generating customer insight with the multi-partner program ... · the data base for generating...

Generating Customer Insightwith the Multi-Partner ProgramHappyDigits

Athens, 24th September 2008Thorsten Franz

Seite 220080918-lecture_Athens.ppt · CAP Customer Advantage Program GmbH

A brief introduction: Who is CAP, what is HappyDigits?

The data base for generating detailed insight into customer behavior

Application of statistical methods and measurement of success

Generating Customer Insightwith the Multi-Partner Program HappyDigits


CAP is a full service CRM provider

Key facts Competencies

Managing Director

BL BL BL BL BL BL BL BL BL

Employees: 110

Managing Director:

Thorsten Franz

Revenue: € 71 Mill.

Shareholding: 51:49

Transaction management on proprietary IT platform

Certified processes & data protection (TÜV-certified)

Customer Intelligence(data mining & geo-analytics)

Customer oriented campaign management


What do we do? CRM? Choose whatever you like!

Customer retentionCustomer retention

Customer aquisitionCustomer aquisition

Data MiningData Mining

PremiumsPremiums

CLVCLV

AktivierungAktivierung

PromotionsPromotions

SegmentationSegmentation

ReactivationReactivation

Customerrevenue

Customerrevenue Direct marketingDirect marketing

Campaign managementCampaign management

IncentivesIncentives

Response controllingResponse controlling

Cross SellingCross Selling

Up-SellingUp-SellingCustomer profileCustomer profile

Churn predictionChurn prediction

SegmentationSegmentation

Dialogue marketingDialogue marketing

ActivationActivation

Web 2.0Web 2.0One-to-oneOne-to-one

SelectionsSelections

Win-backWin-back

IndividualizationIndividualization

Below-the-lineBelow-the-line

One-to-OneOne-to-One

CouponsCoupons

Regular-customer careRegular-customer care

AffinitiesAffinities

New-customer potentialNew-customer potential

Closed loopClosed loop

Target groupsmarketing

Target groupsmarketing

Customer valueCustomer value


Mall concept

IT management

Operations

Analytics

Multi partner

White label

CAP offers three key product categories

Loyalty programs CRM services Giftcards

ActivationCharging

DischargingAccount queryH

andl

ing

Customers & Potential

Products & Product Groups

Subsidiary & Channel

Business & Competition


Department stores

Specialtyretail

Telecom

Travel & Mobility

Mail-order

Financial Services

Grocerystores

Pharmacies

HappyDigits is the leading multi partner network in Germany

Others

Regional partners

Alliances

Online partners


Objective: Efficient Organization of Customer Relationships to Maximize Value Creation

Initiating therelationship

Establishingthe relationship

Reinforcing therelationship

Utilizing therelationship

Revitalizing therelationship

Terminatingthe relatonship

Customer relationshipmanagement

Which customer is addressed in which phase with which content at whichtime via which channel?

Basis: Transformation of data into customer insight!



The data base for generating detailed insight into customer behavior




HappyDigits key performance indicators underline the strong basis for an efficient CRM

> 22 million households (actual reach)

> 33 mill. personalized cards

> 61% activity

< 3% non-delivered mail

> 53% permissions(plus program reach)

> 1.1 mill. Mastercards


• Partners (independent of type of business)• Transaction type, sales channel (mailorder, stores,etc)• Product lines, transaction location, etc.• Purchasing times (seasonal, weekends, etc.)

Analysis Starting Point:Together with HappyDigits,CAPhas a Unique Supply of Primary Data at its Disposal

• Occupation, income• Size of household / family• Children, etc.

• Familiarity with advertisements• Original partner• Type of card, etc.

• Revenues from fixed net- / mobile communication• Purchases in the telecommunication sector

(T-Punkt stores, T-Shop: Fixed-net terminalequipment, mobile phones, accessories, etc.)

• Interests (e.g. fashion, cars, DIY, telecommunication, sports)

• Attitude: Critical, adventurous, belligerent, etc.

• Address• Age, gender• Contact information, etc.

• Programs used• Internet purchases• Indications for usage intensity

Personal data Socio-economic data Interests/attitudes

Registration data Data on Internet usage

Data on buying behavior Telecommunication data

Endless data derivatives via data mining!

• Cash-in channels / - frequency• Coupons, give-aways, etc.• Rewards: Events, enjoyment, etc.

Cash-in data


• Size > 3 Terabytes• More than 700 characteristics per

participant• Continuous up-dating of data base• Continuous evaluation ofdata base

with regard to data quality

HD data base: Efficient and comprehensive data warehouse (DWH)

HD data analysisemploying latest software tools

Interactive reporting(key indicators, monitoring, etc.)

Data mining(customer classification, customer segmentation, forecast models)

Campaign management(data selection, standardizedcampaign controlling)

Analytical CRM with a Broad Data Base -Employing the Most Modern Tools and Systems

Transformation

Daily data delivery frompartners

DWH DB2



The data base for generating customer insight




We Use Diverse Methods as a Statistical Basis for CRM

Descriptive = uni-/bivariate analyses

Data mining =multivariate analyses

Goal: Reveal insight!Goal: To validate hypotheses!

