Case study: Iceland's Bonus Card improves insightWhen the UK's Iceland frozen foods chain decided to launch a new Iceland Customer Card with the goal of building up a detailed and accurate single view of the company's three million customers, a technology platform from Trillium Software was introduced to gain better customer intelligence and to enable personalised direct marketing.
For many years, Iceland has collected customer data at multiple touch-points. Stores collect data locally to enable home deliveries, while a contact centre gathers customer data for correspondence. Telesales and an online home shopping site - channels which have both since closed - also collected large volumes of customer data that is still available to Iceland today.
"We collect customer data in localised repositories which we merge, mostly for home delivery and direct marketing purposes, to our central customer data warehouse," said Mark Pearson, IS Director at Iceland. "From 1999 until mid-2008, we applied basic but vital data cleansing processes to handle simple postcode verification and de-duplication."
In October 2008, as a key component of its enhanced customer relationship strategy, the company went nationwide with the Iceland Bonus Card, offering shoppers its 'Win, Save and Deliver' benefits: swipe the card at the checkout for the opportunity to win prizes, save money through money-off coupons, and enjoy the time-slot home delivery service for goods bought in-store.
In return for the Bonus Card benefits, customers allow Iceland to capture data about their store transactions and to conduct automated basket analysis. The retailer builds a profile of consenting shoppers and intelligently generates Bonus Card-related discount coupons and personalised direct marketing offers relevant to each customer.
Trials of the card had shown that its introduction increased store performance, check-out interaction and customer experience ratings. Executive sponsorship for the card was strong and a launch planned nationally.
Clearly, introducing the card would lead to a significant increase in customer data volumes and data processing. Iceland would need to capture customer data, cleanse it and match it with records in the customer data warehouse. It would then need to update those records to create a clean, current and accurate single customer view (SCV), both quickly and on an ongoing basis.
"We recognised that our existing and relatively simple data quality process needed to be improved to maximise the value of Iceland Bonus Card data," said Pearson. "We were predicting a significant uplift in weekly Bonus Card registrations following on from the national launch. We determined that strong, smooth data quality processes were an absolute necessity."
As the retailer rolled out the new Bonus Card, hundreds of thousands of card swipes a week from across the store network would need to be swiftly and accurately matched against each card holder's profile. Any problems in this matching process could lead to long check-out queues, home delivery delays and customer frustration - as well as starving marketing of consumer data.
Iceland was attracted by the extensive data quality rules built into the Trillium Software System, which meant the company could implement the solution and reap its benefits quickly. In addition, the system facilitated the company's model of collaboration and data quality between the IT department and other areas of the business. "The data visualisation features within the data discovery and profiling tools support understanding and enable a consensus to be reached on the meaning of data, data fields, issues, rule definition changes and process improvements and the like," said Pearson. Since the launch, business and IT representatives have continued to meet regularly, using the tool to help them review data quality performance, processes and rules.
Successful going live in 2008, the PAF (postal address file) match rate increased initially by 9%. Multiple instances of duplicates were also spotted and resolved. Within six months, further rule refinement delivered a additional 4% match to PAF. This meant significantly more customers could be profiled and mailed post-implementation - offering the potential for an increased return on investment from direct marketing.
Iceland mails one of two types of Bonus Card welcome packs to all new applicants, one targeting existing home delivery customers and the other aimed at those who appear not to have used the service - a process requiring accurate identification of existing home delivery users.
In the four weeks following the launch of the Iceland Bonus Card, the company received a huge spike in registrations from stores; a figure which has six month's later stabilised. More than 70% of customers on Iceland's customer database now hold a Bonus Card.
Based on pre-launch trials, Iceland had a forecast for the number of transactions that would be accompanied by a Bonus Card. "In fact, the card has proven so popular, the level has surpassed the forecast and is climbing," said Vost.
The card has been very effective in providing information not only about home delivery customers (about whom Iceland already held limited data, such as a home address), but also on 'shop and go' customers (who take their shopping with them and were previously anonymous to the retailer's marketing systems).
"This strong data quality process means that, with every Bonus Card swipe, we are capturing home delivery address, shopper and basket details immediately," said Vost. "We are capturing data at the tills without slowing check-out times, while at the same time improving our customer intelligence base and the relevance and success of our direct marketing by personalising offers to each individual's profile."
"Senior Management, including our Finance and Marketing Directors, receive a regular update of our current and targeted data quality rates from the business," concluded Pearson. "The Board recognises that at Iceland Foods, good customer data improves business performance and they take an interest in data quality as a part of their overall governance duties."
Iceland Foods focuses on frozen foods at low prices, and has more than 700 stores throughout the UK, with an annual turnover exceeding 1,800 million. The IT setup involves a Teradata data warehouse, SQL Server, IBM EPOS, and the Microsoft .NET platform.