your marketing efforts and determining which channels provide the best return on investment (ROI), most marketers will agree that results from in-person events are still difficult to track:

• 69% of marketers say that tracking ROI for events is their primary challenge. (Aberdeen Group)
• Only 48% of marketers report having any event ROI metric in place (Regalix)
• 82% of marketers cannot quantify the data received from attendee interactions at their corporate events (Kissmetrics)

Indeed, events often lag behind other marketing methods by a significant gap, with the success or failure of many events based solely on anecdotal evidence instead of quantitative measurement and logic.

Furthermore, because data-driven marketing produces highly personalized, engagement-focused campaigns for everything from enterprise servers to event apps, consumers are now beginning to expect a high level of personalization with each transaction.

What is data-driven marketing?

Let’s start out by trying to develop a simple definition for a relatively complex concept and practice. Data-driven marketing captures insights and data from a prospect, analyzes and scores the prospect’s data and behavior, and then subsequently triggers marketing actions and campaigns based upon marketing analysis. An appropriate analogy is to think of data-driven marketing from the consumer side in the average online shopping experience. When you purchase an item online, data-driven marketing strategies provide recommendations of complementary products to provide a better overall experience. If you’re looking at airfare rates for your next vacation to Hawaii, a data-driven marketing approach will focus on restaurants around the island with cuisine you regularly Google, potential places to stay based on positive reviews on Facebook, visitor’s guides that reflect your online budget-hunting practices and local activities such as scuba diving, listed on your LinkedIn profile.

By comparison, when you look at data-driven marketing from the marketer’s side, you’ll find a much more complex process. As you are able to obtain and update information on the customer from secondary sources, such as social media sites and web search data, you can create an approach that is customized to their buying behavior, interests, past purchases, web searches, social media posts and similar information. In other words, this approach allows you to optimize your funnel and customize your buyer journey to that particular prospect’s needs. You can also survey prospects to obtain primary sources of data, but be aware that there is often a bias between what individuals or groups claim versus their actual behavior. For example, an event attendee who was ranting about poor service at the luncheon one day may be raving about the closing keynote, leaving you with plenty of praise on the keynote but failing to mention the luncheon on the exit survey. Once you’ve obtained the data you need to make a comprehensive group, you can divide your prospects up into the personas they fit into best. This allows you to customize and personalize your approach, timing, channel and subject matter to optimize the results for each persona group.

The problem many marketers run into at in-person events is that they often don’t have the information they need to determine how to best engage each prospect. The closest option currently available are scans that provide contact information and basic registration information. But scans don’t provide the data you need to track that prospect’s engagement before, during, and after the event to prove the event ROI that particular group of prospects has generated for your company. As an example, at a recent conference, my badge was scanned by a gentleman from a company that prints promotional items. I was looking through the items in his booth to determine if there was anything I could use for our company’s next event. Though the exhibitor could have collected further data from me at the time, it would have been at the cost of other prospects that he could not help while gathering my information. When I returned home from the event, I had several recommendations for items that didn’t meet our needs because the minimum quantity was much too high, the quality wasn’t good enough and the prices were too expensive. The company had my contact information, but didn’t know enough about me or my organization to make appropriate recommendations. A data-driven marketing approach to this in-person event would have drastically improved my experience while increasing the marketer’s Event ROI.

How does data-driven marketing improve your ROI?

If you’re still wondering how data-driven marketing can make a difference to your company, you’re not alone. Though there was a 14% increase in confidence in putting big data to work in marketing departments from 2013 to 2014, with expectations for additional growth, many marketers still don’t know how the additional data provides a solid improvement in ROI or how to use the data to their company’s best advantage. In fact, companies that have implemented data-driven marketing into their marketing toolbox and recorded the results have often seen a 10-20% improvement on their ROI. Like any tool, it must be used correctly and implemented with other tools in your kit, such as using social media data, search analytics, SEO, content targeting and developing better buyer personas.

Why does data-driven marketing make such a big difference? Using the marketing convention example above, if the company had used data-driven marketing techniques to track my information, they would have known my organization was operating on a modest budget. All these factors made their special offer on a tri-fold brochure with a minimum order of 5,000 a very bad fit. Instead of learning more about the client, the company made a suggestion based on what was popular with their clients in general, few of whom had the needs of our organization, and lost a prospective sale. A targeted campaign based on data-driven marketing would have recommended a small-minimum product order that was inexpensive, while offering additional items that would have fit well with our company’s mission.

Click Image To Enlarge

Courtesy of an article titled "How a Data-Driven Approach Can Engage Customers and Boost Marketing Returns" appearing in SAS blog and an article dated May 26, 2016 appearing in Certain

BIG DATA IS NOW A TOP MANAGEMENT ISSUE WITH THE CIO AND CTO TAKING OWNERSHIP OF BIG DATA STRATEGY SAYS NEW SURVEY

A new study by the Economist Intelligence Unit has just been released that shows how big data is moving from its infancy to “data adolescence,” in which companies are increasingly meeting the challenges of a data-driven world.

The report, called “Big Data Evolution,” details the ways in which companies’ attitudes and activities have changed over the past four years with regards to big data — collecting it, storing it, analyzing it, and using it to make business decisions about strategy.

Data is becoming a corporate asset

The report shows that, since 2011, substantially more companies are treating their data as what it actually is: a strategic corporate asset. The initial excitement about the possibilities presented by big data is morphing into a more strategic approach, defining which data initiatives will have the biggest and most immediate impact.

I refer to this as asking the right questions. Companies are getting a bit savvier, and on the whole, are not asking for more data, but rather the right data to help solve specific problems and address certain issues.

Because of this greater understanding, executives are more likely to report they are making good, fact-based decisions about their data and their business.

In addition, data strategy has been elevated to the C-level, usually centralized with a CIO/CTO or a newly-appointed Chief Data Officer (CDO). Outside that position, executives across the board are more likely to be in charge of their departments’ particular data initiatives and instrumental in putting those resources to use.

Click Image To Enlarge

Click Image To Enlarge

Another important finding of the survey points to a strong correlation between good data management practices and financial success.

Companies with a well defined data policy, are much more likely to report that they are financially competitive with their peers and rivals.  In addition, they’re more likely to report that their data initiatives are successful and effective at resolving real business problems.

The reason for this could be that data initiatives are moving out of the realm of theoretical possibility and well into reality, demonstrating the ability to focus on real business problems and provide practical solutions.

Less about volume and velocity than value

One final encouraging trend the report finds is that the “bigness” of big data is starting to wear off. Companies are less focused on the quantity of data they can collect and the speed at which they can access it, and more focused on the value the data can provide for their business.

I strongly believe that the right data is much more important and valuable than simply collecting more data, and the report bears that out.

As technology continues to improve, the “bigness” of big data will become less and less of a factor. Companies are becoming more comfortable with the idea that they will need to scale up to allow the value of data initiatives to reach all sectors of the business, and so they are becoming more comfortable with approximation, agility and experimentation.

From my point of view, all of these are positive signs that big data is moving out of its infant stages and is well on the way to data maturity.

Bernard Marr is a best-selling author, keynote speaker and business consultant in big data, analytics and enterprise performance. His new books are 'Big Data' 'Key Business Analytics'

COMMENTARY:  The tone of corporate conversations about big data continues to shift from initial excitement to expecting long-term business impact.

Over the past four years, executives have not only become better educated about the technology behind big data, but have fully embraced the relevance of data to their corporate strategy and competitive success.  It could be said that most companies are experiencing their “data adolescence”, increasingly rising to the challenge of executing and delivering against the promise and potential of big data.

What are the hallmarks of this current stage of evolution, and what does the path to “data adulthood” look like from here?

In February 2015, the Economist Intelligence Unit (EIU) conducted a global survey of 550 senior executives sponsored by SAS, to follow up on our 2011 and 2012 executive surveys. By comparing the results, we were able to examine the evolution of companies’ views, capabilities and practices regarding big data as a corporate asset, and explore the future implications as companies continue to mature as strategic data managers.

Additionally, EIU conducted six in-depth interviews with leading corporate big data thought leaders and practitioners.  Two of these interviews revisited specific big data–related issues these companies faced beginning in 2011.

Key highlights of the research include the following:

• Since 2011, a significantly larger proportion of companies have come to regard and manage data as a strategic corporate asset. The ranks of companies with well-defined data-management strategies that focus on identifying and analysing the most valuable data (referred to here as “strategic data managers”) have swollen impressively since 2011. No longer indiscriminate data collectors or wasters, companies are entering a period when the initial excitement over the possibilities presented by big data gives way to the need to prioritise and develop on data initiatives with the biggest payoff. More companies have ventured further into this stage of their data evolution, and their executives are more likely to feel that they are better at making good, factbased business use of their information.  
• Strategic data management is correlated with strong financial performance. Our survey points to a clear correlation between managing data strategically and achieving financial success. Companies with a well-defined data strategy are much more likely to report that they financially outperform their competitors. In addition, they are more likely to be successful in executing their data initiatives and effectively applying their data and analytics to resolve real and relevant business problems.
• Data-strategy ownership has been elevated and centralised, while engagement and demand from the business is at an all-time high. Across industries, data strategy has been elevated and centralised to the C-level, most often with the CIO/ CTO or the newly minted chief data officer (CDO) role. At the same time, senior executives across functions and business units are increasingly in the driver’s seat of their data initiatives, and not just relying on IT leadership to design and execute them.
• Data initiatives have moved from theoretical possibilities to focus on solving real and pressing business problems. Companies approach data initiatives today with a clear focus on their purpose—putting business value first. They are much more likely to start by articulating and finding a consensus on the high-priority business problems the organisation will solve by leveraging its data assets. Financial resources available for big data initiatives remain scarce, so there is a pronounced need to prioritise which initiatives to invest in, as well as how to demonstrate the financial return on these investments.
• Technical challenges associated with quality, quantity and security persist. Even top performers continue to struggle with a number of technical aspects of big data. These foundational aspects of data management still drown out the more advanced, higher-value-add aspects of data management, such as governance, compliance and converting data into actionable insights.
• The future of big data is less about volume and velocity, and more about the value that the business can extract from it.  Going forward, companies will have to shift their attention away from the “bigness” of big data and focus on its business value. Data and analytics will be increasingly applied to predict future outcomes and automate decisions and actions. Most importantly, many companies will have to continue to evolve their structure and culture to scale up successful data pilots across the entire organisation. This means becoming more comfortable with approximation, agility and experimentation, and reinventing themselves into a new kind of information-driven, data-centric business—closer to data adulthood.

CIO's Now Consider Big Data Analytics A Game-Changer

Greg Taffet, CIO of U.S. Gas & Electric, when The Economist Intelligence Unit interviewed him back in 2011, said.

“It is going to be a game changer.”

He was referring to fast-moving, real-time “big data”—which, at that time, was a novel buzz word.

In EIU's first comprehensive study in 2011 of how companies perceive and handle big data as a corporate asset, just 9% of survey respondents said data had completely changed the way they do business, while 39% believed data had become an important tool that drives strategic decisions at their organisation. But more than half of executives saw data in less critically important terms.

Click Image To Enlarge

As you can see from the above EUI survey, 58% (First two colums for 2015 survey: 14% + 44%) of respondents now see data as a game-changing asset, or at least, an important decision-making tool.  

In the EUI 2011 study, four categories of companies were identified based on their level of sophistication of their thinking and strategy vis-à-vis corporate data:

• Strategic data managers: companies that have well-defined data-management strategies that focus resources on collecting and analysing the most valuable data;
• Aspiring data managers: companies that understand the value of data and are marshalling resources to take better advantage of them;
• Data collectors: companies that collect a large amount of data but do not consistently maximise their value; and
• Data wasters: companies that collect data, yet severely underuse them.

