Business Intelligence at BCA Don t do it without IT: Managing customers in a highly competitive environment

Transcription

1 Business Intelligence at BCA Don t do it without IT: Managing customers in a highly competitive environment Tim Schiffers Senior Vice President Corporate Development Direct Group Bertelsmann 1

2 Agenda BCA An introduction to company and business model UK Book Market The challenges and BCA s response New Database Architecture at BCA SAS as overall database marketing environment ROAC Benchmark SAS as integrated business intelligence solution? 2

3 Agenda BCA An introduction to company and business model UK Book Market The challenges and BCA s response New Database Architecture at BCA SAS as overall database marketing environment ROAC Benchmark SAS as integrated business intelligence solution? 3

4 Company Overview BCA BCA (Book Club Associates) formed in 1966, now 100% owned by UK market leader in book club and mail order marketing Specialist in Direct Marketing and Cross Channel Customer Relations: Direct Mail, Press/Inserts, Doordrops, Online, Telemarketing Annual marketing spend of over 45 million BCA in Numbers Employees 500 Members 1.5million Turnover ~ 100million General clubs Fiction clubs Specialist clubs 4

5 Overview Direct Group / Bertelsmann BCA is the fourth biggest book club business of Direct Group Bertelsmann, the world market leader in direct-to-customer business Other Bertelsmann Divisions Bertelsmann Employees 76.2k Turnover ( )17.0bn Direct Group Members >30mi Turnover ( ) 2.2bn 5

6 The Club Mechanism NM Marketing Introductory Offer Choose 5 books from 99p Channels: - direct mail - door drops - press / inserts - online - telemarketing CM Marketing Regular Catalogue Mailings (10 16 Mailings pa) - expert editorial selections - overall discounts - special offers / promotions Full E-Commerce Websites Commitment to buy a certain number of books over the term of the membership (e.g. 4 books in a year) Enforcement Mechanism - negative option - default Book Club Rights Buying licenses from publishers in contrast to retailers that buy from wholesalers 6

7 Agenda BCA An introduction to company and business model UK Book Market The challenges and BCA s response New Database Architecture at BCA SAS as overall database marketing environment ROAC Benchmark SAS as integrated business intelligence solution? 7

8 The UK Book Market An Increasingly Competitive Landscape Traditional Competition: Concentration of Booksellers New Competitors: E-commerce & Supermarkets Other Factors: Format change & Price Perception Net Book agreement disbanded Heavy discounting, but without real analysis 97 Watersone buys Dillons Borders buys Books Etc. 97 AMAZON launches in UK More selective discounting Stores become homogenous Central buying introduced 98 WHSmith buys Menzies 99 BOL launches in UK Supermarkets increase focus on selling media products, initially music and videos / DVD s, but continuously more books Concentration on key titles 03 Ottackars buys Hammicks 01 AMAZON takes over operation of Waterstones website BOL is integrated into BCA and becomes club business Tesco online becomes key competitor of AMAZON for online book retail Hardbacks are in decline as a format Size of supermarkets and chains leads to focus on key titles, which is reflected in publicity Cheap or free book promotions of magazines and newspapers

9 BCA Strategy Book Club Core Business Recruiting and servicing members in the traditional Book Club model Build on: unique publisher relations / editorial expertise state-of-the-art database marketing high performance systems (SAP, SAS, Microsoft) to constantly improve efficiency & effectiveness Additional Products and Services Complementary Club Extra offers for book club members, sourced through strategic partnerships: Video/DVD, Music, Toys, Gifts (with e.g. ) DVD Rental: Continuity Business New Business Initiatives Leveraging assets and / or know-how into related new businesses, e.g.: Party plan concept for children s books and toys: Magic Offers (direct selling) 9

10 CRM at BCA Managing the Member Life Cycle Commitment Reminders Current Member - Different chains according to behaviour to date and stage in membership Payment Reminders and Dunning - Different chains according to life stages Multi-buyer / Active Member Segmentation - Different treatments depending on current and forecasted future behaviour Contact Suppression - Frequency reduction for slow buyers New Member Activation - Welcome material - Welcome s Intro-payer New Member GOAL: Improve customer relations and customer management across all channels and stages of their membership Thus, increase efficiency and effectiveness and consequently maximize profitability Less Active Member Dormancy Prevention - Special messaging and promotions for members identified as at risk Dormant Member New Member Contact Strategy New Member Models - Response modelling - Backend modelling Lapsed Member Cancellation Reversal - Dedicated campaigns for members that have cancelled recently Dormancy Reactivation - Special messages and promotions for dormant customers - Slow buyer programme 10

