Investigating the effect of applying business levers in action arbitration

Business levers are one of the arbitration factors that allow the business to assert some level of control over the prioritization of actions defined within the system. One of the experiments in Impact Analyzer is the business levers experiment, which highlights opportunities that are missed because of the use of business levers. Using Scenario Planer, you can simulate different business levers settings, and assess which one has the right balance between missed opportunities and alignment with your business goals.

Business Levers are used to manually nudge Customer Decision Hub toward next best actions based on external factors. For example, the recommended next best action might be to offer a credit card to a customer when they visit the home page. But to meet a business goal, the Mortgage Line of Business favors a mortgage offer, even if that offer is ranked a little lower on the list of possible actions.

One of the experiments you can perform using Impact Analyzer is "How is next best action performing against arbitrating with no business levers?".

The business levers experiment highlights opportunities that are missed because of the use of business levers. This experiment evaluates the effectiveness of the full PCVL priority formula, which includes Propensity, Context, Business Value, and Business Levers, compared to arbitration with no business levers.

We expect that the next best actions should not outperform the control group with no levers in terms of value capture during this experiment. This is because the action that wins the impression using the full PCVL formula may not have the highest expected value capture. When next best actions arbitrate without any business levers, actions with the highest expected value capture will be presented. However, when business levers are applied, actions with lower expected value capture may be boosted and win the impression. Therefore, for this experiment, the value lift KPI is expected to be negative. This experiment can identify missed opportunities due to the use of business levers. When engagement or value lift is negative in this test, reducing lever values at the issue, group, and action levels can improve performance by giving next best actions the space to optimize. To ensure that the next best action is optimizing lift, the test widget provides recommendations to follow.

In the following example, the experiment indicates an -18 percent value lift and -15 percent engagement lift, with an overall red status, which is in line with expectations.

To examine the impact of changing lever values, use Pega Scenario Planner. Scenario Planner allows you to easily simulate 'what-if' scenarios to accurately forecast results, optimize strategies to hit specific goals, and explore the potential trade-offs of each option. Scenario Planner also estimates the value that the subsequent next-best-action run creates using its current configuration. For example, you can observe whether prioritizing a specific action by increasing its business weight will likely result in an opportunity gain or an opportunity cost.

Consider running a comparison simulation using a Scenario Planner to examine the difference between applying the full PCVL formula and the PCV formula without levers. Customer Decision Hub has various subsets of customer data available to run comparison simulations. The subsets of customers represent a sample of real customer data. For a Scenario Planner simulation, you use the same customer data sample for both simulations – one sample with full PCVL, and the comparison sample with the PCV formula.

The Scenario Planner landing page shows a number of useful key performance indicators (KPIs) including projected reach and projected acceptances, projected value capture, as well as historical acceptances, sends, and impressions.

In this example, the value capture is shown as $6.68k, which represents the estimated value that will be generated by the upcoming next best action using the currently selected configurations. The delta is displayed in red and indicates that actions arbitrated without business levers result in a higher value. Based on the results obtained from the Scenario Planner, and taking into account your business goals, you can determine whether or not to update the business levers.

If you choose to update the business levers settings in an attempt to increase the value lift and engagement lift, you can use Scenario Planner to compare the current simulation with the adjusted simulation. This time, Scenario Planner will compare two simulations with full PCVL formulas, to determine whether the newly adjusted settings are aligned with the business objectives and bring value.

You have reached the end of this video. You have learned:

• How Impact Analyzer identifies the value and engagement loss caused by applied business levers.
• How Scenario Planner enables users to simulate different scenarios and explore potential trade-offs, to optimize their business strategies.
• How updating your business levers influences the Scenario Planner results.