EUI plotted the four corporate categories and compared 2011 vs 2015 in the following chart: 

Click Image To Enlarge

The above chart (Figure 2) shows that, in the last four years, companies have advanced along the evolutionary curve and, compared with 2011, many more now have developed a well defined data strategy.  The ranks of strategic data managers have swollen impressively (18% vs 33%), and actually showed the only growth among the four categories, while the number of data collectors and wasters is shrinking (28% to 20%).

Further evidence that companies are moving beyond strategy development and are tackling the adoption, or implementation, stage of data evolution is the fact that executives today put more of their valuable data to good use (see Figure 3).

Click Image To Enlarge

Alan Feeley, managing director of global shared services at Siemens, a global engineering firm, points out.

“Data and analytics are no longer opportunistic.  They are now formal research areas for our company.”

The CIO and CTO Have Now Taken Ownership of Big Data

The ownership of data strategy and the sponsorship of data initiatives have evolved throughout the organisation. Responsibility for the organisation’s data strategy has been elevated and centralised to the C-level, but at the same time, the pull and energy are increasingly coming from the lower levels of the corporate pyramid.  Over half of companies surveyed make sure that data are available to employees who need them, and offer the appropriate technology and training programmes. Data strategy has become “everybody’s business”—senior executives across functions and business units are increasingly in the driver’s seat of their data initiatives, instead of relying on the CIO or CTO to design and execute them in a top-down manner.

The vertical migration to centralised leadership of data strategy and strong ownership from the C-suite is an emerging best practice today. Ram Chandrashekar, executive vice-president of operational excellence and IT and president of Asia Pacific and Middle East region at ManpowerGroup, a global human-resources consulting company, says.

“Clearly, a top-down data strategy driven and articulated by the CEO is a critical success factor.”  

The EUI Survey data support his observation.

Over the past four years, ownership of corporate data strategy has migrated upwards from executives at the business-unit level to C-suite members—particularly, the CIO. In 2011, 23% of respondents said their CIO is primarily responsible for all data initiatives. This proportion jumped to 30% in 2012, and continued to rise to 39% in 2015 (Figure 7 below).

Click Image To Enlarge

A recent appearance in our 2015 survey is the increasingly popular chief data officer (CDO) role. This C-level position was virtually unknown in 2011—limited mostly to government and heavily regulated industries such as banking and insurance following the 2008 financial crisis. In our 2015 survey, some 9% of respondents pointed to their CDO as the custodian of the corporate data strategy and capabilities. Emergence of this role comes at a good time, especially as business executives from across the functional spectrum have become much more technology-literate and involved in the design and execution of their data strategy and initiatives.

Emergence of the Chief Data Officer (CDO)

Increased involvement from the business comes with the challenge of co-ordinating agendas, aligning priorities and communicating effectively with all stakeholders.  Mr Chandrashekar of ManpowerGroup says. 

“There is strong alignment and articulation at the C-level. People on the frontline, such as sales and operational staff, are also data-driven.  The disconnect often happens in the middle, and the challenge is to make the data flow from top to bottom. Engaging the business is critical—data strategy cannot be seen as just a central initiative.”

And few today excel at engaging the business. In the EUI 2015 survey, when asked to rate their company’s competence across different datarelated corporate capabilities, respondents expressed the least confidence in their ability to engage employees across the organisation to use data in day-to-day decision-making (only 26% rated their company as “very competent”, while 22% saw themselves as “not at all competent”). High-quality, consistent engagement across layers of the organisation and among horizontal functional lines is in high demand, and in short supply.

Click Image To Enlarge

Enter the CDO.   Mr Krishnamurthy of Cognizant Technology Solutions says.

“The CDO has emerged as the embodiment of ‘integrated leadership’.”

He points out that the best-designed CDO roles are focused on three top-level priorities:

• Ensuring availability and integrity of data across the organisation;
• Driving adoption—from small-scale pilots to company-wide rollouts; and
• Driving the monetisation of new data capabilities.

Most importantly, the role is about organisational engagement, brokering between agendas and balancing priorities among big data initiatives. Thus, finding the right senior talent to fill the CDO role can be tricky, as Edd Dumbill, vice-president of marketing and strategy at Silicon Valley Data Science, a big data consulting firm, points out:

“They have to know technology, they have to know the business, and they have to be a political wiz.”

Foundational and talent challenges

Companies have made great strides in embracing data as a strategic asset, making the necessary technology investments, and even beginning to evolve their corporate structure. Centralised leadership allows for better co-ordination in strategy and execution of initiatives. And executives, both on the business side and in IT, are much more focused on deploying their limited resources on top-`priority data projects that extract tangible business value from these investments.

However, significant challenges still plague most companies—and that’s true even for companies with the financial resources. The most daunting challenges companies face relate to three.  highly technical and operational aspects of big data—quality, quantity and security (see Figure 8).   These are fundamental aspects of data management. Yet companies are far from having resolved them completely and with full confidence, leading to a lack of progress to more advanced, value-added aspects of data management.

In the last four years, the problems posed by the overwhelming amount of data companies can access and collect have only been exacerbated further. In 2011, one in eight companies said they had so much data that they struggled to make sense of them—in 2015 this was nearly one in four companies. And today, more than half of executives (54%) say they probably leverage only half of their valuable data (Figure 3). 

Given the sheer volumes, ensuring the integrity and quality of data, and arriving at the proverbial “single source of truth”, are still major problems. And thus, the ultimate challenge of extracting meaningful and actionable business knowledge from data is still a significant one for most companies, even slightly more so for companies that say that they are strong financial performers as they may be more ambitious with their data strategy. But only 16% of companies these cite extracting business insights as a top challenge—for reported poor financial performers, this was 24%. Despite strong or poor financial performance, 33% of all survey respondents continue to struggle with managing the vast amount of data and 41% struggle with maintaining quality (Figure 9).

Click Image To Enlarge

On the organisational front, companies have made strides in both creating the right structures and roles, as well as recruiting key talent to enable them to formulate and begin executing their data strategy. However, the talent market in the data and analytics field is still very tight.

This is especially still true in the market for data strategists—executives who are expected to speak the languages of both technology and data science, as well as understand the business, the markets and the customers (see section Paving the way for the CDO). These rare and invaluable executives—the “effective engagers”, as Ms Merkel of Zurich Insurance calls them—are in short supply and high demand. As Mr Feeley of Siemens puts it,

“There’s a war for talent, particularly for people who combine data expertise with domain knowledge.”

In a blog post dated December 8, 2015, in which I wrote about the market for data scientists, I mentioned the serious talent shortage in big data and analytics.

Courtesy of an article dated November 30, 2015 appearing in Forbes and the whitepaper prepared by The Economist Intelligence Unit titled, "Big Data Evolution"

Follow Me:   Twitter: turk5555    Facebook: 797743955    LinkedIn: turk5555 

Subscribe To My Blog Newfeed

 

 

WHO DOES WHAT IN THE DATA SCIENCE INDUSTRY, HOW MUCH THEY EARN AND A MASTER GUIDE TO HIRE OR OUTSOURCE

What are the key roles in data science? Here's a look at the various job positions in the data science industry and what they mean.

A data scientist cleans, massages, and organizes Big Data, according to DataCamp in the following infographic.

A database administrator, on the other hand, focuses on backup and recovery, data modeling and design, distributed computing, database systems, and data security.

Another role is statistician. This person "collects, analyzes, and interprets qualitative as well as quantitative data with statistical theories and methods," according to DataCamp.

To find out more about the different roles in data science, click or tap on the infographic.

Click Image To Enlarge

COMMENTARY:   Data-driven business processes are not a nice-to-have but a need-to-have capability today. So, if you’re an executive, manager, or team leader, one of your toughest assignments is managing and organizing your analytics and reporting initiative.

The days of business as usual are over.  Data generation costs are falling everyday.  The cost of collection and storage is also falling.  The speed of insight-to-action business requirement is increasing.  Systems of Record, Systems of Engagement, Systems of Insight are being transformed with consumerization and digital.

With this tsunami of data and new applications, the bottleneck is clearly shifting from transaction processing to Analytics & Insight-driven “sense-and-respond” Action. This slide from IBM’s Investor Briefing summarizes the data-driven transformation underway in most businesses.

Data Science And Analytics Outsourcing – Vendors, Models, Steps by Ravi Kalakota - May 28, 2015 from Tommy Toy

Courtesy of an article dated December 8, 2015 appearing in MarketingProfs and an article dated May 28, 2015 appearing in Ravi Kalakota's  Practical Analytics

Follow Me:   Twitter: turk5555    Facebook: 797743955    LinkedIn: turk5555 

Subscribe To My Blog Newfeed

 

HOW TO HIRE A GREAT DATA SCIENTIST AS THE DEMAND FOR BIG DATA ANALYTICS RISES AND A SERIOUS TALENT SHORTAGE LOOMS

 

The huge demand for big data analytics, and scarcity in individuals with the right skills and experience, is driving the starting salaries for data scientists over $200,000, and it is going to get worse

A new species of techie is in demand these days—not only in Silicon Valley, but also in company headquarters around the world.  Pascal Clement, the head of Amadeus Travel Intelligence in Madrid, says.  

“Data scientists are the new superheroes.”

The description isn’t exactly hyperbolic:  The qualifications for the job include the strength to tunnel through mountains of information and the vision to discern patterns where others see none. Clement’s outfit is part of Amadeus IT Holding, the world’s largest manager of flight bookings for airlines, which has more than 40 data scientists on its payroll, including some with a background in astrophysics. The company recently launched Schedule Recovery, a product that tracks delays and automatically rebooks all affected passengers.

A study by McKinsey projects that “by 2018, the U.S. alone may face a 50 percent to 60 percent gap between supply and requisite demand of deep analytic talent.”  The shortage is already being felt across a broad spectrum of industries, including aerospace, insurance, pharmaceuticals, and finance. When the consulting firm Accenture surveyed its clients on their big-data strategies in April 2014, more than 90 percent said they planned to hire more employees with expertise in data science—most within a year.  However, 41 percent of the more than 1,000 respondents cited a lack of talent as a chief obstacle.  Narendra Mulani, senior managing director at Accenture Analytics, says.

“It will get worse before it gets better.” 

Many data scientists have Ph.D.s or postdoctorates and a background in academic research, says Marco Bressan, president for data and analytics at BBVA, a Spanish bank that operates in 31 countries and has a team of more than 20 data scientists. He says.

“We have nanotechnologists, physicists, mathematicians, specialists in robotics.  It’s people who can explore large volumes of data that aren’t structured.”

So-called unstructured data can include e-mails, videos, photos, social media, and other user-generated content. Data scientists write algorithms to extract insights from these troves of information. But “true data scientists are rare,” says Ricard Benjamins, head of business intelligence and big data at Telefónica, Europe’s second-largest phone company, which employs more than 200 of them.  Stan Humphries, chief economist at Zillow, the real estate listings site, says:

“You can find a great developer and a great researcher who has a background in statistics, and maybe you can find a great problem solver, but to find that in the same person is hard.”

Universities are taking note. MIT, where graduate students in physics, astronomy, and biology are fielding offers from outside their chosen fields, is in the process of setting up a dedicated data-science institute. Marilyn Wilson, the university’s associate director for career development, says the center will begin enrolling graduate degree candidates in 2016.

In the U.K., the University of Warwick introduced a three-year undergraduate data-science program last year, which David Firth, the program’s mastermind, says may well be the first of its kind.  He says.

