Profile - How We Use Big Data
The Goal Is Finding Customer Preferences
Some of the world’s most successful companies use big data to target business opportunities, but can this approach help companies in the ad specialty industry? Top 40 distributor National Pen Company (asi/281040) makes the case it can. “The first thing the data does is provide us a high level of confidence in our ability to predict outcomes from our marketing campaigns,” says Dave Thompson, president of National Pen.
From there, as National Pen analyzes data, it looks for customer preferences related to timing, sampling, decoration styles and communication patterns. “We can determine what time of year is optimum to key in on different segments of customers, what rotation of product samples we should send, and what kind of personalized imprint we should put on the sample,” Thompson says.
Read more of Thompson’s big data insight.
Q: What is National Pen’s business model?
A: National Pen is a direct marketing company specifically targeting small businesses in 23 countries. What makes us unique is that we don’t have any salespeople who actually visit our customers due to the economics of very small order sizes from this market segment. Secondly, we are likely one of the few distributors in our industry doing business on such a global scale tied to a very specific niche.
Q: Why is collecting and analyzing big data so important to your model?
A: Direct marketing is completely built on data models and our ability to run marketing campaigns which beat the control. The control represents what our best practices have been in the past with a similar group of customers or prospects related to products, prices and promotions. National Pen has been working on the continuous improvement of this business model for many years and we’re very reliant on what we’ve learned.
Q: Give an example of how data helps National Pen win a sale or reach a customer.
A: A basic example would be associating product preferences to business SICs. For instance, we know that plumbers generally prefer low-cost plastic pens and attorneys are more inclined to buy higher priced metal pens. The data is also a strong indicator of customer preferences for communication – some of our customers love to speak with us directly on the phone while others interact exclusively online. Customer order patterns help us differentiate our communications making clients happier and us more efficient.
Q: What kinds of resources are needed to be successful in your approach?
A: With approximately one million customers around the world and an opportunity to sell to 60 million small businesses, there is a lot of data out there. From an analytical perspective, we leverage external firms who have extremely sophisticated modeling capabilities. Internally, we have a team of people around the globe who are data scientists and have extensive experience working at National Pen. Finally, we’ve purchased external tools to help non-data geeks answer many of their own questions with simple selection filters.
Q: Has the company seen improvements due to its concentration on analytics?
A: Absolutely, the company has grown the top and bottom lines dramatically over the past seven years. Our pursuit of improvement versus what we have done in the past is what makes the business so exciting. We’re constantly testing new approaches with the data ultimately keeping score. What’s great about our business model is we can test almost anything due to our direct mail sample delivery mechanism and historical experience.
Q: What advice do you have for firms that want to invest more in data analysis?
A: Identify what questions you want answers to and determine the easiest way to obtain the data to support the exploration. In a traditional business model, tools like Salesforce.com can do a great job of providing this data. In the online world, Google Analytics is a similar comparison to provide data to begin the process. I can’t tell you how often we think we know which test our customers will prefer, and yet we’ve been surprised with a different result – the beauty is we are now just a little bit smarter.