Situation
Saga is perhaps the UK’s most well known specialist in providing holidays and financial services products for people age 50 and over. The Saga Group targets six million households nationwide and generates annual revenue of $300 million.

Critical Issue
According to James Gambling, database marketing manager at Saga Holidays, the company was spending a substantial amount of money each year on direct mail campaigns to a targeted group of approximately two million people in its marketing database. However, due to the large amount of complex information held, it was very difficult to target customers accurately, and as a result, response rates on these campaigns were in need of improvement. The company wanted to better target direct mail at people that were likely to respond and reduce waste on its campaigns.

Furthermore, Saga Holidays was analyzing customer responses mainly at a segment level. The company wanted to look beyond the customer segments it approached traditionally in order to find promising new customers and also spark new revenue streams.

Therefore, Saga Holidays needed a solution to improve the effectiveness of its mail campaigns. This solution needed to make complex analytics available for non-statistical business users. The aim was to better target retention campaigns to existing customers and acquisition campaigns to new customers, with the objective to enhance campaign results, tap into new markets, and grow its business.

Solution
Saga Holidays decided to implement predictive analytics in order to analyze customer data, predict customer behavior and needs, and create targeted campaigns. "The first step was to pilot the software," continued Gambling. "In just ten days, we had managed to install the software on our existing database and scope out a campaign by identifying 'high responder' segments based on customer information which was previously hidden in our data. The results we achieved not only confirmed what had taken years of experience to understand, but also gave us a fresh insight into other segments of the database, providing us with even more knowledge of our customers' needs."

Predictive analytics has enabled Saga Holidays' marketing department to drill down in to its customer data, reduce costs by better targeting existing campaigns, and generate additional revenue by marketing to customers not usually targeted. Standard variables of recency and frequency of purchase and inquiry were still included, but additional information, such as average spend and booking patterns, as well as activity in other parts of the Saga Group, is now also monitored.

Already in two campaigns the company has been able to achieve significant cost savings by excluding certain prospects. At the same time, it has included customers outside the normal target segments within some campaigns, which has enabled Saga to continue to grow the business. These combined initiatives have helped Saga Holidays to achieve a revenue increase of approximately $1 million on these campaigns alone.

Future Plans
"So far, we have only just scraped the tip of the iceberg with predictive analytics," concludes James Gambling. "However, as a result of it, we are now reviewing our marketing procedures and improving the knowledge of our target markets. The potential for savings and profits to be achieved using this software is huge. In the future we will take a much more customer-focused approach to marketing our products."