“Big Business was complaining about the lack of people.  Finance is a major employer, but also large-scale insurers, large online commercial retailers, high-tech startups, and government, which has huge data sets.”

Accenture’s Mulani says he’s tallied some 30 new data-science programs in North America, either up and running or in the works. The University of Virginia began offering a master’s in 2014, as did Stanford. Many of those students may be tempted to drop out before collecting their degree.  Margot Gerritsen, director of Stanford’s Institute for Computational & Mathematical Engineering, says.

“Companies are scrambling.  We have second- and third-year students getting offered salaries much higher than what I get.”

Starting pay for some full-time jobs is above $200,000, she reports. Summer internships, meanwhile, pay anywhere from $6,000 to $10,000 a month.   To make these stints memorable, many employers offer perks such as free meals, complimentary gym memberships, and occasionally temporary housing.   Gerritsen says.  

“Sometimes you read about students getting abused in internships and working like slaves.  We don’t see that.”

The bottom line: McKinsey projects that by 2018 demand for data scientists may be as much as 60 percent greater than the supply.

COMMENTARY:  There is no doubt that data scientists are in high demand.  There is simply not enough talent to fill the jobs.  Why? Because the sexiest job of 21st century requires a mixture of broad, multi-disciplinary skills ranging from an intersection of mathematics, statistics, computer science, communication and business.   Finding a data scientist is hard.  Finding people who understand who a data scientist is, is equally hard. 

Jean-Paul Isson, Monster Worldwide, Inc. says.

“Being a data scientist is not only about data crunching. It’s about understanding the business challenge, creating some valuable actionable insights to the data, and communicating their findings to the business.” 

It is very unlikely that you will be able to hire a data scientist who can solve all your data problems. The skill-set presented below is a guide on how the modern data team should be equipped.

Click Image To Enlarge

What Makes a Great Data Scientist?

What are the personality traits of today’s data scientists? Do they have the skills needed to support businesses’ changing needs? How can senior management build cohesive teams to drive the most value from big data? Is this fast evolving discipline causing stress to its practitioners?   These are some of the questions that SAS Analytics tried to answer when it conducted a survey in 2014 of 596 respondents in the UK and Ireland who identified themselves as part of the data science profession. The survey highlights 10 key personality types as well as some of the challenges data scientists are facing today.

Summary of Findings

• Data scientists with “traditional” traits (analytical, logical, technical) make up the largest group (41 per cent), yet a significant proportion of data scientists display other traits, such as strong communication and creativity skills.
• We expect a lot from data scientists: to be technically proficient, mathematically agile, business savvy and good at communicating. Yet 55 per cent of data scientists have fewer than three years of experience in the discipline, and more than a quarter are adapting their behaviours to fulfil roles that are not well matched to their skills or work personality profiles.
• In most personality types there is a 70:30 split between men and women. The Geeks, the profile with technical bias, strong logic and analytical skills, shows a higher percentage of women at 37 per cent compared to 63 per cent for men.
• Data scientists are exhibiting high levels of work-related stress, with a total of 55 per cent of the respondents showing a level of stress, with 1 in 4 male and just under a third of female data scientists being heavily stressed.
• Organisations must better identify and define what they need from data scientists. Only then can they build and develop multi-faceted teams with the complementary skills needed to realise the full value of big data.  

This SAS survey report looked at the aggregated data of the initial 596 responses, received from 405 men (68 per cent) and 191 women (32 per cent).  Respondents’ experience ranged from less than a year to a handful of data science pioneers who have committed more than 21 years to the discipline.

The survey was based on the well-established DISC profiling methodology, which has been used for more than half a century to categorise respondents into a range of personality types with recognised characteristics.

By using DISC, SAS able to create the typical profiles of today’s data scientists, and explore how these compare to skills and personalities required by organisations.

The DISC Personality Profiling Methodology

The DISC methodology has been widely used to assess personality types for decades. This information is often utilised to analyse and build effective teams, improve communication and increase productivity. DISC is based upon a two-axis matrix:

• Vertical Axis:  Proactive to Reactive  
• Horizontal Axis: Introvert to Extrovert 

This generates four possible combinations – named D, I, S and C.  Individuals possess measures of all four of these combinations but in varying amounts. The values for each combination is calculated and plotted on a graph to illustrate the relative strengths of each.  These values can be matched to known behavioural characteristics to describe an individual’s personality profile.

Click Image To Enlarge

The Data Scientist Personality Mix

The SAS analysis identified ten psychometric profiles evident within the data scientist community, based on the responses to the survey so far.   These profiles are characterised by definable patterns that are well known to scientists and were consistently apparent in the survey sample.  

The ‘traditional’ traits associated with data scientists – such as technical, analytical and logical skills – still dominate. However, other less technical traits – such as project management, creativity and good communication skills – are also present. Organisations need data savvy individuals who are technically proficient, mathematically minded, business oriented and strong communicators.

It’s unlikely that any individual will have all of the skills required to maximise the value of big data.  So it’s important for managers to identify the particular skills needed and build a cohesive team of individuals with complementary skills and traits.  As we will see later in the report, failure to do so can result in individuals trying to fulfil roles to which they are not suited – which may lead to stress and burn-out.

Distribution of Personality Types in SAS Survey Sample

Click Image To Enlarge

 

Final Conclusions Drawn From The Survey

There is huge pressure on data scientists to display a range of skills: technical, mathematical, creative, business aptitude and communication. Unsurprisingly, organisations struggle to find this mix of skills in just one person, particularly when the majority of data scientists have only a few years of experience.

It is therefore important for managers to build cohesive, diverse teams that can answer all the needs of the organisation – not just data scientists but also data savvy managers to interpret the insights and transform them into actions. Organisations will need to:

• Manage the business’ expectations from data scientists
• Find and develop individuals with the appropriate skills and personality traits
• Create teams of individuals with complementary skills and experience
• Encourage peer to peer support, learning and development
• Match training to the business’ requirements.

It’s possible that, as technology develops, there will be less of a weighting towards the more traditional, technical personality traits – while demand for the less frequently found profiles such as the Ground Breakers, the Teachers and the Seekers will grow. As more respondents take part in SAS surveys, it is hoped to be able to explore this interesting development further.

Courtesy of an article dated June 4, 2015 appearing in Bloomberg Businessweek, an article dated August 30, 2014 appearing in Marketing Distillary and the results of a SAS survey titled, "What Makes A Great Data Scientist?"

Follow Me:   Twitter: turk5555    Facebook: 797743955    LinkedIn: turk5555 

Subscribe To My Blog Newfeed

 

PREDICTIVE ANALYTICS: WHAT IT IS, APPLICATIONS, INDUSTRY USES, HOW TO GET STARTED

 

“The dilemma is, as it is often said, correlation does not imply causation. The discovery of a predictive relationship between A and B does not mean one causes the other, not even indirectly. No way, nohow.”  - Eric Siegel, Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie or Die

What is predictive analytics?

Predictive analytics is the use of data, statistical algorithms and machine-learning techniques to identify the likelihood of future outcomes based on historical data.

The goal is to go beyond descriptive statistics and reporting on what has happened to providing a best assessment on what will happen in the future. The end result is to streamline decision making and produce new insights that lead to better actions.

Predictive models use known results to develop (or train) a model that can be used to predict values for different or new data. The modeling results in predictions that represent a probability of the target variable (for example, revenue) based on estimated significance from a set of input variables. This is different from descriptive models that help you understand what happened or diagnostic models that help you understand key relationships and determine why something happened.

More and more organizations are turning to predictive analytics to increase their bottom line and competitive advantage using predictive analytics. Why now?

• Growing volumes and types of data and more interest in using data to produce valuable information.
• Faster, cheaper computers and easier-to-use software.
• Tougher economic conditions and a need for competitive differentiation.

With interactive and easy-to-use software becoming more prevalent, predictive analytics is no longer just the domain of mathematicians and statisticians. Business analysts and line-of-business experts are using these technologies as well.

What is predictive analytics?

A 2014 TDWI report found that the top five things predictive analytics are used for is to:

• Identify trends.
• Understand customers.
• Improve business performance.
• Drive strategic decision making.
• Predict behavior.

Some of the most common applications of predictive analytics include:

• Fraud detection and security – Predictive analytics can help stop losses due to fraudulent activity before they occur. By combining multiple detection methods – business rules, anomaly detection, link analytics, etc. – you get greater accuracy and better predictive performance. And in today’s world, cybersecurity is a growing concern. High-performance behavioral analytics examines all actions on a network in real time to spot abnormalities that may indicate occupational fraud, zero-day vulnerabilities and advanced persistent threats.
• Marketing –  Most modern organizations use predictive analytics to determine customer responses or purchases, as well as promote cross-sell opportunities. Predictive models help businesses attract, retain and grow the most profitable customers and maximize their marketing spending.
• Operations – Many companies use predictive models to forecast inventory and manage factory resources. Airlines use predictive analytics to decide how many tickets to sell at each price for a flight. Hotels try to predict the number of guests they can expect on any given night to adjust prices to maximize occupancy and increase revenue. Predictive analytics enables organizations to function more efficiently.
• Risk – One of the most well-known examples of predictive analytics is credit scoring. Credit scores are used ubiquitously to assess a buyer’s likelihood of default for purchases ranging from homes to cars to insurance. A credit score is a number generated by a predictive model that incorporates all of the data relevant to a person’s creditworthiness. Other risk-related uses include insurance claims and collections.

Click Image To Enlarge

Predictive analytics use across industries -- real life examples

Any industry can use predictive analytics to optimize their operations and increase revenue. Here are a few examples:

• Credit card, banking and finan­cial services. Detect and reduce fraud, measure credit risk, maximize cross-sell/up-sell opportu­nities, retain customers and optimize marketing campaigns. Commonwealth Bank can reliably predict the likelihood of fraud activity for any given transaction before it is authorized – within 40 milliseconds of the transaction being initiated.
• Governments and the public sec­tor. Improve service and performance; detect and prevent fraud, improper payments and the misuse of funds and taxpayer dollars; and detect criminal activities and patterns. The Hong Kong government visualizes and analyzes big, unstructured data to anticipate and address public complaints.
• Health care providers. Predict the effectiveness of new procedures, medical tests and medications, and improve ser­vices or outcomes by providing safe and effective patient care. Taipei Medical University executives analyze and monitor performance across all hospitals in its system.
• Health insurers. Detect and handle insurance claims fraud, identify which patients are most at risk of chronic diseases and know which interventions make the most medical and financial sense. One of the largest pharmacy benefits companies in the US, Express Scripts, uses analytics to identify patients not adhering to their prescribed treatments, resulting in a savings of $1500 to $9000 per patient.
• Insurance companies. Determine insurance premium rates, detect claims fraud, optimize claims processes, retain customers, improve profitability and optimize marketing campaigns. Within two hours of an earthquake striking rural New Zealand, Farmers Mutual Group assessors were headed to affected areas. With SAS Analytics, they knew who their most at-risk policy holders were and chartered a helicopter to get to them quickly.
• Manufacturers. Identify factors leading to reduced quality and production failures, and optimize parts, service resources and distribution. Lenovo used predictive analytics to better understand warranty claims, leading to a 10 to 15 percent reduction in warranty costs.
• Media and entertainment. Deepen insight into audiences by identifying influencing attributes, trends, drivers and desires across properties, and score visitors to determine appropriate audience seg­ments and behavior value. How is the slot floor doing every day? How is the gaming floor performing? How are the nonsmoking tables compared to the smoking tables? The answers – which previously could take numerous weeks and many dollars to find out – are now coming in minutes and at a far lower cost for Foxwoods Resort Casino. 
• Oil, gas and utility companies. Predict equipment failures and future resource needs, mitigate safety and reliability risks, and improve performance. Salt River Project is the second-largest public power utility in the US and one of Arizona's largest water suppliers. A sophisticated forecasting model helps them know the best time to sell excess electricity for the best price.
• Retailers. Assess the effectiveness of promotional events and cam­paigns, predict which offers are most appropriate for consumers, deter­mine which products to stock where and how to build brand loyalty. Staples analyzes online and offlilne consumer behavior to provide a complete picture of their customers, and realized a 137% ROI.
• Sports franchises. Sports analytics is a hot area, thanks in part to Nate Silver and tournament predictions. The NBA’s Orlando Magic uses SAS predictive analytics to improve revenue and determine starting lineups.

