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Bon-Ton stores recently mined 10 million customer records from its clothing stores nationwide and pulled a sample set of 100 million transactions. From that, it analyzed 200 separate factors, including what types of products customers bought, the associations between products in their shopping carts, and how many discounted products they purchased. The reason for all this data crunching: to create a model for direct-mail campaigns that could better predict which customers are likely to shop at a Bon-Ton store in the next 30 days.
For retailers like Bon-Ton, predictive analytics software is increasingly viewed as an edge. "It's a long and difficult process, and therein lies the competitive advantage," say Mike Hayes, Bon-Ton's senior VP of marketing. "A lot of companies don't want to hire the skills to do that or take the time to do it." Bon-Ton saw "marked improvement" in sales from such campaigns, using the predictive model based on software purchased from SPSS earlier this year. Advanced analytics--of which predictive analytics is a subset--has long been a separate, pricier tier from the business intelligence reporting and query tools provided by the likes of Business Objects, Cognos, and Hyperion (which were or are being acquired by SAP, IBM, and Oracle, respectively). Last year, the advanced analytics market grew 11.3% to $1.24 billion, according to IDC analyst Dan Vesset, who predicts it will grow 10% a year through 2011. What's changing, however, is that companies specializing in analytics, led by SAS Institute and SPSS, are making it somewhat easier to run programs like predictive analytics and to access the results. While the price and complexity will likely keep such tactics the province of big companies with large customer rolls, a number of recent deals show progress on making the technology more accessible.
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