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The Santa Challenge 5: Learn and Improve!

Santa Claus faced a challenge in this pandemic year. Kids worldwide can’t sit on Santa’s lap. Elves are in lockdown and he needed to find new toy sources. Plus with Dancer and Prancer self-isolating, he needed a new way to make his worldwide rounds. This calls for advanced AI and decision management technology – enter FICO!

Santa, Mrs. Claus and the elves are all celebrating a successful delivery. But just a few weeks ago, things didn’t look so bright. The global pandemic created new challenges for organizations of all sizes, and Christmas Inc. was no exception.

For sure, Santa is very experienced and has faced pandemics before. But the growing world population makes his job a little bit harder every year. Just to put things in perspective, Santa had to deliver presents to four times more children this year than during the Spanish Flu pandemic 100 years ago!

Santa turned to FICO for help, and we worked together to get missing data on millions of children, analyze that data to find out individual preferences and behaviors, determine and produce the best matching gifts for all the children and deliver every one of those presents in an epic midnight run with fewer reindeer than usual.

Because Santa now has all his data, machine learning models and strategies in the FICO Platform, results are instantly available and can be sliced and diced to help analyze this year’s performance. And also, to get ideas on how to make next year’s Christmas even better!

Lightning Can't Stop Him

First, let’s take a look into that scary lightning strike that struck the sleigh! Thankfully it was not too difficult to repair and the FICO Platform calculated an updated route in no time.

Looking at the performance of the weather forecast models, responsible for predicting where storms are likely to hit on Christmas night, we can clearly see their predictive power has decreased over the last decade, and in particular over the last couple of years.

This is likely a consequence of Climate Change, which is making storms more frequent and more extreme. For next year’s Christmas, the data science elves will use FICO Analytics Workbench to develop a new model incorporating the latest weather data, reducing the chances of a similar incident in the future.

Continuous Improvements in Gift Matching

In terms of assigning gifts to children, it seems the new optimized strategy did a great job. The data is still coming in, but so far, we are tracking well for a 3.5% increase in overall child satisfaction compared with last year!

However, in the pre-teen cohort I’m afraid the matching performance continues its downward trend this year. The issue seems to be due to the so-called “additional attributes”: the present is the right one, but since many of the kids in this age group are not specifying what exact model or color they want, Santa is missing the mark.

The new alternative data sources we used this year might be of help here. Knowing the most popular set of additional attributes from retailers in different regions should help us make better predictions on the details of what the children wanted but failed to mention in their letters.

Using the simulation capabilities of the FICO platform, we can check how the new additional attributes predictions would have performed if they had been introduced years ago, and the impact on other indicators. For instance, we want to make sure we don’t dramatically increase costs by always gravitating towards the most expensive model.

The simulation seems to indicate this change will have a good net impact, but it is still wise to proceed with caution. Given the risks of introducing changes in this area, we can define the new additional attributes strategy as a challenger to the logic currently in place. In other words, by randomly diverting a certain percentage of children in the pre-teen cohort to use the new strategy, its effectiveness can be better assessed. And if we are pleased with next year’s results, all children can go through this strategy in the future.

Santa Challenge 5 – solved!

See all the ways we helped Santa at www.fico.com/santachallenge

Find out how you can solve YOUR challenges using the FICO Platform

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