Click Image To Enlarge

What do you need to get started?

• Problem to solve. The first thing you need to get started using predictive analytics is a problem to solve. What do you want to know about the future based on the past? What do you want to understand and predict? You’ll also want to consider what will be done with the predictions. What decisions will be driven by the insights? What actions will be taken?
• Data. Second, you’ll need data. In today’s world, that means data from a lot of places. Transactional systems, data collected by sensors, third-party information, call center notes, web logs, etc. You’ll need a data wrangler, or someone with data management experience, to help you cleanse and prep the data for analysis. To prepare the data for a predictive modeling exercise also requires someone who understands both the data and the business problem. How you define your target is essential to how you can interpret the outcome. (Data preparation is considered one of the most time-consuming aspects of the analysis process. So be prepared for that.)
• Modeling building tools.  After that, the predictive model building begins. With increasingly easy-to-use software becoming more available, a wider array of people can build analytical models. But you’ll still likely need some sort of data analyst who can help you refine your models and come up with the best performer. And then you might need someone in IT who can help deploy your models. That means putting the models to work on your chosen data – and that’s where you get your results.
• Predictive modeling requires a team approach. You need people who understand the business problem to be solved. Someone who knows how to prepare data for analysis. Someone who can build and refine the models. Someone in IT to ensure that you have the right analytics infrastructure for model building and deployment. And an executive sponsor can help make your analytic hopes a reality.

COMMENTARY:   According to Malene Haxholdt, Global Marketing Manager, Business Analytics, SAS, there are several good reasons why businesses should start predictive analytics initiatives.  

• Growing revenue.
• Lowering costs.
• Establishing governance and compliance.

Companies are looking to get value from predictive analytics in many business areas. The value comes when you can take data, apply analytics, and act on the results. The value ultimately means growing revenue, lowering costs, or establishing governance and compliance. Growing revenue is often associated with customer analytics and being better at retention modeling and cross-sell and up-sell activities. Lowering costs often comes from analytics used to improve processes as well as from using internal capacity in any form. Especially in the financial industry, the driver for predictive analytics can be part of a compliance and governance strategy.

Predictive analytics is relevant and useful across all industries. Some industries are more mature in their use and implementation of predictive analytics. The most common applications of predictive analytics come from a need to better manage fraud, risk, equipment failure, or customer interactions. What are common across industries are the accelerating growth of data and the desire to turn it into valuable information. Predictive analytics is a component of that journey.

It is key to remember that predictive analytics is only valuable if you can turn the results of analytical models into actions. The business process, the people, and the technology need to be aligned to successfully deploy predictive analytics. Think of predictive analytics as part of a life cycle that consists of (1) managing all of your data, (2) exploring all of your data, (3) building your models with the best techniques, and (4) deploying and monitoring your models.

It is important that the organization believes and understands that predictive analytics is driving better decisions. The software tools that allow you to start building predictive models are very approachable and do not require you to be a technical expert. We see a tremendous uptick in interest in interactive predictive modeling using visual analytics and visual statistics. Without any coding required, you can start exploring your data and get value. More mature companies are hiring more data scientists to further grow and explore the possibilities predictive analytics brings. Having human skills that can align the technology and business understanding is key to success.

With the reality of big data, new techniques are being explored by companies to leverage the value hidden in new types of data. Being able to explore all of your data quickly and in an interactive manner is driving the need for data visualization techniques and interactive predictive modeling on very big amounts on data—fast. Also, we see a growing interest in machine-learning techniques such as Random Forest and techniques to handle unstructured data. Take, for example, SAS Contextual Analysis. This next-generation text modeling software combines the ease of machine learning with subjectmatter expertise, enabling powerful text models to easily be defined from unstructured data.

To get sustainable value from predictive analytics, IT and business users are both key in the process. A modern CIO and IT department work closely with the business to enable predictive analytics throughout the organization by providing data access and approachable analytics tools to the right users. Think of it as self-service analytics. The IT department is, in some cases, the true driver of innovation because it can enable the use of all data and help get even more predictive power in the models used by the business. IT’s role is critical in selecting an architecture that will meet future demands around diverse analytical data preparation tasks, reducing model building latency and quickly deploying models into operational systems.

All companies, no matter the size, will benefit from making better decisions in a world of uncertainty. We see small companies that apply predictive analytics as a key strategy to growth. In fact, companies that embed predictive analytics as a cornerstone in their business tend to be more successful in the long run.

Getting A Predictive Analytics Initiative Started

Please read my previous blog post dated October 11, 2015 titled "The Ultimate How-To Guide For Planning A Predictive Analytics Project and Results From An Actual Case Study." if you would like to begin a predictive analytics project at your company. 

Courtesy of an article titled, "Predictive Analytics: What It Is and Why It Matters," by SAS Analytics and the TDWI eBook by SAS titled, "Predictive Analytics: Revolutionizing Business Decision Making"

Follow Me:   Twitter: turk5555    Facebook: 797743955    LinkedIn: turk5555 

Subscribe To My Blog Newfeed

WALMART'S U.S. SALES ARE DOWN, ITS STOCK FELL 10% AND LOST $20 BIL IN VALUE, IS WALMART'S BUSINESS MODEL BROKEN?

This week, Walmart's shares crashed on October 14 after the company reported a disappointing profit outlook. Profits will fall 6% to 12% next year, the company said.

Walmart founder Sam Walton wrote in his 1992 memoir "Sam Walton: Made in America".

"Now, when it comes to Wal-Mart, there's no two ways about it: I'm cheap," 

If the notoriously cheap Walton were alive today, he would probably be surprised that his pioneering profit formula -- keep costs low so that prices are as low as possible and customers buy more -- is now virtually impossible to maintain. Full blame for that can be pinned on employees demanding higher wages and the rise of e-commerce giants such as Amazon (AMZN), which are open 24 hours a day, seven days a week. 

Walmart founder Sam Walton (Click Image To Enlarge)

Perhaps the retail legend saw some of this on display from up above on what was a dark day in Walmart's history on Wednesday. Walmart's usually stable stock price tumbled 11% as the company said at its annual investor day that higher wages for associates will dent profits by about $1.5 billion in the 2017 fiscal year, following a $1.2 billion hit this fiscal year.

For years, Walmart has had the upper hand with its employees, paying them state minimum wages, offering basic healthcare plans, and using computerized systems to control their hours. But with the rise of social media and the internet giving employees a free platform to express views, and the rising cost of living causing state governments to push through higher minimum wages, Walmart has had to change with the times.

As a result, it has lost a key element of its business model put in place by Walton that has supported the company's profits since its founding. Further, rising employee costs are arriving as online shopping is also limiting the ability of Walmart to raise prices at all to help deliver sustainable profit growth.

Walmart added on Wednesday that it expects earnings per share to decline between 6% and 12% next year. Wrote Sterne Agee analyst Charles Grom in a note to clients on Wednesday :

"What's surprising to us is that the new outlook is incorporating roughly $20 billion in share buybacks in the next two years, which implies significant margin contraction along with modest sales growth." 

Employee costs aren't the only line item on the income statement Wal-Mart is battling to control.

Walmart's investments in e-commerce and digital initiatives are expected to total about $1.1 billion in the 2017 fiscal year. This year, Walmart is projected to shell out $1.2 billion to $1.5 billion on e-commerce and digital.

These investments are a necessary evil to stay competitive with Amazon, as well as with Best Buy (BBY) and Target (TGT) , which are continuing down their own paths to reduce prices, improve checkout speeds and offer a range of delivery options.  

When Walton opened the first Walmart store in Rogers, Arkansas in 1962, though, it's unlikely he foresaw a day when a sweater could be purchased off a handheld device. Today it can be, however, and to make it happen seamlessly and at the lowest cost is proving to be a major profit headwind for the once mighty Walmart.

Even with such enormous investments in digital, however, Walmart still sees sales as being under pressure. Walmart said it now expects net sales growth for the current fiscal year to be relatively flat, down from a forecast of between 1% and 2% in February. Excluding the impact of currency exchange fluctuations -- mostly the stronger dollar -- net sales growth is estimated to be about 3%.

Goldman Sachs analyst Matthew Fassler in a note on Wednesday pointed out.  

"New guidance reflects that Walmart's competitive edge -- historically largely assortment and price -- has faded relative to purveyors of extreme value (warehouse clubs, hard discounters) or extreme convenience (dollar stores, hard discounters), as e-commerce has neutralized the impact of selection." 

The deterioration of Walton's pioneering business model has been playing out for some time in Walmart's numbers. 

According to Bloomberg data, Walmart's operating profit margins, which takes into account its costs to run stores and pay for wages and healthcare, has fallen from 7.1% in 1987 to 5.6% in 2015.  From 1988, Walmart's return on assets -- an indicator of how profitable a company is relative to its total assets -- has gone from 13.7% to 8.0% in 2015.

The alarming downtrends in these measures, partly fueled by investments to compete online and compensate workers better, have been overlooked for years by Walmart's investors who have focused on the retailer's healthy dividend and relative stability.

Walmart CEO Doug McMillon (Click Image To Enlarge)

But the stock's nosedive on Wednesday, and an 11% drop for the year prior to that point, suggests Walmart's investor base is growing concerned that the retail giant's business is broken. Wrote Stifel analyst David Schick in a note,

"The market is reacting to meaningful evidence that Walmart has substantially over-earned."

In other words, Walmart is now being forced to play catch up on investments it neglected to make in the past to keep the profits flowing. 

And if Walmart's business model is broken, profits are likely to stay under pressure for some time, and future dividend hikes may not be as robust as in years past. 

Now, Walmart has to find a way to channel Walton and become cheap once more. Indications have emerged that it may be willing to take drastic actions to return to some sense of frugality. 

 

Walmart CEO Doug McMillon said at the investor event.

"We are more than open to re-shaping our portfolio."

McMillon added the company continues to "evaluate its portfolio" of assets, and pointed to Walmart's history of exiting non-strategic assets and closing underperforming stores.

For example, the retailer exited Germany in 2006 and took a $1 billion hit to profits as a result. By shedding assets such as Sam's Club or lagging international operations, Walmart would also be shedding costs related to employees and maintaining physical stores. In turn, those savings could be used to offset the investments being made in core assets such as the online business and Walmart U.S., or simply be brought to the bottom line to appease investors.

Walton wrote.

"You can make a lot of different mistakes and still recover if you run an efficient operation -- or you can be brilliant and still go out of business if you're too inefficient."

Words of wisdom from beyond the grave for McMillon and the execs tasked with turning around the largest ship in retail.

Walmart did not respond to request for comment for this story.

COMMENTARY:   When I heard that Walmart's stock had plummeted 10% in mid-October over its shitty earnings report, decling profit margins and the CEO's statements that earnings will continue to be stagnant due to higher employee wages and investments in ecommerce, I shed crocodile tears and managed a smile.

