Evaluation Report – SPSS Predictivemarketing

April 2006 Document G21 EVALUATION REPORT SPSS PREDICTIVEMARKETING Corporate Headquarters Nucleus Research Inc. Nucleus Research Inc. www.NucleusResearch.com 36 Washington Street Wellesley MA 02481 Phone: +1 781.416.2900 Fax: +1 781.416.5252 April 2006 Document G21 RELATED RESEARCH THE BOTTOM LINE G15 SPSS ROI case study SPSS PredictiveMarketing solutions enables companies to increase FBTO marketing staff productivity, reduce marketing campaign costs, and F121A Closer look at increase profits by targeting the right customer at the right time with the SPSS right campaign. F31 The Real ROI from SPSS F113ROI Scorecard – Business Intelligence SPSS’s PredictiveMarketing solution leverages SPSS’s strengths in predictive suite market analytics and business rules logic to support marketing campaign planning, optimization, and execution. Using PredictiveMarketing customers can: Identify the right customers for a particular outbound marketing campaign. Select and optimize multiple campaigns based on desired outcomes. Choose the right channel for each customer. Determine the appropriate time to contact customers with a particular campaign. Coordinate multiple campaigns across channels to reduce overlap and maximize responses. Companies seeking to improve marketing effectiveness or reduce the cost of their marketing efforts have a number of different technology choices, including traditional business intelligence tools, marketing campaign management and other tools from CRM vendors, pure statistical analysis tools, and analytics-based solutions such as PredictiveMarketing. Nucleus analyzed the experiences of PredictiveMarketing customers to determine the potential ROI from such a solution. Customers were in sectors with large business-to-consumer sales and marketing components, such as insurance, travel, and financial services. The challenge PredictiveMarketing customers faced a common challenge: the need to reduce marketing costs while improving marketing effectiveness. Many customers had extensive historical data that they had either gathered or purchased from multiple sources, and they wanted to better leverage that data to reach customers without overwhelming them. As one customer said, “We knew we were mailing a little too deep — and a few customers were receiving a little too much from us. We wanted to find a way to reduce the number of customers in mailings but also to hopefully identify new types of customers that we couldn’t target properly using our existing selection techniques.” Although most SPSS PredictiveMarketing customers were already using other business intelligence tools for other tasks, they found that those tools were being used to generate reports on data and convert information from one format to another — but not to drive proactive decision making, and use this information to drive marketing campaigns. Instead of a tool to push information out to users in the way they requested it, they needed a solution that could pull data from multiple sources and then enable the user to build models around the data to better understand it. Functionality beyond reporting, such as predictive analytics, was key to improving their marketing effectiveness. © 2006 Nucleus Research, Inc. Reproduction in whole or part without written permission is prohibited. Nucleus Research is the leader in the return on investment analysis of technology. www.NucleusResearch.com 2 April 2006 Document G21 A number of customers also had CRM solutions in place, but were looking to predictive analytics to provide a way to mine existing customer data to better understand and to predict the behavior of customers. As one customer said, “We didn’t want a total CRM solution — we had a lot of applications we had built ourselves. We wanted something that could work from the data mining point of view and instead of pushing our products to consumers, looking at the behavior of the customer and how the customer is evolving and what we can do to satisfy their needs.” Finally, customers were also looking for a solution that didn’t require extensive training or database or statistical knowledge. Some were using or had considered other statistical or analytics packages but found them to be too complicated or expensive to learn and support to be effective: “Most analytics tools require an understanding of statistics — you do have to understand the database and what’s there. We have a long history of doing direct mailings but we’re not incredibly “techy” experts — we’re just used to using our database to understand our customers.” “We chose PredictiveMarketing because we needed the power of analytics with simple functionality — more of a power user tool for a marketing user than a statistical modeling tool.” KEY BENEFIT AREAS Nucleus analysts identified a number of key areas where SPSS PredictiveMarketing customers achieved returns, including reduced mailing costs, increased revenues, increased staff productivity, improved operations, and improved customer satisfaction. Reduced mailing costs All the customers Nucleus interviewed cited a goal of reducing mailings as a motivation for investing in SPSS PredictiveMarketing ― and found that they were able to dramatically reduce mailing volumes while increasing response rates. Companies sending out more than one million pieces of promotional materials a year are likely able to justify the investment in PredictiveMarketing on mailing cost savings alone. One customer noted, “Within two mailings, we saved enough to pay for the solution.” PredictiveMarketing can enable customers to reduce mailings by up to 50 percent while maintaining or improving campaign response volumes. Increased revenues At the same time they reduced mailing volumes, customers were able to increase revenues by better targeting the promotions they did send to customers. PredictiveMarketing enables users to add business rules such as restrictions on channel, budget, and customer contact, and see the best strategy for maximized revenues. Users can also use PredictiveMarketing to analyze strategies across multiple campaigns to maximize overall revenues. One customer reported more than one million dollars in increased profits by increasing average conversion rates for two campaigns from one to three percent. © 2006 Nucleus Research, Inc. Reproduction in whole or part without written permission is prohibited. Nucleus Research is the leader in the return on investment analysis of technology. www.NucleusResearch.com 3 April 2006 Document G21 A number of PredictiveMarketing customers have moved beyond simple event planning to support real-time interaction with customers via the Web and call center, driving offers to the customer based on the customer profile: “We have 10,000 fewer calls in the call center with more bookings, and we changed the flow of the Web site so the offers customers get are related to their data after they log in — so they get the right offer. Looking at all the combined campaigns together, we’ve conservatively gotten a million euros in increased profits.” “It’s really good for cross selling. Our numbers in terms of outreach may be low but customers like it because when we call they know we’re thinking about their situation and can recommend things that they need.” Increased marketing productivity PredictiveMarketing customers found the ease of use and reusability of the solution enabled them to reduce the time they spent planning campaigns and take advantage of more sophisticated modeling and planning that would have been cost-prohibitive using traditional planning methods. Marketing time savings translated into a number of benefits including better use of data and better campaign management. Using PredictiveMarketing can increase database marketing staff productivity by 40 to 60 percent depending on the current level of analytics sophistication. Many customers had used predictive analytics before, but found the time and effort needed to build and run models and use them in marketing campaigns was time consuming and difficult for the uninitiated user.