Apr 4, 2006

Data mining and Actionable Customer Insight

Which is better from this cinema owner's perspective?

a) Handing this voucher to all customers?
b) Having the offer appear on the bottom of the customer’s credit or debit card receipt, based on each customer’s prior purchase behaviour?
c) Having the voucher sent by mail as part of the customer’s bank statement?

I suggested a few days ago that the movie vouchers handed out to Skycity moviegoers in Auckland could instead be delivered automatically at the point of sale as a receipt offer, at the bottom of the customer’s card receipt, and that the offer could be targeted to frequent moviegoers or to people that had not been to Skycity Cinemas in a long time.

Why couldn’t banks just send the vouchers to customers as part of the next billing statement? They could target the vouchers in a similar way, without needing to touch the point of sale system, and they could charge the merchant for the service. Since banks already sit on lots of payments data that can be mined to create new services for merchants, isn’t this a better way to go?

A data mining industry has emerged around a concept called “Actionable Customer Insight”. One company calls it the “convergence of data analytics, database marketing and qualitative research techniques to generate insights that drive business change.” A conference was dedicated to the subject a couple weeks ago, in London, with speakers from American Express, Nectar, AOL, Motorola, B&Q and Hilton, to name a few. Also see my prior post on an article in BAI Banking Strategies, Decoding the Value in Payments Data, which encourages banks to use their payments data to create new analytical and marketing services that they can provide to retailers.

There are 3 major reasons why sending the voucher by mail, maybe as part of the customer's next bank statement, is a bad idea: cost, privacy and what I call contextual relevance. My next post will describe each of these in more detail.

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