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Fingerhut Extends Data Analysis Capabilities with the Quadstone System

  Product Review published in DM Review Magazine
July 2001 Issue
  By Randy Erdahl
Quadstone, Inc.
Review of: Quadstone System from Quadstone, Inc.

REVIEWER: Randy Erdahl, director of business intelligence for Fingerhut Companies, a subsidiary of Federated Department Stores.

BACKGROUND: Fingerhut is the second-largest cataloger in the world, selling a broad range of products and services directly to the consumer through catalogs, direct marketing and the Internet. In addition to the Fingerhut catalog, the Minnetonka, Minnesota-based company also publishes Figi's, Old Pueblo Traders, Bedford Fair, Willow Ridge, Brownstone Studio, Lew Magram and Popular Club.

PLATFORMS: Fingerhut runs the Quadstone System under Windows NT.

PROBLEM SOLVED: We maintain more than 200 models across a range of analytical applications such as response and lifetime value. Our priority was to improve the speed with which we can deliver, verify and deploy these models. With sales of nearly $1.8 billion and data on 30 million households, we needed to find a method that would help us deliver the right catalog with the right products to the right customers. We wanted to incorporate an analytic tool that would both optimize our contact strategy within a multichannel environment and deliver analytics that would help nonstatisticians access the data to support better marketing decisions.

PRODUCT FUNCTIONALITY: The Quadstone System is primarily being used by Fingerhut to analyze online and direct marketing campaigns. It is also being employed to make predictions of customer behavior in areas such as response to promotions, order size, return of orders, pre-shipment cancellation of orders, lifetime value of customers and saturation of promotions.

STRENGTHS: Using the Quadstone System, Fingerhut can understand, predict and influence customer behavior in order to directly target customers who are most likely to be interested in buying particular products in the most profitable manner. This ensures that catalogs are not sent to customers who do not presently buy or are not likely to make a purchase in the near future. Added value is derived from Quadstone's advanced interactive visualization, a unique feature for extracting valuable business insight from data, giving our business analysts more control, instant feedback and a better understanding of the subtleties and detail that comprise the database. With its high-speed customer segmentation and profiling, Quadstone can create a complete view of all customer data and is able to process the information and build new models in just hours. Quadstone also helps with Fingerhut data, which in raw form has multiple categories, numerous shopper income categories, a wide range of purchasing frequencies and many promotional drivers. Because even the most logical examination of these categories would be arbitrary, we decided that an outside solution would be necessary to look at the data and help us break down the information in a responsible and meaningful way. The Quadstone System addresses this pain through a process called binning - collapsing the data in a way that is much more consequential to the business user.

WEAKNESSES: The Quadstone System requires a Windows X- Client server to support the dynamic visuals on PCs and laptops. This required us to purchase a separate license, but Quadstone worked closely with Fingerhut to ensure that installation was executed seamlessly.

SELECTION CRITERIA: Fingerhut selected the Quadstone System over other business intelligence and CRM applications because it provides a highly productive environment for analysts and has a proven ability to quickly and accurately analyze massive amounts of data while easily integrating with an existing IT infrastructure. The ability to break the data into meaningful groups for analysis was another key strength that influenced our decision to select the Quadstone System.

DELIVERABLES: We anticipate that by reducing the number of catalogs sent to customers with low purchasing indicators, we will make significant savings on advertising and marketing costs. Early tests with the Quadstone System returned results showing potential improvements of a few percentage points on campaign effectiveness - improvements that could amount to hundreds of thousands of dollars in savings.

VENDOR SUPPORT: Quadstone's support staff has been both very responsive and extremely knowledgeable on the few occasions we have had questions about the software.

DOCUMENTATION: The Quadstone System documentation includes a comprehensive product walk-through/tutorial as well as a detailed reference manual. All of the documentation is available in hard copy or online via a Web browser.


For more information on related topics visit the following related portals...
Data Mining and Data Analysis.

Randy Erdahl, group manager of corporate research for Fingerhut Companies, Inc.

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