by Stephanie Overby

Loyalty Club Uses Data Analytics to Send Pitches That Hit the Target

Feb 25, 2015 3 mins
Analytics Big Data Predictive Analytics

Club Premier uses a data mart and analytics to help partners send targeted promotional offers to the customers most likely to respond

The Project: Build a customer-centric data mart and deploy analytics to improve customer acquisition and partner profitability for a multicompany loyalty program.

The Business Case: In 2010, AeroMexico spun off its frequent flier program to create Club Premier, a cooperative loyalty program jointly owned by the airline and loyalty company Aimia. Its members can “earn and burn” Premier Kilometers at more than 100 partners, including banks, retailers and travel service providers. Club Premier has collected a massive amount of data on its 3.3 million customers, from their favorite brands of liquor to when they like to shop for groceries.

“We have a lot of information from a lot of different sources, which opens up opportunities, but also creates a challenge,” says Manuel Alejandro Sánchez Vega, Club Premier’s CRM manager. The opportunity, and the challenge, is to figure out how to use that embarrassment of data riches to get a more complete picture of each member’s behavior.

First Steps: Club Premier had all member data in a single system, but it was built for transactional speed, not advanced analytics, and it did not store historical data. The company built a data mart organized by customer, not company or product. It had to standardize the transactional data coming from companies as varied as gas stations and luxury hotels. “They did not speak the same language,” Sánchez Vega explains. It also used tools from vendor SAS Institute to create data flows extending from analytic results to the business processes that could do something with that data (such as email a specific offer).

Club Premier piloted customer analytics projects with several partners. Some, like a promotional experiment for liquor retailer La Europea, started very small. Executives at the family-owned company were not experienced in data analysis. Sánchez Vega and his team won them over by showing how a narrowly targeted, SKU-specific promotion to customers in a category likely to take advantage of a deal could have a big impact on sales. Indeed, La Europea saw its business from new customers within Club Premier jump from 20 percent to 30 percent.

Other partners, like financial services companies American Express and Banamex, were already advanced analytics users. So the goal with them was to prove the value of the customer intelligence Club Premier had gathered across a broad swath of industries.

What They Discovered: Club Premier and its banking partners wanted to increase the number of members who had their jointly-branded credit cards, targeting those who would be the most active users. Big banks typically take a mass-marketing approach, but Sánchez Vega wanted to show them how Club Premier data could make it worthwhile to push the credit cards to small groups of people who were very likely to use them.

Last year, Sánchez Vega’s team uncovered a segment of customers who shared characteristics with the most active existing credit card users (for example, they bought from the same stores, lived in the same areas, flew at the same rate, had similar gas consumption) and were therefore deemed likely to sign up for and use the credit card. It was a small pool, but to the surprise of the financial services companies, the acceptance rate was 60 percent. “We shared the offer with a much smaller population, but we were really certain that those members had the right profile,” says Sánchez Vega. “It was a better response with less effort, and some of the [customer] acquisitions were totally new to the companies.”