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Retelling the Data Story

By Richard H. Levey, Senior Writer, “DIRECT Magazine”

This article describes a predictive model and associated database work performed by Wheaton Group on behalf of one of its clients, The Parable Group.

This article appeared in the April 1,2002 issue of Direct Magazine.  A summary is provided below, with the permission of Primedia Business Magazines and Media.  For the complete text, please see: http://www.directmag.com/ar/marketing_retelling_data_story/

Thanks to a predictive model generated from a gutted and rebuilt customer database, The Parable Group garnered an impressive 31.9% response rate for a catalog mailing… The gains were all the sweeter for the headaches involved in setting up the model.  Long before the model run that produced those results, the Parable database required a great deal of massaging.

The San Luis Obispo, CA-based company provides products and marketing materials to nearly 1,000 independent Christian merchandise retailers around the United States.  Although nearly 300 of them are branded under the Parable name, they are still independent retailers.  Their data comes to Parable's database in a variety of formats, and with different degrees of completeness…

It turned out that the outside contractor charged with maintaining the file was recording the location of a given customer's most recent purchase as the “local” store, even if the customer lived in California and visited a store in Maryland, says Jim Wheaton, principal of The Wheaton Group, a Chapel Hill, NC database strategy and design firm that assisted [Melissa] Lundie, [Parable's information and marketing strategy manager]. 

The new database also replaced attributes that had been set up as ranges, such as recency, with a series of open-ended fields, allowing for greater modeling flexibility…

After bringing the database in house, Parable began running test models to determine which product categories were indicators of additional purchases.  “[Parable] has several of these magic categories,” Wheaton says.  “And there is an additional variable – people who have bought across multiple product categories.  If you have purchased from category ‘A,’ and only category ‘A,’ that may suggest you won't be a good customer.  But if you have purchased from category ‘B,’ you may be an excellent customer”…

Parable's recent database efforts have focused on expanding the number of stores that can use the predictive model, despite not having the necessary data history.  To facilitate this, Parable has run a series of “sensitivity models” in which it used just six month's worth of historical purchasing data.  While there was a falloff in the models' accuracy, their performance curves were still “highly acceptable,” according to Wheaton, although less reliable than for those with the fuller scope of data…

Jim Wheaton is a Principal at Wheaton Group, and can be reached at 919-969-8859 or jim.wheaton@wheatongroup.com.   The firm specializes in direct marketing consulting and data mining, data quality assessment and assurance, and the delivery of cost-effective data warehouses and marts.  Jim is also a Co-Founder of Data University www.datauniversity.org.

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