Walmart has been the "king of exploiters." For years it has exploited its employees, vendors and foreign suppliers.

Walmart has been the subject of numerous lawsuits from employees seeking payment for overtime and unfair labor practices, including paying female managers less than their male counterparts, among other sins.

For years Walmart has squeezed its vendors for lower prices, often forcing some into bankruptcy, while others have fled the retail giant, and swore never to return again.  

The pricing deals that it has extracted from Chinese suppliers has cost hundreds of thousands of US jobs, and many U.S. small businesses have gone out of business.

So, if you were to ask, I don't feel the slightest remorse for this disgusting company?  Nope.  

The Walton family, prior to the recent stock market decline, were worth $140 billion, the wealthiest American family, and representing the very top of that 1% which owns 90% of America's total net worth. After the stock price crash, they are still worth at least $125 bllion.  Now I hear they are blaming the far left's campaigns to increase the minimum wage for cause of their problems.

From my viewpoint, the cause of Walmart's problems is mostly about Walmart's values, and they are all about profits, and more profits, at any cost.  

Do you think the Walton family cares about all the small retailers they have put out of business, or the Chinese workers being exploited by suppliers so that they can pay bottom dollar for their goods, the US vendors they squeezed for lower prices then put out of business, or even their employees who are finally getting paid minimum wage (a paltry $9.00 per hour)?  

This is more of a condemnation of Walmart's values coming back to bite them in the ass.  It is not about their business model going to pieces.  You can bet that Walmart's CEO Doug McMillon and his team will find ways to restore the viability of their dirty business model by screwing somebody.  Stay tuned for more bad news about this indecent company.   

The Wharton Business Radio ran an excellent broadcast titled Marketing Matters Walmart, that details where Walmart fucked up, their failure to react to the dollar discount stores, their botched entry into Canada, their badly executed store remodelling, and failure to gain traction in online sales to combat Amazon, and what is really going on, to get them into this disasterous hole.  Definitely worth listening to.

Courtesy of an article dated October 16, 2015 appearing in The Street, an article dated February 19, 2015 appearing in Newsmax, an article dated October 16, 2015 appearing in Business Insider, and an article dated October 14, 2015 appearing in Fortune Magazine

Follow Me:   Twitter: turk5555    Facebook: 797743955    LinkedIn: turk5555 

Subscribe To My Blog Newfeed

THE STATE OF DATA-DRIVEN MARKETING, MARKETING BENEFITS, KEY GROWTH DRIVERS AND THE 15 ESSENTIAL MARKETING METRICS

Data-driven marketing, in theory, is about better using the flood of customer-related data to integrate and optimize marketing efforts in the age of an empowered consumer and Big Data.

What matters most is the optimization of the customer experience, relevance and (perceived) customer value as a driver of business value. Data-driven marketing certainly is not (just) about advertising and programmatic ad buying as some believe. Nor is it just about campaigns. On the contrary: if done well, data-driven marketing is part of digital marketing transformations whereby connecting around the customer across the customer life cycle is key.

The Role and Evolution of Data-Driven Marketing

One of the pioneers and leading voices is data analytics and marketing software vendor Teradata. A while ago, the company recently released the results of its Teradata 2015 Global Data-Driven Marketing Survey. According to Teradata, marketers who adopt an integrated and data-driven marketing approach become more empowered across all areas including the various stages of “engagement” as described in the illustration below from the page of the 2013 survey the company conducted.

The Various Stages of Customer Engagement - Teradata (Click Image To Enlarge)

At the occasion of the launch of the 2015 edition of the survey, Teradata said it saw some “dramatic shifts in how companies and marketers are deriving business value from data, integrated marketing platforms, and customer-centric data-driven marketing strategies” as compared with its 2013 report.

Among the key findings of the Teradata 2015 Global Data-Driven Marketing Survey:

• A large majority of marketers (90%) wants to move beyond segmentation towards one-to-one personalization in a real-time interaction context.
• Faster decisions and more accurate decisions are reported as key benefits of using data in this real-time economy. Two-thirds of respondents cite speed and accuracy in decisions as key benefit.
• For 38% of respondents the major challenge is improving both customer acquisition and customer retention.
• 78% of marketers in the survey claim to use data systematically. In 2013 this was only 36%.

Omni-channel consistency and silos remain hurdles

Respondents see data-driven marketing as a means to an end and for several an integrated marketing cloud approach seems like the way forward from a platform perspective. Of course, Teradata is one of several major providers of such a marketing cloud (like Adobe, Oracle, Salesforce.com, IBM, Microsoft etc.).

Obviously there is a gap between what marketers would like to achieve with data-driven marketing and what they actually achieve. Many hurdles remain, among others regarding consistency in an omni-channel marketing context whereby silos are the eternal challenge, also from a campaign marketing perspective.

More about the evolutions, challenges, customer data issues (privacy, regulation, ownership) etc. in the press release, the report and the infographic below.

Given the huge attention for data-driven marketing (and, admittedly, the big marketing cloud wars we see happening), there is of course more research looking at the state of data-driven marketing and the drivers of it. In a second infographic below the one from Teradata, we’ll take a closer look at more research – with a second infographic.

Data-driven marketing: customer-centricity and customer experience first?

It’s not just the vendors and marketing cloud providers such as Teradata who come up with research.

Recently, the GlobalDMA, “an organisation that represents, supports and unites marketing associations from around the globe that focus on data-driven marketing”, looked at the state of data-driven marketing and data-driven marketing practices in 17 global markets.

It did so in collaborations with strategic consultancy for the advertising and marketing industry, Winterberry Group.

You can access the report for free on the website of the GlobalDMA (registration required). Just like Teradata, the report found that marketers – obviously – increasingly see the importance of a smart use of data in marketing, customer experience and advertising (the whole programmatic advertising concept).

In an infographic on AdWeek, infographist Carlos Monteiro summarized some of the key takeaways from that research (and from Teradata’s 2015 Global Data-Driven Marketing Survey).

How Data-Driven Marketers Outperform Their Competition - Adweek by Carlos Monteiro (Click Image To Enlarge)

Data-driven marketers outperform their competitors according to The State of Marketing 2013 by IBM – another contender in the marketing cloud wars – source: presentation by Jason Heller of McKinsey at Integrated Marketing Week 2013

Among the key takeaways of the data-driven marketing report by the GlobalDMA:

• 77% of marketers are confident in the data-driven approach and 74% expect to increase data marketing budgets this year.
• Data efforts by far focus on offers, messages and content (marketing) first (69% of respondents). Second ranks a data-driven strategy or data-driven product development. Customer experience optimization unfortunately only ranks third with 49% of respondents.
• Among the key drivers of increased data marketing: first of all a need to be more customer-centric (reported by 53% of respondents). Maximizing efficiency and return ranks second followed by gaining more knowledge of customers and prospects.

The question is what will be done with this knowledge. And here we see that 20% reports a need to align with digital consumer preferences.

So, it seems the digital customer experience does matter as it’s essential for a more customer-centric approach and the – for many in practice – extremely urgent need to align with (digital) consumer preferences or, maybe better, catch up with the changed customer reality, in the end the essence of what digital marketing transformation is all about in the first place.

Infographic – via AdWeek and made by Carlos Monteiro – below. You can download the Winterberry Group/ GlobalDMA report here.

 Click Image To Enlarge

COMMENTARY:  Customers today expect—and demand—a seamless and relevant experience. They have grown accustomed to marketers’ knowledge of their preferences and anticipation of their needs. Fractured or conflicting messages from a brand make marketers seem unorganized and annoy customers, sometimes even driving them away.

For marketers, the only solution is data-driven marketing for individualized insights. Teradata defines data-driven marketing as

"the process of collecting and connecting large amounts of online data with traditional offline data, rapidly analyzing and gaining cross-channel insights about customers, and then bringing that insight to market via a highly personalized marketing campaign tailored to the customer at his/her point of need."

Data-driven marketing is the means that leads to the end of individualized insights: moving beyond segmentation to true one-to-one personalization in a real-time context— achieving the capability to distill insights at the individual level, and the ability to target known customers in a digital marketing ecosystem that often settles for “close enough.” 

A well-integrated data-driven marketing program that provides a single view of the customer is the path to such individualization, and can result in business benefits that are just waiting to be tapped. The data in this report is based on a survey of 1,506 marketing and communications executives worldwide, representing all major industries. The survey was conducted in the fall of 2014, and follows a similar survey conducted in 2013.

According to Mark Jeffrey, Kellogg School of Management, Northwestern University, and author of "Data Driven Marketing," there are 15 essential marketing metrics that all marketers should know.

Click Image To Enlarge

People-Centric Targeting Across All Screens

What is it: Media consumption habits are more fragmented and diverse than ever, as consumers engage with multiple screens and devices. And in this multi-channel world, isolated, one-off marketing strategies and closed technologies no longer make sense. Advertisers don’t need a social plan or a mobile plan; they need to take full advantage of all available data to develop a people-centric plan that zeroes in on customers wherever they are and when they are most likely to engage. This requires platforms that can integrate data across channels and provide transparent, objective analysis of performance across every marketing touch point.

In the following schematic, Mark Jeffrey illustrates the process of gathering customer data from multiple sources, the flow of that data through the processes of validation, cleaning, transformation, aggregation and loading that data into a centralized data warehouse for business intelligence purposes.   

Click Image To Enlarge

Why it’s important: People-centric marketing is even reaching the world of linear TV, where new streams of data from set-top boxes and connected televisions are making it possible for advertisers to programmatically buy specific audience segments rather than focusing only on shows and time slots, which is how TV has traditionally been bought and sold.

Data will continue to blur the lines between TV and digital, between mobile and display, and even between direct response and branding. It all comes down to the person — whether the screen they are looking at is on their wall, at their desk or in the palm of their hand.

Why it’s hard: Cross-channel engagement is the cornerstone of people-centric marketing. The challenge, though, lies in evaluating attribution — an understanding of how well channels performed in engaging targets. Several years ago, this degree of accountability was impossible to achieve because data analysis tools hadn’t yet innovated to the point of granular attribution. Today, however, multi-touch attribution platforms, driven by more recent advances in machine learning and predictive analytics, have made this a reality.

Courtesy of an article appearing in i-scoop, an exerpt from the Teradata's 2015 Data-Driven Marketing Survey and an article dated August 28, 2015 appearing in VentureBeat

Follow Me:   Twitter: turk5555    Facebook: 797743955    LinkedIn: turk5555 

Subscribe To My Blog Newfeed

THE ULTIMATE HOW-TO GUIDE FOR PLANNING A PREDICTIVE ANALYTICS PROJECT AND RESULTS FROM AN ACTUAL CASE STUDY

The explosion of interest in predictive analytics and in particular sophisticated  predictive analytics has led to renewed interest in the topic of how to plan for an predictive analytics project.

The topic is hardly new but anyone involved in planning for, or conducting a serious analysis project needs to cognizant of the fundamentals. Here we abstract from insights and ideas from two classic discussions, the 1996 paper by Fayyad, Piatetsky-Shapiro, and Smyth "From Data Mining to Knowledge Discovery in Databases,” and the 1999 “Cross-Industry Standard Process (CRISP) for Data Mining” developed by analytical practitioners at Daimler-Chrysler, ISL (later acquired by SPSS and now part of IBM) and NCR (Teradata). While these first-generation discussions clearly date from an earlier technological era the principle ideas are still relevant and are being rediscovered and translated into modern terminology daily. Here we offer a summary of the essentials viewed from our perspective of 20 years of experience in the world of data mining and predictive analytics.

