Leading edge algorithms automate one-to-one marketing

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By: Wise Marketer Staff |

Posted on February 5, 2002

Leading edge algorithms automate one-to-one marketing

An Israeli company is using algorithms that its scientists developed for pattern recognition in medical diagnosis to automate CRM marketing.

Israeli data mining and consumer personalisation solution provider, Sagarmatha Ltd., has launched its Personal Promotion Builder (PPB) in the US. It is intended for bricks and mortar and online retailers who operate high transaction level databases. PPB automatically analyses customer loyalty and other purchase characteristics and then - also automatically - generates personalised incentives through a variety of channels: direct mail, web sites, e-mail, kiosks, mobile phones or even PDAs.

Automatic According to Will Phillips, president of US marketing for Sagarmatha, PPB is not  a system that requires repeated human intervention: instead, it's "a complete and totally automatic solution that delivers true one-to-one personalization - all without the need for human-driven hypothesis."

It automatically detects sales-building opportunities within each household (such as category voids, category under performers, and potential for increased sales). It also detects loyalty enhancing opportunities and recognises lost and declining shoppers. It then selects a set of promotions aimed at increasing loyalty and measures the response.

Pattern recognition algorithms The heart of the system is a data mining engine originally developed for pattern recognition in the field of medical imaging diagnostics. Its new algorithms make it one of the most sophisticated multi-dimensional data mining tools to be used for promotional purposes.

Two markets It is targeted at two markets: loyalty programme operators and credit card issuers. It is currently used by three out of Israel's four top retailers: the largest grocer, largest pharmacy and largest general merchant.

Pharmacy Sagarmatha analyses the pharmacy's loyalty programme database and produces personalised coupons for each customer each month. Over the last year, the spend per cardholder has increased by 24% and frequency and loyalty levels have increased measurably.

Credit cards A credit card company that used the PPB-CC system to analyse its customer base and toproduce an optimised set of merchant offers for each customer achieved coupon redemptions ten times higher than in the control group.

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