11 Agenda BCA An introduction to company and business model UK Book Market The challenges and BCA s response New Database Architecture at BCA SAS as overall database marketing environment ROAC Benchmark SAS as integrated business intelligence solution? 11

12 Old Database Architecture BCA Issues Before SAP R/3 BW Protagona CustDB CD2 + Doc1 Very long campaign run-times Very long update run-times, leading to infrequent updates of customer database Array of different technologies Over-complicated business processes Objectives FastStats Implementation of an efficient Database Marketing Solution to support: New and Current Member campaigns Media Sales processes Ad-hoc analysis Modelling Replace the existing systems (Protagona, Customer DB, FastStats) Optimise the business processes 12

13 Benefits New SAS Database Architecture Before Objectives SAP R/3 BW Protagona CustDB CD2 + Doc1 Implementation of an efficient Database Marketing Solution to support: - New and Current Member campaigns - Media Sales processes - Ad-hoc analysis - Modelling FastStats Replace the existing systems (Protagona, Customer DB, FastStats) After Optimise the business processes SAP R/3 BW SAS CD2 + Doc1 Benefits Significant reduction of IT costs Improved business processes Complexity reduction Reduction of data replication Significantly improved database marketing capabilities 13

14 New SAS Based Database Architecture SAP R/3 Data Cleansing Other data sources Internet, SAS Integrated Solution for: - Campaign management - Database marketing - Data warehousing PSA BW Cubes Segmentation Templates Update Customer Account In SAP R/3 Default Programme Marketing Message Update Internet & IVR Output Systems Database Marketing (Analytics, Modelling, Segmentation) 14

15 Improved Database Marketing Capabilities due to SAS 1 Totally up to date data as updates are run daily instead of monthly 2 Elimination of data redundancies and discrepancies 3 Faster deployment of campaigns and running of analysis 4 Very robust environment with checks and balances as well as security layers 5 Openness of platform will allow to easily ad further SAS components and tools 15

16 Agenda BCA An introduction to company and business model UK Book Market The challenges and BCA s response New Database Architecture at BCA SAS as overall database marketing environment ROAC Benchmark SAS as integrated business intelligence solution? 16

17 The ROAC Benchmark Setting the Stage BW Reporting Analysis Database ( 1 TB) SAP R/3 Transactional Backbone (Finance, Sales Order Process, Billing and Payment, Marketing Campaign Planning, ) Database of R/3 (> 3.4 TB) SAS Analysis Modelling Segmentation Database ( 450 GB) Overall Situation BCA R/3 as the transactional backbone BW utilised for: Reporting Analysis Base for Protagona (segmentation engine until 09/2004) SAS Analysis Modelling Segmentation Current Member campaigns New Member campaigns Media sales 17

18 The ROAC Benchmark Setting the Stage BW Reporting Analysis Database ( 1 TB)? SAP R/3 Transactional Backbone (Finance, Sales Order Process, Billing and Payment, Marketing Campaign Planning, ) Database of R/3 (> 3.4 TB) SAS Analysis Modelling Segmentation Database ( 450 GB) Core Questions Does BCA (or other clubs) really need 2 data warehouse systems? Does SAS offer adequate and sufficient functionality in the areas of: Analysis Reporting (Finance, Marketing, ) Scenario building & forecasting Profiling Does SAS provide a sufficient technical environment in terms of: SAP integration Scalability & flexibility Performance Does an integrated solution based on SAS provide cost advantages in comparison to a split BW / SAS environment? Does an integrated solution provide synergy potential? 18