Stage #1: Business Understanding (Specification of an Objective)

To successfully conduct an analytics project it is first necessary to have a notion of what is hoped to be accomplished, described in the practical language of business or decision-making. Often the objective can be clearly stated. Examples include:

• In an election campaign, identify the swing voters most likely to ultimately vote for a specific candidate (precisely what the Obama campaign undertook in 2012).
• Rank the offers you might provide to a website visitor by the probability of acceptance or expected value of the response (something Salford Systems undertook on behalf of a client).

Not all projects have such a clear and focused objective and may be more generic:

How can I make my overall grocery store operation more efficient logistically? 

In this discussion we have in mind the more clearly defined, and thus more narrowly scoped, projects. The CRISP approach calls this first prerequisite “Business Understanding” which as Fayyad et. al. point out, includes the identification of the objective from the point of view of the client.

Stage #2: Data Inventory and Understanding

Getting a good grasp of exactly what data is available for analysis is critical and involves canvassing both internal (proprietary) and external (publicly available or purchasable) data sources. Identifying, locating, and gaining access to potentially useful data within an organization can be challenging, and a project may be forced to proceed using less data than actually exists due to institutional constraints isolating data silos. An effort to identify all sources of potentially useful data is generally worthwhile as many large organizations have a myriad of data stores, some of which are generally unknown outside the department that collected it.  External data is increasingly available via the Internet and can come from government sources and/or private organizations.  Such external data can be extremely helpful in improving the predictive performance of a model and refining of the analytical insights it can yield. Examples of such data include:

• Popularity of certain Internet search terms
• Stock market index movements
• Snowfall in Fairbanks, Alaska

Supplemental data can be of enormous value in providing the relevant context for what is tracked from the perspective of a single enterprise. For example, supplemental data may include prices charged by competitors for the same or similar products offered by a retailer.

In our consulting experience for financial services enterprises, we have generally found that the data such enterprises amass on their own customers is far more valuable than anything that could be collected or purchased about those same customers externally, but the added value of such data could still justify the cost of the acquisition of this data.

 

Stage #3: Assessment of Data for Suitability

Having identified objectives and located potential data the next step involves an assessment of the data with the objective of determining whether the available data can in fact support the original objective or perhaps some modified and even scaled-back objectives. One may discover that the available data is missing essential details (descriptors for the ad actually shown to a web site visitor) or that data is available only for a subpopulation (e.g. only data for the clicks was retained and all non-click information was discarded). Such data omissions make the job of predictive analytics vastly more difficult if not impossible. The topic of mishandled or mismanaged data is a large one and all experienced analysts have their own catalog of horror stories. Our point here is simply that we have to allow for the possibility that data problems may complicate the project if not stop it in its tracks. 

The data may also offer too small a sample size for meaningful analysis. This may appear to be a thing of the past, something that will never occur again in the brave new world of big data.  But even with huge data stores the fraction that is relevant to a specific analysis may be small. 

If you need to build a click model for an ad that has only been clicked on a 15 times you are short of data even if you have one billion impressions for that ad.  In sum, we need both a sufficient quality and a sufficient quantity of data.

Stage #3: Assessment of Data for Suitability

Having identified objectives and located potential data the next step involves an assessment of the data with the objective of determining whether the available data can in fact support the original objective or perhaps some modified and even scaled-back objectives. One may discover that the available data is missing essential details (descriptors for the ad actually shown to a web site visitor) or that data is available only for a subpopulation (e.g. only data for the clicks was retained and all non-click information was discarded). Such data omissions make the job of predictive analytics vastly more difficult if not impossible. The topic of mishandled or mismanaged data is a large one and all experienced analysts have their own catalog of horror stories. Our point here is simply that we have to allow for the possibility that data problems may complicate the project if not stop it in its tracks. 

The data may also offer too small a sample size for meaningful analysis. This may appear to be a thing of the past, something that will never occur again in the brave new world of big data.  But even with huge data stores the fraction that is relevant to a specific analysis may be small. 

If you need to build a click model for an ad that has only been clicked on a 15 times you are short of data even if you have one billion impressions for that ad.  In sum, we need both a sufficient quality and a sufficient quantity of data.

Stage #4: Pilot Project 

During the last five years or so, all of our consulting projects have begun with a significantly scaled-down dry run or pilot project; one major year-long project we conducted in 1996 began with a 3-month scaled down trial. This is something of an innovation in the practice of advanced analytics even though the notions are anything but new. Engineers and architects build scale models, jet engines are tested in stationary mounts on the ground long before they are placed on an airplane, and new web pages and marketing campaigns are typically first exposed to just tiny fractions of a major web site’s traffic. Obvious or not, the notion that data analysts should consciously opt for a trial run may be new to some practitioners and is well worth considering.  At the very least, analytics could be conducted on a radically slimmed down version of the data set to accelerate modeling run times.

Real-World Example: In a project to predict the sales of individual promoted products in a chain of large grocery stores we started with data for a few dozen products for one department, and then expanded with further selected products from other departments. When done with the pilot project we moved on to making the system work for 122,000 products.

Stage #5: Prepare (and Explore) Data 

From a manager’s point of view the important point here is that the preparation of the data (“beating it into shape”) so that it can be successfully modeled may require considerable time and resources.  David Vogel et. al. were the winner’s of the first (and second) round progress prizes in the $3 million Heritage Provider Network predictive modeling competition. In their paper explaining their approach and methods, about one third of the paper is devoted to documenting their preparation of the data. While some data mining and predictive analytics tools can work remarkably effectively with unprepared data (TreeNet is clearly one such tool), careful data preparation invariably leads to better, and often substantially better, performance.

Much of the data preparation is guided by rather straightforward examination of the main components of the data expected to be relevant to modeling.

Routine first Steps:

1. Ensuring that the data display appropriate values
2. Scanning for extreme values and/or invalid values
3. Locating oddities in the data such as unexpected gaps

Often special care needs to be devoted to handling of missing information, which might be encoded in different ways in different parts of the data. Data that has been collected over a fairly lengthy period of time may also suffer from changes in data coding conventions over time rendering the overall inconsistent. A simple example would be post codes initially stored as 9 digit zip codes and then later stored always in the ZIP+4 format. Without paying attention to such details certain aspects of the analysis will suffer.

There is nothing especially glamorous about data preparation and perhaps for this reason there are very few books or courses devoted specifically to this topic. The data cleaning process is crucial for achieving the best possible results, however, and we expect to offer a series of blog entries on this topic in the future.

Stage #6: Modeling

For the professional data analyst, modeling is the most enjoyable and stimulating part of the project.  It s here that we get to show off our skills and the magic of modern technology, delivering results with modern analytical tools that were simply unthinkable using only standard statistical methods. In SPM 7.0 we offer CART, MARS, TreeNet, RandomForests, GPS Generalized Pathseeker (Lasso style regression, logistic regression, and the extended elastic net), ISLE model compression, and conventional regression which gives the modeler a fair of options to choose from.

Although modelers enjoy building and assessing models, the process of moving from first drafts to final versions can involve a fair bit of experimentation and trial and error. To accelerate this search process we recommend making use of Modeling Automation such as embedded in the SPM BATTERY feature.

By modeling automation we do not mean letting the machine do all the work, but in allowing the machine the assist the modeler by automatically running and summarizing a series of experiments in which variations on a theme, tailored by the modeler, are run. This allows the modeler to keep analytical servers running 24 hours a day, building model variations that can be quickly reviewed in graphical summaries.

Stage #7: Evaluation, Interpretation, Understanding

Although any model can be treated as a black box prediction machine there are usually valuable insights that can be extracted from the model and it is worthwhile spending the time to secure them. We might learn for example that certain subpopulations of customers are unusually favorable or unfavorable for our objectives or we might learn that we can shift selling effort from one segment to another. Evaluation, interpretation, and insight are by definition the domain of the thoughtful and informed reviewer and we do not expect this stage of the project to be automated any time soon (with or without Watson).

The traditional large consulting companies have always understood this very well and have typically devoted the lion’s share of their efforts to telling the story unveiled by the technical analysis in any project. When analytics are undertaken in house the responsible department should take pains to perfect this portion of the project as well.

Stage #8: Full Project

The pilot project may yield results good enough to justify moving forward with the resulting models and insights.  In this case, we would move immediately to “Deployment” below and then consider expansion of the pilot.

If the pilot is successful but the business requires the full project before deployment can be considered, then the steps above must be repeated but in the context of a much larger scope. While much should have been learned from the pilot the full project may reveal a host of new problems and challenges and several conclusions derived form the pilot may need to be revised.

Pilot projects often benefit from the luxury of allowing detailed study of a narrowly defined set of data, supporting very high quality results. A risk for the expansion of the project is that insufficient resources are allocated under the mistaken understanding that the simple scaling up of the project is routine. Salford Systems has been part of several projects in which we thought the pilot was of far higher quality than the full project in all aspects of its execution due to resource allocation.

Stage #9: Deployment

Unless a model is intended to guide only strategic thinking its real payoff comes only when it is deployed in some real-world process. Our retail sales prediction models are used to guide the logistics of a grocery store chain, dictating the number of cans of tuna fish to ship to each store in the network next week. Our ad optimization system recommends which of possibly many thousands should be displayed right now for a given visitor of a given web page. Our lifetime customer value model scores credit card applicants on the basis of their likelihood to have nonzero balances on their card 12 months from now. These models all needed to be embedded in business processes to speed and improve the quality of decisions. Without deployment, models become little more than academic exercises or illustrations of what might be accomplished.

Deployment is a complex topic deserving of an extended discussion all of its own. The only point here is that a modeling system should support easy deployment, by, for example, allowing export of models into reusable code such as Java, C, or PMML. (SPM offers all three and more).

Conclusion

Here are the stages we described once again:

1. Business Understanding  (Specification of an Objective)
2. Data Inventory and Understanding
3. Assessment of Data for Suitability
4. Pilot Project
5. Prepare (and Explore) Data
6. Modeling (Build Predictive Models)
7. Evaluation, Interpretation, Understanding
8. Full Project
9. Deployment

We might also add a final stage: Extract lessons learned and refine “best practices” documents to guide future projects. 

COMMENTARY:     As consultant I often discover that my business clients have only a very general and superficial understanding of who their customers are.  Many claimed they know their customers, but they are only seeing the first layer or veneer of their core customers.  They lack a deeper understanding of their customers.  They are surprised when they discover that their are many different layers of customers that makeup their core customers.

It is no longer sufficient to target customers based solely on demographics. Targeting has become a lot more complicated and difficult than in the past because customers are found both online and offline.   They read less newspapers for their news, listen to less radio broadcasts for their music, watch less television programs than in the past and don't go to movie theaters like your parents did. We are living in the "digital age" and the internet has changed everything.  Customers are spending more time online now, consuming more online content and spending more time sharing and engaging with friends and brands on social networks.   Customers are shifting from the desktop to mobile devices like smartphones, tablets and wearable devices adding an additional layer of complexity in targeting them.  Finally, your customers must not only be targeted demographically but by customer segments and lifestyles -- in short, how they spend their time and money.       

I cannot stress the importance of gaining a deeper understanding and knowledge of your customers in order to effectively target them.  Customer data is no longer homogenous, but originates from many different sources and comes in different formats, and this data must be captured, stored, validated, cleaned, transformed and aggregated, then it must be procesed through a business intelligence system for data mining purposes, online analytical processing (OLAP), data visualization, reports and management dashboards.

