1to1 Magazine 04/06/2006 Issue: April 2006 People: Mila D'Antonio

How What You Don't Know Can Help You

Valentine's Day this year wasn't just for lovers. It was also for analysts.

That is, it was a special day for the 80 analysts at Hallmark Cards. After scouring every U.S. city's sales figures and buying trends, combing through thousands of customer interviews and focus group results, and analyzing in-store observations, the analysts found what they tirelessly searched for: the top-selling Valentine card nationwide.

The results were surprising: The most popular card was the same in every city from Tallahassee to Los Angeles. But Hallmark Cards now has gleaned valuable insight as to what sentiments consumers want to convey to their sweethearts.

This new insight not only ensures that Hallmark will increase allocation of this card nationwide next Valentine's Day, it positions Hallmark as one of the growing number of companies that view analytics as an investment, not an expense. From managing portfolios of customers to enhancing products, companies are more aware of the benefits of using advanced customer analytics to make informed operational decisions.

Time Warner learned early on that applying advanced analytics to its operations has numerous benefits, including obtaining near-accurate magazine distribution results. The media and entertainment company applies a complex set of algorithms that blends store-level data, historical sales performance, seasonal sales patterns, and expected market conditions to predict such outcomes as sales performance, store demand, national magazine allocation, and inventory management. So, for example, when Hillary Clinton graces the cover of Time magazine, Time Warner knows before the publication hits the newsstands exactly how many magazines should be distributed in the blue states and in the red states.

Martin Koschat, executive vice president of information management at Time Warner Retail Sales & Marketing, says that by carefully analyzing the data the company has saved more than $3.5 million year over year, mostly in shredding costs, since launching Insightful's analytics server five years ago. He credits the rest of the savings to making better business intelligence decisions. Customers benefit because local magazine outlets are continually stocked with the publications of their interest.

FBTO Verzekeringen, a Dutch insurance company, used advanced analytics to eliminate haphazard monthly mailings. Before using competitive analysis, three different database marketers at the insurer would randomly select what they thought to be the most valuable customers to receive promotional mailings on either car insurance, health insurance, or travel insurance. However, they did so without considering past campaigns, customer interests, and purchasing histories because they operated from three different databases.

The company implemented SPSS analytics software to improve marketing effectiveness. The results over the initial three months included a 29 percent increase in efficiency as well as a 40 percent reduction in hands-on workloads on time spent conducting analysis. Customers now receive information about products that interest them. "It changed the way we communicate with our clients," says Wytze van der Veen, FBTO marketing intelligence leader.

Colin Shearer, vice president of product marketing at SPSS, says more companies are discovering that investment in CRM software alone is not enough. Financial services, in particular, lead the movement in analyzing customer value and using the insight to move customers up the value chain. "Once [companies] get their efficiencies [from CRM], where else do you go from there?" Shearer asks.

Frost Bank, based in San Antonio, TX, uses predictive analytics from direct marketing agency Alcott Routon to determine the radius around the bank's branches in which to send mailings. Using a combination of demographics, census data, and geographical data, Frost Bank examines the vicinities around the branches on a micro level.

According to Mary Ann Beach, executive vice president of research and strategy with Frost, through this micro-analysis the bank discovered operational-level factors that influence prospect behavior, ranging from personnel to location to the number of days the banks are open. By applying these factors, Beach says, Frost determines exactly what influences predictability of response and refines the models. "We used this qualitative knowledge to further refine the audience selection," she says. As a result, in 2004 Frost doubled its new account volume, and in 2005 the bank increased that volume another 6 percent.

© 2006 Carlson Marketing, Inc. All Rights Reserved. Peppers & Rogers Group is a division of Carlson Marketing.