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future value of 96.2 percent of all customers on the database with 96.8 percent accuracy. Acxiom allocated the customers to low, medium, and high future value bands. Using these segments, Golden Casket: Created a retention strategy for customers whose future value was likely to decrease. Continued the current strategy for those whose future value was not likely to change. Took a stronger focus to build a relationship with customers whose future value was likely to increase. Behavioral segmentation model Acxiom clustered Golden Casket s customers within value bands. Thirteen behavioral clusters emerged. Acxiom found that six of these variables accurately de ned customer behavior: The number of games played The number of certi cates used Brand The total amount spent The number of games played per week Methods of play chosen This model told Golden Casket which customers could be in uenced to move to a more desirable cluster. Cross-sell model Using a neural network to track historical behavior, each customer was scored with a percentage probability of playing another of the seven games. Table 10-11 shows the way it worked (all names are ctional). Since Jane Smith is 95 percent likely to play Saturday Gold Lotto, the strategy is to reinforce her behavior. Trying to cross-sell other Table 10-11 Lotto Results
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Likelihood of Playing These Games Saturday Wednesday Tuesday Thursday Gold Lotto Gold Lotto Oz Lotto Powerball Jane Smith John Brown Pat Johnson 95.0% 23.0% 65.0% 2.0% 25.0% 31.0% 2.0% 27.0% 3.0% 1.0% 25.0% 1.0%
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brands to Jane would waste marketing dollars, create annoyance, and undermine her loyalty. John Brown is a good candidate to purchase all brands. His behavior is always reinforced to retain his loyalty. Pat Johnson prefers Saturday Gold Lotto, but Golden Casket should try to cross-sell her on Wednesday Gold Lotto at every opportunity.
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The entire loyalty program was restructured and relaunched around the cross-sell model. When players purchased an entry, each receipt gave them a chance to win a free surprise game instantly at the point of purchase. Which free game they could win was determined using the crosssell model (e.g., Jane Smith would win a free Saturday Gold Lotto game, whereas Pat Johnson would win a Wednesday Gold Lotto game). The terminals at the 1150 retailers were linked to the central Golden Casket database. When any of the 710,000 active Winners Circle players purchased an entry, a personal message was printed at the top of the lottery receipt. If the cross-selling model indicated that the player was likely to play Powerball, the message would promote Powerball. The personal message was also used to alert ag players to outstanding prizes. Before this system, Golden Casket had mailed more than 10,000 checks a week, at a cost of $520,000 per year for the mailing alone. With the new system, special messages printed on the receipts alerted winners to their prizes, which could be claimed at the retail agent. A screen message on the agent s terminal also used the cross-sell model on each customer, prompting the agent to either cross-sell the appropriate game or reinforce the customers Winners Circle buying habit. If the player was to be cross-sold Powerball, the agent would be prompted to mention the Powerball jackpot for that week. The cross-selling recommendation was put on the call center screens as well. When a player called, a screen would prompt the call center operator as to what game to suggest. The model was also used to develop direct-mail cross-selling offers. One example was a letter and promotional premarked certi cate that was mailed to 50,000 players
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identi ed by the models. Of those who were sent the offer, 21 percent played the game identi ed by the certi cate, compared to 1 percent of the control group (10 percent of the le). Interestingly, the promotional certi cate was available in the store to the control group. Prior to using the model, Golden Casket averaged response rates of 10 to 12 percent. The company now consistently achieves direct-mail response rates of over 30 percent by using combinations of the models. The Golden Casket Web site was upgraded to allow Winners Circle players access to their personal information. Players can check for outstanding prizes, update their details, and opt in and out of various offers such as, Email me every time the Powerball jackpot reaches $5 million. Additionally, when a Winners Circle player visits online, the cross-selling table is used to populate the banner ad and promotional elds.
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