Data Sources and Data Flows Essential For an Efficient Business Intelligence System (Click Image To Enlarge)

As a former CFO for Solar Planet, a very successful indoor tanning salon franchise headquartered in San Francisco, I speared the effort to gain a deeper understanding and knowledge of the tanning customers of our tanning salon franchisees located across the U.S.  This required esablishing a data warehouse, then going through numerous steps (see above schematic) to get our customer data in a format that could be used for business intelligence analysis and reporting purposes.  

When we began this effort, we had a pre-conceived notion of what we thought our tanning salon customers were like, but when we analyzed the customer data through our business intelligence system, we discovered that our customers were not all the same.  True, they enjoyed tanning for different reasons, but they were different as night and day, and this deeper understanding, valuable insights and knowledge allowed us to more accurately target them while using the most efficient media channels to reach them.  Armed with this information we were able to provide our existing Solar Planet franchisees with better service and marketing advice and information, and identify the best locations for future Solar Plant franchise locations.  Solar Planet was able to customize the advertising and promotions campaigns for each franchisee based on the knowledge we gained about their customers.  Our franchisees were able to gain measureable improvements in new customers, increases in revenues and lower marketing expenses, and the results of each marketing campaign became much more predicable.  Below is a presentation that I prepared for our management team and potential investors.   I hope you find it valuable.

Solar Planet Company Owned Salon Presentation 3 from Tommy Toy

Courtesy of Salford Systems how-to guide titled, "The Ultimate How-To Guide For Planning A Predictive Analytics Project." 

Follow Me:   Twitter: turk5555    Facebook: 797743955    LinkedIn: turk5555 

Subscribe To My Blog Newfeed

HOW, WHEN, AND HOW MUCH IT WILL COST TO OUTSOURCE YOUR SOCIAL MEDIA, PLUS A LIST OF THE TOP SOCIAL MEDIA MARKETING FIRMS

Many large companies worldwide are facing a conundrum when it comes to using social media to help generate new business.

On the one hand, firms of all stripes are pouring large sums of money into using paid media to do outreach to consumers on social networks such as Facebook and Twitter — and are allocating larger slices of their digital ad pies for that purpose.

In the United States alone, advertisers will spend $9.59 billion on social ads this year, according to the market research firm eMarketer. This represents a 31 percent surge from the 2014 outlays on social media, and more than double what was put into this segment in 2013.

Click Image To Enlarge

By 2017, U.S. advertisers will boost their social ad outlays to $14.4 billion, eMarketer projects. By that point, social ads are expected to consume nearly $1 out of every $5 in U.S. advertisers' budgets.

This year, social will account for 15.9 percent of North American ad budgets — up from 10.5 percent just two years ago. But while eMarketer has estimated that nearly 90 percent of companies with 100-plus employees did social marketing last year, many firms are also having trouble achieving their goals in that realm.

Click Image To Enlarge

A study that Ascend2 published in December 2014 discovered that 43 percent of respondents found a lack of in-house resources and skills as their most challenging obstacle to success from social media marketing. Another 42 percent complained about an inability to measure return on investment, and 39 percent cited a lack of effective strategy.

These results suggest that for many companies it may make sense to outsource the job of social outreach to prospective customers (something that the Ascend2 study found 53 percent of respondents were doing, in whole or in part).

However, as companies worldwide learned during the great outsourcing boom of the previous two decades, farming out important jobs carries risk.

As Hootsuite has pointed out, having someone else handle your social marketing can result in everything from an added layer of bureaucracy for customers to navigate to slower response times to consumer inquiries.

In social media outsourcing, as in every area of business, it's important to pick partners wisely — and to follow sensible practices in managing your relationships with those vendors.  

Five Keys to Social Media Outsourcing Success

Success in outsourcing social marketing boils down to five considerations:

1. Setting realistic goals: Before talking to prospective vendors, executives need to establish what they want to achieve from a social campaign and how outreach in this realm can help achieve them it. Up-front research is key to know what's doable.
2. Doing due diligence: A relationship with a key vendor can bear certain similarities to marriage. As any divorce lawyer can attest, bad marriages can wreak havoc on the lives of everyone involved. It's thus vital to do as much up-front checking on prospective vendors as possible.  
3. Being reasonable: As CIO.com has pointed out, hardball business tactics (e.g., beating vendors down on price or paying bills slowly) can lead to hard feelings — and problems down the road. Maintaining good relationships with vendors can lead to better results for both parties. 
4. Using a carrot and stick: In social media, as in any area of outsourcing, it makes sense to pay for performance. This means structuring the vendor's compensation so it has an incentive both to work only in the client's best interests and to help achieve business goals.  
5. Getting everything in writing — including an escape hatch: If client and vendors both leave extensive paper trails on their key interactions, it provides both parties with strong motivations to live up to their sides of the bargain, along with a quick and fair way to resolve disagreements. Every vendor agreement should provide the customer with some type of "kill switch" to get out of the deal if things aren't working out.

Ultimately, a relationship between a company and its social media vendor is just that — a relationship. And like any interaction between people, the client will only get out of the association what it puts in.

The more a vendor can learn about a client's business and its goals, the better the vendor can serve.

And isn't that what outsourcing is about in the first place?

COMMENTARY:    As has been pointed out in the above article, the biggest obstacle small business owners face in managing social media inhouse is a lack personnel with sufficient expertise in social media marketing and management systems.

Simply having a social media presence on social networks like Facebook, Twitter or Pinterest, does not provide sufficient experience for small business owners to manage their social media inhouse. Managing your social media means a lot more than just posting updates in your newsfeed, generating Likes and retweets for your content, or sending messages with your fans and followers.  

At some point, small business owners are faced with the decision to do their social media inhouse or outsource their social media.  So, let's look at a few cost estimates.

Social Media Management Costs

According to Mack Collier, a social media marketing thought leader and blogger, here's what outsourcing social media PR costs for Twitter and Facebook platforms:

• Twitter - Launching a new Twitter account, complete with setup and outsourcing content creation/consumer interaction (all 140 characters at a time), costs an average of $2,000-$4,000 per month – and that's just for Twitter. With that said, the total price range was $1,000-$7,500 per month.   If you already have an existing Twitter account, but need some help to take it to the next level, restructuring an existing Twitter account with "limited coaching" to achieve client goals is still going to cost you between $1,000-$2,500 per month, with some charging as much as $4,000 per month…just for Twitter! That's right, if you want Facebook, you're paying extra.
• Facebook - If you thought the costs of marketing with Twitter were high, you might want to grab your fainting chair — Facebook marketing rates will give you a case of the vapors. To set up a new Facebook account and provide limited ongoing training to business partners, online PR agencies charge an average of $2,500-$5,000 per month, with some going as high as $9,000. Of course, this also includes status updates and interacting with customers. 

If you're shelling out a minimum of $4,500 per month for Facebook and Twitter management, you're not getting any strategy behind the efforts.  Social media strategy is an additional cost. 

Social Media Strategy Costs

According to Mack Collier, creating a comprehensive strategy for social media marketing and outsourcing all work for all channels (with a minimum of two social networks) costs anywhere from $3,000-$20,000 per month, with the industry average settling between $4,000-$7,000 per month. If you want the social media agency to start the accounts from scratch and consult on a 4- to 12-month contract, you'll pay between $3,000-$15,000 per month. What do they mean by channels, minimum of two? That's just a fancy way of saying that the cost includes both Facebook and Twitter…I'm betting there's probably an upcharge if your company wants Google+, too.

Other Costs To Consider

• Customer Personas - If you're doing market research to figure out your customer/client's persona(s) and preferences, it's possible to legitimatize a $20,000 spend to gather the background info necessary to excecute a killer social media campaign. But otherwise, you can probably get much of the same for less money.  I also recommend that you read my previous blog posts on developing customer personas dated June 20, 2015, July 20, 2015, September 2, 2014, and March 6, 2014.  I have actually helped clients develop customer personas, and it is a grueling process, which is why it costs so much to do. Truth be told, many clients think they know their customers, but they really don't.  Knowing customer basics such as gender, age, what they buy, and how often they buy, barely scratches the surface.  To do it right, you need more indepth ways of describing and segmenting your customers, hence customer personas.
• Social Media Audit -  What if you just want an audit of your current social media strategy, with a few pointers on how to improve?  This is going to cost you anywhere from $2,000-$10,000. The lower end of this spectrum seems reasonable, especially if you add in the cost of social media training and competitive analysis. The only way to justify a $10k spend is if the social media consultant actually flies out to your office and does an in-depth, in-person training over the course of several days. 

Before jumping into the fray and making the decision to go inhouse or outsource or your social media, it might be very helpful to know what small business owners are spending on social media. VerticalResponse conducted a survey of small businesses, and the created this wonderful infographic that shows what SMB's are actually spending.

Click Image To Enlarge

If you are a small business owner, you are probably experiencing advanced stages of sticker shock, and probably ready to drop the whole idea of outsourcing social media.  However, keep in mind that 62% of small business owners outsource some or all of their social media functions.  Having said this, if you are serious about outsourcing, and willing to make the necessary investment, the next question is:  Who do I contact to outsource my social media management and strategy.  Well, I just happen to have that information for you, thanks to the good folks at Clutch Firms That Deliver. Clutch has done all the work of reviewing and rating the top social media marketing firms.  I am not recommending any particular firm.  They are all good.  The best of the best.

Make sure that you do your homework when evaluating firms to outsource your social media.  You should be asking the following questions:

1. How long have you been in business?
2. Who are your clients and can you provide references?
3. What sets you apart from your competition?
4. What social media services to you provide?
5. Do you offer month-to-month or fixed term contracts and what is your minimum term?
6. Are there any penalties for early termination of contracts?
7. Do you offer pricing plans for each social media service and how much does each cost per month?
8. Do you offer package pricing plans, what is included and how much does each cost per month?
9. How long will it take to accomplish our goals and objectives?
10. What exactly will I get for my money?  
11. How many people will be assigned to my account and what services do they provide?
12. How often can we contact you about problems and issues, needs and requests?
13. How much interaction do you require from the client?
14. Do you offer clients a dashboard where we can view our social media efforts in real-time?
15. Can the client prepare their own newsfeed content and tweets?   

Courtesy of an article dated September 16, 2015 appearing in eMarketing and Commerce , the Content Factory's article titled, "How Much Does Social Media Marketing Cost," and Clutch's "Top Social Media Marketing Companies - 2015 Reviews"

Follow Me:   Twitter: turk5555    Facebook: 797743955    LinkedIn: turk5555 

Subscribe To My Blog Newfeed

UBER'S BUSINESS MODEL IN PERIL AFTER CALIF JUDGE RULES DRIVERS ARE EMPLOYEES, AND THE POTENTIAL COSTS OF THAT DECISION

When a California judge ruled earlier this month that a lawsuit brought by Uber drivers could go forward as class-action, it re-opened the biggest question about the hottest company in Unicornland: Is its business model legal? And if not, can Uber survive?

The ruling has also reignited questions about whether the sharing economy, of which Uber is by far the largest participant and its poster boy, is fair to workers. Last week, workers’ advocacy group the National Employment Law Project released a report that equated Uber and other sharing economy companies to “turn of the century sweatshops” because of a lack of employee benefits and protections.

Investors think that Uber will not just survive, but thrive. They have driven Uber’s valuation up to $51 billion, much higher than what Facebook was worth when it was a six-year-old private company. But the recent lawsuits against Uber raise questions about what seemed like its inevitable success.

By now, many people know the debate. Uber currently classifies its drivers as independent contractors, or “1099” workers, rather than (W-2) employees. Uber says its drivers prefer the flexibility of being independent contractors. But that classification also allows Uber to avoid the taxes and insurance and other administrative expenses that companies usually have to pay to have a workforce.

