Invesco Uses Data Warehouse to Target Its Customers Better

Diversity may be fine for investing money, but when it comes to managing information, the Invesco Funds Group, Denver, found that simplicity is best.

It has been nearly a year since the investment adviser and distributor of mutual funds switched from a complex, involved mailing process to a data warehousing and direct marketing solution that has resulted in more efficient, precise mailings, improved response rates and savings of time and money.

“On the average, at least a dime was taken out of our cost per each direct mail piece,” said Tom Hurley, vice president of database marketing and research at Invesco. “In addition, we've also taken in excess of a week out of the cycle time required to turn a mailing around, from campaign creation to in-home delivery.”

Additionally, the company's response and conversion rates and initial dollars invested by customers have grown 25 percent compared with a year ago.

But it takes money to make money. Invesco contracted $2 million to Exchange Applications Inc., Boston, a database marketing services and software vendor, to develop a data warehouse for its more than 1 million customer records after realizing that its system was disorganized.

To begin a direct marketing program, data first had to be fed from more than 20 sources — including in-house customer records and lifestyle data from companies such as Claritas and Equifax — into one system, using an Oracle database and an array of external service bureaus.

“We would send data out to service bureaus to clean up, organize and household, and it would come back and forth five or six times before we could actually execute mailings,” Hurley said. “It was a roundabout, convoluted way to look at households and customer-level data.”

It was difficult, too, to get conversion on the responses.

“This was a particularly difficult and cumbersome process that often wasn't utilized, and when it was, it wasn't timely,” he said.

Though voluminous mailings were sent out, they were blanket and product-based to a large degree, Hurley said.

“Sure, there were times when they were targeted — where we would do some income cuts or something — but it was not organized.”

For example, a husband and wife with a retirement account and another account to pay for a child's education would be viewed as two separate accounts instead of one household account.

“Customers were receiving unnecessary mail, which certainly didn't reflect well on the company,” Hurley said.

In addition, the industry was maturing quickly, and there were market-share battles and competition for assets. Other larger companies, like Fidelity, were becoming more sophisticated in reaching customers.

“It was becoming evident in the industry that what we were able to do well three or four years ago, we were unable to do with the explosion of accounts and funds and product offerings in the industry, as well as the competition for funds,” Hurley said.

Furthermore, the company was selling more funds than ever — 36 in all, ranging from retirement plans to sector funds to international growth funds — which added to the confusion and complexity.

Invesco implemented the new solution in March 1997. It maintains the database internally but has a service agreement with Exchange Applications. Exchange's campaign-management system, ValEX, allows Invesco employees to develop multidimensional campaigns with data fed monthly into the system directly from the Oracle database.

Invesco uses the system to eliminate duplication and for targeted mailings, dropped to between a half-million and a million households eight or nine times per year.

In about three months, the system should “be a much more automation-driven, trigger-based process, where monthly processes will drive event-based mailings to new or reactivated customers, mature customers, dormant or zero-balance customers, or prospects,” Hurley said.

By then, he said, the company will be more comfortable with the system.

“To be event-based, we really need to understand the power of our system and how to actually use the technology to set up a behavior-based or life cycle-based direct marketing program,” he said, adding that the company is planning to mail a million targeted mailings monthly after this period.

The system has taught Invesco much about its customers. For instance, it revealed that inquiry response rates were higher when brochures were not sent with mailers. Invesco thought the opposite was true. This revelation resulted in a lower cost per fulfillment.

Future plans include integrating external data sources and data mining systems into the data warehouse. But for now, Invesco is happy with the data warehousing goals that were met.

“The most important thing we wanted to do [with the database] was use it to get away from the mind-set of selling funds or pushing product to understanding the customer and managing customer relationships,” Hurley said, “and we have been able to do this.”

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