Applications:

• Customer profiles

• Customer structure analyses

• Time series and comparisons

• Customer evaluation

Applications:

• Buying forecast models

• Affinities deviations

• Customer segmentation

• Shopping cart analyses

Time series analyses, allocation, cross-tabulation, deviation analyses

Decision trees, regression, clusteranalyses, association approach


• What specifically do I know about the card holder?Simple descriptive analyses and profiles

Analysis of Customer Data: Buying Behavior ForecastsVia Multivariate Mining Methods

Customerinsight

• How should I segment my cusomer base, and what arethe relevant segments?Communication-specific clustering of customers

• How do I evaluate a card holder? Who are myvaluable customers?Multi-dimensional customer assessment (basis: RFM)

Customersegmentation

Customerevaluation

• How will the card holder behave in future? Who has affinity w/ which products a. what are their buying intentions?Forecast models via data mining

Customerbehaviorforecast

Com

plex

ityof

met

hods


Customer Evaluation: CAP Defines Three Different Categories of Customer Value

Find

ings

Goa

l

Evaluation of activitiesand participants‘

understanding of theprogram

Activity- and value-oriented segmentationfor CAP and Partners

• Segment-specificanalyses

• Satisfaction - and success indicators forcontinued programdevelopmentA

pplic

atio

n

Evaluation of newparticipants with

regard to top-customer potential

Evaluation of thefuture development

of existingcustomers

Evaluation of newcustomers based on

registration data

Forecast of future valuesegments

• Criteria for addressingcustomers within CIC

• Variatedcommunication withnew participants

• Utilizing churnmovements forcommunicationspurposes

• Forecasts of futuredevelopments in theentire portfolio

Marketing value Potential value Forecast value


Diverse Applications of Data Mining for Derivations in Lifecycle-Oriented Occasions of Communiation

Loya

lity

time

Prevent churnand revenueloss!

Develop yourcustomers and utilize theirpotential!

Recognize and retain your topcustomers!

Gain newcustomers and interestedparties !

Reactivationanalyses

Win-backanalyses

...Churnanalyses

Churnanalyses...

New-customeraffinities

Activationanalyses

Productaffinities

Rewardaffinities

Up-sellingaffinities

Sales-channelaffinities

Cross-sellingaffinities

Prospective-customeraffinities


Added ValueCustomer Insight

4. Addressing customers related to occasions and their needs (e.g. holiday special) providing specific information and product offerings

5. Individualised and automated customer service (based on historical customer data) via PoS terminals in addition to the card concept

6. Targeted Initialisation / ActivationFirst-year program as a tool to accompany, explain the program and activate new members to use it

1. Customer based analyses Purchase data analysis for optimizing the range of articles and the statistical evaluations of sales promotions

2. Consumer profiles and customer segments (PoSand online) based on intersectoral customer- and transaction data of the entire HappyDigits data pool

3. Store- and location analysesBased on geographic HappyDigits information of customers & potential customers

CRM-based marketing: We support our partners in getting customer insights and generating added value

Store X

In Development


CRM-based marketing: CAP provides high-frequency, fully personalized contact platforms for its partner network

HappyDigits contact platform

> 60 million items p.a. Mailings

> 40 million newsletters p.a. Email

> 20 million web page visitors p.a. Online

> 500,000 calls p.a. Call centers

Examples of marketing media

Infomailing • Digits account status,

partner coupons • Partner-specific print variations,

personalization and supplements • Mailed 4 times per year

Target group mailings • Basis: data mining analysis • Integrated partner offers,

depending on target group characteristics

• Mailed 2 to 4 times per year

Partner mailings • Content and mechanism

individually tailored to partner needs

• Use of affinity models to boost effects & impact


40 000 Variations Lead to a One-to-One

Account balance

Consumptionaffinity

Online affinity

Living situation

Place of residence

AgeIncome Interests affinity

Range of purchases

Partner utilization

Distance to currentpartnerPOS

Types of rewards

Cash-in frequency

Distance to new partner POS

Partner affinity


Individualization of:• Senders / Partners• Offers / Bonuses• Benefits• Texts

40 000 Variations Lead to a One-to-One


3-tiered campaignmonitoring: ROMI

Analytical Campaign Management Loop for a Continuous Optimization in Addressing Customers

ActionSelection

Selection

Descriptiveanalyses

Data mining

Geo analyses

Campaignexecution

Analysis Analysis


It works: Proven, Effective Support of the CRM Strategyin Partner Enterprises!

Cancellation rate Control group:

Cancellation rate Target group:

Churn- 70%

Significant reduction of customer churn

Increase in average sales receipts

Gaining new customers throughtargeted coupons

Ø sales receipt withtHappyDigits

customer card

+41%

add.revenue€ 184 848 gross-

earnings€ 52 682

couponsDigits

add.profit

€ 40 680

total costs€ 12 002

Target group selection based on HD churn models

Earnings four times thecosts invested!

Increase in revenues through datamining

Through HappyDigits a household-variable, double model lift valuecompared to the partnermodel for DSL salesCoincidence

Partner scoreCAP score

Percentage of mails sent

Thank you.

Contacts

Thorsten FranzManaging DirectorCAP Customer Advantage Program GmbHInnere Kanalstrasse 98D – 50672 ColognePhone: +49 221 - 60 60 7-100eMail: [email protected]

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