How much would it cost Uber if it was forced to reclassify its drivers as employees, rather than independent contractors? By my calculations, with help from some experts, I crunched the numbers and got an answer, and it’s a huge amount: $4.1 billion.

Click Image To Enlarge

Uber declined to comment on Fortune's calculations. A spokesperson for the company said it’s difficult to know what additional costs Uber would have to pay if it were required to turn all of its drivers into employees because doing so would force the company to completely change its business model, which is exactly the point.

The California lawsuit was brought by four former drivers who think they deserve the status of employees and reimbursement of their driving expenses. But by certifying it as a class action, the judge said the eventual ruling in the case will apply to all of Uber’s California drivers, excluding only those who had specifically waved their right to participate in the current suit. Uber is fighting the lawsuit, as it has other efforts to force the company to put its drivers on its books. On Tuesday, Uber filed an appeal in the California case, asking the court to reverse the class action status.

Uber critics say the real reason Uber has opposed the shift is that it can’t afford it. Miriam Cherry, a St. Louis University law professor who has long followed the sharing economy, says Uber’s current business model is one part technology company and one part labor law workaround. The question is which part is bigger.

To figure that out, Fortune spent the past two weeks digging into Uber’s finances, employment law, and payroll realities. It enlisted the help of experts from two companies that specialize in payroll costs, Paychex and StaffOne. It also talked to SherpaShare, a third party application that helps ride-share drivers track their work, for data on the size and composition of Uber’s workforce, which SherpaShare estimates at around 200,000 drivers. (Uber says it has 160,000 drivers, but those numbers were from the beginning of this year.)

To get the $4.1 billion figure, Fortune started at the top. Uber’s recently leaked numbers—the company is private, so it doesn’t disclose its financials, but some have emerged—put the company’s expected sales this year at about $10 billion. Uber splits what passengers pay 80-20. Uber takes a 20% cut for allowing drivers to use its platform. The rest, $8 billion, is what the drivers get, which would be their salaries if they were employees, though Uber currently does not include that figure in its finances.

Two caveats: Uber has licensing deals for its technology with other companies, and those deals may be contributing to its $2 billion in revenue. So Fortune may be overstating driver salaries by a bit—but not by much. And, just to clarify, Fortune's calculations are based on what it would hypothetically cost Uber if it had to hire all of its drivers as employees. But even a legal loss in California won’t automatically mean it will have to change the status of all of its drivers, though it will add to the pressure on the company to do so.

Let’s move on. As 1099 workers, Uber drivers are responsible for paying all of their payroll taxes. If they were employees, Uber would have to split those taxes with its employees. Uber’s share: 6.2% of what it pays its drivers for Social Security and another 1.45% for Medicare taxes. And it has to pay those taxes for both its part-time and full-time workers.   Uber's share of Social Security and Medicare taxes, one of its largest new costs, would total $612 million a year. 

The next biggest cost: workers’ compensation insurance. Workers’ comp is regulated by each state, and not all states require it, though most states where Uber is active do. The one exception is Texas—but even there, a worker can demand that his or her employer pay for any work-related injuries, so Uber would be smart to have insurance. Rates vary by state and occupation. Those tend to be relatively high for taxi drivers, and particularly high in California, where about 20% of Uber’s drivers are based, according to estimates by SherpaShare. Total workers' compensation insurance bill: $512 million a year.

Next up, medical insurance. Under Obamacare, employers don’t have to provide medical insurance, but starting next year that decision comes with a $2,000 penalty per employee per year. Paychex says that on average employers spend $5,000 for single employees and $12,000 for family coverage medical insurance. But employers can provide basic medical insurance (and not pay a penalty) for about $3,000 per employee. According to a filing with the federal government, Uber spent $1,275,066 on its healthcare plan, which included prescription drug benefits, for the workers (non-drivers) that it does classify as employees from July 2013 through June 2014. The filing said the plan covered 442 employees, which means it cost $2,885 per employee.

The good news for Uber is that companies only have to provide healthcare to full-time employees. Uber says that many of its drivers log less than 10 hours a week, though it’s not clear if Uber is counting just the hours when the drivers have passengers, or total drive time. SherpaShare estimates only about 20% of Uber’s drivers work more than 40 hours a week. (Some might even qualify for overtime, but Fortune hasn't factored that cost in.) Nonetheless, providing medical insurance for its full-time drivers at the same rate that it paid in 2014 for other employees would cost Uber $115 million a year.

NerdWallet, which published an earlier story looking at what Uber drivers stand to gain from becoming employees, said that the company would likely have to provide drivers with nine vacation days, based on what it currently offers its employees. Paychex says providing vacation days and sick leave typically costs employers 6.9% of a workers salary. For Uber, again only for its full-time drivers, providing vacation days and sick leave would be another $110 million a year.

Unemployment insurance varies by state. The average of what employers pay in the four states with the most Uber drivers, according to SherpaShare, was $363 per employee.  Unemployment insurance would cost Uber an additional $72 million for Uber a year, plus just over $8 million a year for federal unemployment.

Let's recap Uber's exposure to additional costs as a result of the California ruling classifying drivers as employees:

• Additional Social Security and Medicare payroll taxes per year:  $612 million 
• Additional workers' compensation insurance per year: $512 million
• Additional medical insurance for full-time drivers per year:  $115 million
• Additional vacation days and paid sick leave for full-time drivers per year: $110 million
• Additional unemployment insurance (California) per year:  $72 million
• Additional federal unemployment insurance (Federal) per year: $8 million

If you tally all of the above, the total so far comes to:  $1.429 billion.   

OK, we’re nearly there.

Companies don’t have to provide a retirement plan. But if they do, they have to provide it for all of their full-time employees. According to Glassdoor, Uber has a 401(k) plan for its current employees, and offers a 3% match, meaning it will match its employees’ 401(k) contributions up to 3% of their salary. If all of Uber’s full-time drivers-turned-employees contributed at least that much, that would be another $72 million in 401(k) plan costs for Uber.

The last one is a big one: millage reimbursement. Not all states require companies to reimburse their employees for using their personal car for business. But California does. And since that is where Uber is based, there is a good chance that it will have to reimburse all of its employees, not just the ones based in California. Calculating this figure is tricky. Based on survey data from SherpaShare, the average Uber driver, full-time and part-time, puts in nearly 24 hours a week for the ride hailing company. The average speed in cities around the country where Uber is most used appears to be around 20 miles per hour. That means the average Uber driver covers about 475 miles a week. The IRS’s mileage reimbursement rate is 57.5 cents per mile. If Uber were to reimburse its workers at that rate, which it has been ordered to do in some cases, that would be an average of $273.13 a week, or just over $13,000 a year per driver. The total mileage reimbursement bill for Uber: $2.6 billion a year.

Add all of those costs up and you get to just over $4.1 billion. Sound too high?  Fortune thought so, too. So it had StaffOne’s Donna Meek, a payroll and HR expert, run her own independent calculation. Meek estimated the costs from the bottom up, looking at what it would cost Uber per worker, rather getting the total figures for each cost as Fortune did. Meek’s conclusion: nearly $1.5 billion before the cost of reimbursing drivers for their miles. So pretty close to what Fortune estimated.   Fortune also calculated how much more Uber's operating costs would increase if all its drivers were classified as employees.

Click Image To Enlarge

Could Uber afford an additional $4.1 billion in costs a year? Depends on how you measure that. Based on profits, no. Uber, by its own admission, is not profitable. So it really can’t afford its current expenses, let alone another $4 billion. But as Uber has told others, startups aren’t run on profits—they’re run on investors’ money. And they can afford their losses as along as those people are willing to keep funding them.

How long will investors be willing to fund Uber? According to leaked financial statements obtained by Gawker, Uber was on track to lose about $300 million a year, though those losses appeared to be growing. It had about $1.2 billion of cash at the end of June 2014. And it just raised an additional $1 billion this summer. That means Uber will likely have about $1.75 billion in cash in the bank at the end of this year.

Sounds like a lot. But if Uber had to swallow an additional $4 billion in costs, they would need to raise more money by the middle of next year, possibly sooner, or face extinction. And that doesn’t include any money it might have to pay out in damages, or past compensation. Uber could force its workers to take a pay cut. Many of them will be getting new benefits. And Uber would be covering some expenses, like gas and payroll taxes, that its workers are covering now.

But James Kimbrough, who drives about 20 hours a week in Austin as a second job, says that Uber has already cut what its drivers make by nearly a half in the past year in order to attract more customers. Any further reduction in rates—”even just a few more cents,” says Kimbrough—and driving for Uber is probably no longer worth it for him. He believes other drivers would feel the same way. So Uber doesn’t have a lot of wiggle room with the drivers.

At a $51 billion valuation, investors obviously believe that, given enough time, Uber is going to make money, and likely a lot of it. The question is how much longer will that take if the company faces an additional $4 billion in expenses—and are investors prepared to stick around for that long. Uber’s cash meter is running, and it’s running fast.

COMMENTARY:  If you missed it, the California Labor Commission ruled on Wednesday, June 17, 2015 that an Uber driver who brought suit was an employee, not an independent contractor. The decision was made after a San Francisco driver, Barbara Ann Berwick, filed a claim against Uber. The commission sided with her largely because it deemed Uber was "involved in every aspect of the operation."

Four more drivers subsequently sued Uber citing the case of Uber driver Barbara Ann Berwick, that won her case with the CLC.  A judge finally ruled that Uber drivers could file a class action suit, paving the way for all Uber drivers to file suit as a group.  Uber is appealing the ruling.  This case is so important to Uber, that losing at the appellate courts, and if necessary, in the US Supreme Court (if necessary), could become very costly for Uber.    

I have actually been involved in a case similar to Uber where the State of California ruled against a former employer mine.  California applies the economic realities test or amount of control the employer exerts over employees in the performance of their work.  In applying the economic realities test, the most significant factor to be considered is whether the person to whom service is rendered (the employer or principal) has control or the right to control the worker both as to the work done and the manner and means in which it is performed. Additional factors that may be considered depending on the issue involved are:

1. Whether the person performing services is engaged in an occupation or business distinct from that of the principal.
2. Whether or not the work is a part of the regular business of the principal or alleged employer;
3. Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
4. The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;
5. Whether the service rendered requires a special skill;
6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
7. The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;
8. The length of time for which the services are to be performed;
9. The degree of permanence of the working relationship;
10. The method of payment, whether by time or by the job; and
11. Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.

Even where there is an absence of control over work details, an employer-employee relationship will be found if (1) the principal retains pervasive control over the operation as a whole, (2) the worker’s duties are an integral part of the operation, and (3) the nature of the work makes detailed control unnecessary.(Yellow Cab Cooperative v. Workers Compensation Appeals Board (1991) 226 Cal.App.3d 1288).

In conclusion, if you utilize the services of independent contractors in your workplace, are providing workspace facilities (offices, desks, equipment, supplies, etc.), set specific work hours and work schedules, set specific guidelines and instructions for the performance of the work to be completed, provide regular supervision and guidance, and control as to where, when and how the work is to be performed, your indepndent contractors are probably employees.  Wow, this describes most of Silicon Valley employers, particularly startups, who as a general rule, employ many independent contractors, in order to avoid paying payroll taxes and providing employee benefits.

The panic at Uber HQ after the latest California decision ruling their drivers as employees is probably something like this:

 

Courtesy of an article dated September 17, 2015 appearing in Fortune and an article dated June 17, 2015 appearing in Business Insider and the California Department of Industrial Relations article titled, "Independent Contractor versus Employee" 

Follow Me:   Twitter: turk5555    Facebook: 797743955    LinkedIn: turk5555 

Subscribe To My Blog Newfeed