Data-Driven Marketing Case Studies (Progressive & Macy’s)
Progressive (one of the largest providers of car insurance in the U.S.) and Macy’s (a major U.S. retailer) are both multi-billion dollar companies that stay ahead of the curve. Today, we will review real-life case studies that show how these companies use data-driven marketing insights to make business decisions and drive growth.
Most of what is covered can be found within research published by MIT Technology Review, in conjunction with Google Analytics 360, entitled, “How Analytics and Machine Learning Help Organizations Reap Competitive Advantage.” The full case study can be accessed here.
How Progressive Uses Data to Make Decisions
When Progressive launched its mobile app, it was only used to get quotes for its various insurance products. However, when they looked into the data and studied how their users interacted with the app, they found out that a vast majority were interested in buying insurance directly from the app. Therefore, a “buy” feature was added, which accounted for $2 billion in written premiums within a year.
“The team recognized its mobile users wanted to do more than simply get information,” said Pawan Divakarla, Data and Business Analytics Leader at Progressive. “We said, ‘It looks like, from the data, people are attempting to buy and so we should put buy-related software up there. It was a really big ‘aha’ moment.”
Furthermore, in 2008, Progressive launched its Snapshot®, Pay As You Drive® program. This is referred to as usage-based insurance technology. Snapshot uses mileage, time of day and what it calls “hard-braking” data (measuring driver behavior) to determine driver discounts. This has enabled Progressive to personalize insurance rates based on actual driving patterns rather than historical factors. Essentially, the safest drivers gets the best car insurance rates! Genius!
Once the mobile app is downloaded or the plug-in device inserted, driving data begins to be collected in real time.
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To date, Progressive has collected more than 10 billion miles of driving data with Snapshot. According to their website, this has resulted more than $700 million in discounts for their customers.
For Progressive, “data-driven marketing” isn’t just a buzzword, it is a core part of their business.
“Data is really the bread and butter for us. It’s all we do,” Pawan acknowledges. “We have a reverence for data and when you think of it that way, you treat it with respect.”
By using data to drive decisions, Progressive is able to introduce a new quality product that better serves their users. For example, Snapshot has advanced functionalities that can identify an issue with a customer’s alternator before it becomes a problem! This is a great value add!
Rather than being reactive, Progressive is moving towards being predictive (a la Predictive Analytics). This is only possible through the collection, analysis and implementation of data.
How Macy’s Make Data-Driven Decisions
Another example of data-driven marketing is how Macy’s uses data to formulate ad-hoc queries.
By definition, ad-hoc simply means something done for a particular purpose. In business, ad-hoc analysis is a solution designed for a specific (future) problem.
How this helps Macy’s make data-driven decisions
Through machine learning, algorithms can learn from current and past data to help identify future problems before they arise. This helps executives and managers make faster decisions when the time calls for it.
“Ad-hoc queries encourage people to learn. There are very simple questions that a manager who is not a data scientist can ask.” — Nur Ghani, Vice President of Marketing Analytics and Decision Sciences, Macys.com.
Therefore, “ad-hoc queries” is simply a fancy way of referring to future questions, problems or issues that may arise and enables business leaders to innovate and create solutions for the future.
“Machine learning is figuring out all the information you’re not asking,” said Sagnik Nandy, Google’s VP of Engineering. “Once you have that information, you can generate insights even before a question is asked. That can be a huge competitive advantage.”
Companies like Macy’s and Progressive are increasingly moving towards a predictive model to help them forecast the future and stay ahead of the competition.
While most businesses are reacting to new challenges, companies like Macy’s and Progressive are already creating solutions for those (and future) problems. This puts them in a great position to introduce products to the market before their competition.
Is a Data-Driven Marketing Strategy Right for Every Business?
The short answer is yes! In a recent McKinsey Global Survey, high performing companies say data analytics has had a greater impact on revenue in the past three years. However, the companies that lag behind do so due to lack of executive support and organizational structure that supports analytics.
Smart organizations are using data analytics and sophisticated data-driven tools to focus on the future, rather than on the past. They gain insights from the data they collect on their customers. But perhaps, more importantly, they use that data to create marketing strategies that drive business growth.
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