19 What and Why ROAC Prototype as Benchmark The Concept ROAC = Return On Acquisition Cost = Profit over life Acquisition cost Measures the effectiveness of NM marketing investment decisions Is measured for each individual campaign Complexities Expenditures and associated revenues are recorded over entire life of member Therefore ROAC will always have an element of actual performance and an element of forecast performance Profiles created so forecasts can be made - Lifecycle Profile speed at which members leave - Activity Profile idea of member quality over life - Purchase Profile shows how much and when members spend Requirements Forecast has to be possible 6 months after the campaign begins Reporting process has to be automated; manual data inputs should be kept to minimum Profile production has to be automated; user should be able to specify level at which profile is produced Reports have to be easily accessible and easy to interpret for all business users 19

20 Benchmark - Implementation Output Campaign Templates Ad-Hoc Architecture SAS: SAS Base ETL Server Metadata Server Segmentation Cube SAS Foundation Layer Staging Area Loading Cleansing Extraction Tools SAS: Enterprise Guide ETL Studio Data Quality Solution SAS Base SAS Solution Adapter for SAP R/3 Transactional Data: Customer Campaign Products Financial Data SAP R/3 SAS: Database Marketing SAS: ROAC Benchmark 20

21 Benchmark - Implementation (II) End User (MS Excel, Internet) Reporting ROAC Aggregation Cube Prototype Tables Profiling Forecasting Campaign Templates Segmentation Cube SAS Foundation Layer Staging Area Output Ad-Hoc Architecture SAS: SAS Base ETL Server OLAP Server Metadata Server Tools SAS: Enterprise Guide ETL/OLAP Studio Data Quality Solution SAS Base Import from MS Excel Loading Cleansing Extraction SAS Solution Adapter for SAP R/3 Data from other Systems Transactional Data: Customer Campaign Products Financial Data SAP R/3 SAS: Database Marketing SAS: ROAC Benchmark 21

22 Benchmark Findings - Functionality SAS provides very powerful tools for analysis and the running of reports as well as simulations Forecasts and profiles can be generated efficiently with a great level of detail All of the above is supported by a large array of analytical and statistical functionality In addition, the flexibility to produce own functionality remains While use of reporting and what-if-scenario is facilitated by Excel, analysis and forecasting require in-depth knowledge of SAS Data retrieval is fast and large sets of data can be sorted, grouped, structured and displayed quite easily 22

23 Benchmark Findings - Technology Data Extraction Flexibility Initial implementation process is not simple Requires deep knowledge of SAP as well as good knowledge of SAS, interface building and the extraction tool Performance of SAS extraction depends on data volumes, SAS input requires extensive file testing SAS provides very powerful development tools (4GL language, good support of standard SQL) Enterprise guide is well suited for development and power user team Performance SAS shows very impressive performance even on large volumes But, system design must be done with performance in mind, some fine-tuning necessary Performance with concurrent activities is fine overall Enterprise guide gives a lot of power to the users, this needs to be managed 23

24 Benchmark Findings Cost Advantages and Synergies Cost Advantages Synergies Unified environment will reduce costs in the following areas: - Development -AMS - Operations (hosting, hardware, storage) - Training SAS pricing is rather complex and rent instead of ownership with maintenance differs from general industry practice Integrated solution for database marketing and data warehouse provides significant synergy potential: - Reporting / analysis and database marketing to benefit from each other s work (scorecards, credit screening, segmentation, planning) - Reduction of duplication of efforts - Potential to integrate database marketing and parts of finance team 24

25 Benchmark Results Summary 1 2 Functionality High acceptance within user community Powerful system with an excellent toolset Data retrieval and manipulation are fast Broad set of standard functionalities Technology Integration SAP and SAS is acceptable Flexible and scalable architecture Impressive performance 3 Cost Integrated solution reduces the operational IT cost 4 Synergy Potential Integrated solution provides synergy potential 25

26 SAS Could Definitely Serve as the One Integrated Business Intelligence Solution for BCA SAP R/3 Data Cleansing Other data sources Internet, SAS Data Warehouse (Reporting & Analytics) ROAC Product Affinity Author Affinity Profiling Correlations Product Mix Customer behaviour PSA BW Cubes Segmentation Templates Update Customer Account In SAP R/3 Default Program Marketing Message Update Internet & IVR Output Systems Database Marketing (Analytics, Modelling, Segmentation) 26