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.
The Saga Holidays division employs about 600 corporate staff and serves approximately 300,000 customers. Saga Holidays sells a portfolio of six product lines to its customers, which include The UK, Holidays in Europe, Long Haul Trips, River Cruises, Ocean Cruises and Saga Shipping—Saga’s own cruise ships. With its brochures and leaflets being sent to many people on a regular basis, Saga is one of the largest direct mail organizations in the UK.
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 help reduce waste on large campaigns.
Furthermore, Saga Holidays was analyzing customer responsesmainly 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.
Saga Holidays selected PredictiveMarketing from SPSS, the predictive analytics provider, in order to analyze customer data, predict customer behavior and needs, and create targeted campaigns. James Gambling commented, "We selected PredictiveMarketing after a thorough evaluation of the analytics market. It easily offered us the best solution. We have experimented with conventional analytical tools in the past, which showed us that we could achieve better results, but we've not been able to make this part of each and every campaign we send out."
"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."
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PredictiveMarketing 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.
In terms of the return on investment, PredictiveMarketing has already generated the requisite amount of revenue to cover the cost of purchase, from the two campaigns. "Historically, our marketing executives have based their campaigns upon their own initiatives, and previous success and experience," said Gambling. "We're very impressed by how easy the software is to use and the fast results it provides. It also allows non-statistically minded staff to build pretty sophisticated models and deploy them on huge amounts of data—in just a fraction of the time needed previously. Using SPSS allows us to considerably reduce wasted mail packs and at the same time grow the size of the company significantly over the next few years."
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.
James Gambling
Database Marketing Manager
Saga Holidays
"So far, we have only just scraped the tip of the iceberg with PredictiveMarketing," 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 powerful software is huge. In the future we will take a much more customer-focused approach to marketing our products. We see PredictiveMarketing as the campaign optimization tool for us to achieve this."
Saga is recognized as one of Britain's best-known travel companies, and the leading specialist in providing holidays for people aged fifty and over. From origins in UK travel, Saga now offers holidays to over 60 countries worldwide, with destinations as diverse as Nepal, Ecuador, the Galapagos, and Vietnam, as well as more traditional European and long-haul destinations such as Croatia, Spain, Italy, Thailand, and South Africa. Saga now operates its own cruise ship, Saga Rose, which each year completes a "Round the World Cruise," as well as shorter cruises in the Baltic and Mediterranean. She will be joined in early 2005 by Saga Ruby, which will undertake a range of complementary itineraries. Additional information regarding Saga can be found at www.saga.co.uk.
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