FEDEX TAPS INTO DATA WAREHOUSE:
COMPANY USES SOFTWARE TO SPEED UP MARKETING CAMPAIGNS

When your business has nearly 5 million customers and shipping activity in 212 countries, it might seem impossible to know and understand those customers. But for Federal Express, a long-range vision and a carefully executed marketing data warehouse have shifted the company's focus from product to customer.

In the process, the company has empowered its marketers by giving them direct access to information. Today, all of FedEx's 100 annual direct mail and telemarketing campaigns are highly targeted, customized communications. The bottom-line benefit is an eight-to-one return on direct marketing dollars.

Accessing customer knowledge

Behind this success is a sophisticated marketing system that moves data warehouse information from a mainframe to a client-server environment. With access to customer knowledge, marketers can now plan and execute marketing initiatives that focus on customer value. More important, the company can accurately gauge results of marketing efforts and modify strategies accordingly.

Key to the project is a campaign management software called ValEx from Exchange Applications, Boston. The software sits on top of FedEx's data warehouse and is used to identify marketing opportunities, plan and execute campaigns, capture and assess results, and refine subsequent campaigns based on those results. Because ValEx speeds marketing execution and analysis, campaign cycle times have decreased from 26 weeks to eight.

Since rolling out the system, FedEx has significantly increased its ability to measure marketing results and has seen a fourfold improvement in marketing campaign returns, says Tom Wicinski, managing director of marketing analysis at FedEx's Memphis office.

"Once we got into this new marketing paradigm, marketing dollars weren't so much sunk costs as investments," he says.

Another important aspect of the system is its easy-to-use interface, which allows marketing specialists to independently analyze and control their marketing segments.

"It's like running their own small business," says Mr. Wicinski. "They're making the investment decisions, doing the analysis necessary to make that small segment profitable."

An added benefit is more consistent customer communication. Having one marketer control the messages going to particular customer segments provides a more unified view of the company.

How it works

FedEx marketers go through a rigorous process of analyzing the company's customers, looking for gaps within each customer segment. Once an opportunity is uncovered, access to historical data allows marketers to review the types of programs that work best for each segment.

For example, pricing programs may work best for one segment, while just sending a thank-you note is effective with other customers. Armed with this information, the marketers can prioritize options.

Through this process, FedEx is able to optimize its offers and make sure they're reaching the right customers at the right time. Rather than making a global offer that gets response rates of about 0.5%, FedEx is able to make targeted offers that garner response rates of 20% to 25%, Mr. Wicinski says.

Improvements in collecting, tracking and analyzing customer information have also enhanced the company's ability to predict how customers will react to its marketing offers.

Most of its modeling has been specific, such as who is most likely to respond as a prospect and who is most likely to use product A vs. product B.

"We've gotten very good at being able to predict those responses based on past behavior," Mr. Wicinski says. "Obviously, we have room for improvement on those, but I definitely think that FedEx is one of the leaders in the implementation of that technology."

While he wouldn't comment on the cost of the project, Mr. Wicinski says FedEx has received a hefty return on its investment.

"The view we have of customers now more than justifies what we've done," he says.