Thursday, April 24, 2008

WiseGuys Gives Small Firms Powerful List Selection Software

Like a doctor specialized in “diseases of the rich”, I've been writing mostly about technologies for large organizations: specialized databases, enterprise marketing systems, advanced business intelligence platforms. But the majority of businesses have nowhere near the resources needed to manage such systems. They still need sophisticated applications, but in versions that can be installed and operated with a minimum of technical assistance.

WiseGuys from Desktop Marketing Solutions, Inc. (DMSI) is a good example of the breed. It is basically a system to help direct marketers select names for catalog mailings and email. But while simple query engines rely on the marketer to know whom to pick, WiseGuys provides substantial help with that decision. More to the point—and this the hallmark of a good small business product—it provides the refinements needed to make a system usable in the real world. In big enterprise products, these adjustments would be handled by technical staff through customization or configurations. In WiseGuys, marketers can control them directly.

Let’s start at the beginning. WiseGuys imports customer and transaction records from an external fulfillment system. During the import process, it does calculations including RFM (recency, frequency, monetary value) scoring, Lifetime Value, response attribution, promotion profitability, and cross-purchases ratios between product pairs. What’s important is that the system recognizes it can’t simply do those calculations on every record it gets. There will always be some customers, some products, some transactions, some campaigns or some date ranges that should be excluded for one reason or another. In fact, there will be different sets of exclusions for different purposes. WiseGuys handles this gracefully by letting users define multiple “setups” which define collections of records and the tasks that will apply to them. Thus, instead of one RFM score there might be several, each suited to a particular type of promotion or customer segment. These setups can be run once or refreshed automatically with each update.

The data import takes incremental changes in the source information – that is, new and updated customers and new transactions – rather than requiring a full reload. It identifies duplicate records, choosing the survivor based on recency, RFM score or presence of an email address as the user prefers. The system will combine the transaction history of the duplicates, but not move information from one customer record to another. This means that if the surviving record lacks information such as the email address or telephone number, it will not be copied from a duplicate record that does.

The matching process itself takes the simplistic approach of comparing the first few characters of the Zip Code, last name and street address. Although most modern systems are more sophisticated, DMSI says its method has proven adequate. One help is that the system can be integrated with AccuZip postal processing software to standardize addresses, which is critical to accurate character-based matching.

The matching process can also create an organization key to link individuals within a household or business. Selections can be limited to one person per organization. RFM scores can also be created for an organization by combining the transactions of its members.

As you’d expect, WiseGuys gives the user many options for how RFM is calculated. The basic calculation remains constant: the RFM score is the sum of scores for each of the three components. But the component scores can be based on user-specified ranges or on fixed divisions such as quintiles or quartiles. Users decide on the ranges separately for each component. They also specify the number of points assigned to each range. DMSI can calculate these values through a regression analysis based on reports extracted from the system.

Actual list selections can use RFM scores by themselves or in combination with other elements. Users can take all records above a specified score or take the highest-scoring records available to meet a specified quantity. Each selection can be assigned a catalog (campaign) code and source code and, optionally, a version code based on random splits for testing. The system can also flag customers in a control group that was selected for a promotion but withheld from the mailing. The same catalog code can be assigned to multiple selections for unified reporting. Unlike most marketing systems, WiseGuys does not maintain a separate campaign table with shared information such as costs and content details.

Once selections are complete, users can review the list of customers and their individual information, such as last response date and number of promotions in the past year. Users can remove individual records from the list before it is extracted. The list can be generated in formats for mail and email delivery. The system automatically creates a promotion history record for each selected customer.

Response attribution also occurs during the file update. The system first matches any source codes captured with the orders against the list of promotion source codes. If no source code is available, it applies the orders based on promotions received by the customer, using either the earliest (typically for direct mail) or latest (for email) promotion in a user-specified time window.

The response reports show detailed statistics by catalog, source and version codes, including mail date, mail quantity, responses, revenue, cost of goods, and derived measures such as profit per mail piece. Users can click on a row in the report and see the records of the individual responders as imported from the source systems. The system can also create response reports by RFM segment, which are extracted to calculate the RFM range scores. Other reports show Lifetime Value grouped by entry year, original source, customer status, business segment, time between first and most recent order, RFM scores, and other categories. The Lifetime Value figures only show cumulative past results (over a user-specified time frame): the system does not do LTV projections.

Cross sell reports show the percentage of customers who bought specific pairs of products. The system can use this to produce a customer list showing the three products each customer is most likely to purchase. DMSI says this has been used for email campaigns, particularly to sell consumables, with response rates as high as 7% to 30%. The system will generate a personalized URL that sends each customer to a custom Web site.

WiseGuys was introduced in 2003 and expanded steadily over the years. It runs on a Windows PC and uses the Microsoft Access database engine. A version based on SQL Server was added recently. The one-time license for the Access versions ranges from $1,990 to $3,990 depending on mail volume and fulfillment system (users of Dydacomp Mail Order Manager get a discount). The SQL Server version costs $7,990. The system has about 50 clients.

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