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Chapter 5 / Data Resource Management ● 215

4
REAL WORLD Applebee’s, Travelocity,
and Others: Data Mining for
CASE Business Decisions

R andall Parman, database architect at restaurant chain


Applebee’s International and head of Teradata’s user
group, opened Teradata’s annual user conference in
Las Vegas with a warning to those who aren’t making the best
use of their data. “Data are like gold,” Parman noted. “If you
unstructured comments so that it can better monitor and re-
spond to customer service issues.
The online travel site has begun to install new text ana-
lytics software that will be used to scour some 40,000 verba-
tim comments from customer satisfaction surveys, 40,000
don’t use the gold, you will have someone else who will e-mails from customers, and 500,000 interactions with the
come along and take the opportunity,” speaking to a room call center that result in comments to surface potential cus-
packed with almost 3,900 attendees. tomer service issues. “The truth is that it is very laborious
Parman drew an analogy to the story about Isaac and extremely expensive to go through all that verbatim cus-
Newton’s discovery of gravity after he was hit on the head tomer feedback to try to extract the information we need to
with an apple. “What if Newton had just eaten the apple?” he have to make business decisions,” notes Don Hill. Travelocity’s
asked. “What if we failed to use the technology available, or director of customer advocacy.
failed to use these insights to take action?” Applebee’s, which “The text mining capability . . . gives us the ability to go
has 1,900 casual dining restaurants worldwide and grossed through all that verbatim feedback from customers and ex-
$1.34 billion in revenue last year, has a four-node, 4-terabyte tract meaningful information. We get information on the
data warehouse system. Although the company has a staff of nature of the comments and if the comments are positive
only three database administrators working with the system, or negative.”
“we have leveraged our information to gain insight into the Travelocity will use text analytics software from Attensity
business,” he said. “Some of those insights were unexpected, to automatically identify facts, opinions, requests, trends, and
coming out of the blue while we were looking in a completely trouble spots from the unstructured data. Travelocity will
different direction.” then link that analysis with structured data from its Teradata
For example, Applebee’s had been using the data ware- data warehouse so the company can identify trends. “We get
house to analyze the “back-of-house performance” of restau- to take unstructured data and put it into structured data so we
rants, including how long it took employees to prepare food can track trends over time,” adds Hill. “We can know the fre-
in the kitchens. “Someone had the unanticipated insight to quency of customer comments on issue ‘x’ and if comments
use back-of-house performance to gauge front-of-house on that topic are going up, going down, or staying the same.”
performance,” he said. “From looking at the time the order Unlike other text analytics technology, which requires
was placed to when it was paid for by credit card and sub- manual tagging, sorting, and classifying of terms before
tracting preparation meal time, we could figure out how analysis of unstructured data, Attensity’s technology has a
long servers were spending time with customers.” Parman natural language engine that automatically pulls out impor-
added that the information is being used to help the com- tant data without a lot of predefining terms, notes Michelle
pany improve customer experiences. de Haaff, vice president of marketing at the vendor. This al-
Applebee’s has also advanced beyond basic business deci- lows companies to have an early warning system to tackle
sions based on data—such as replenishing food supplies ac- issues that need to be addressed, she added.
cording to how much finished product was sold daily—to VistaPrint Ltd., an online retailer based in Lexington,
developing more sophisticated analyses. His department, for Massachusetts, which provides graphic design services and
example, came up with a “menu optimization quadrant” that custom-printed products, has boosted its customer conver-
looks at how well items are selling so that the company can sion rate with Web analytics technology that drills down
make better decisions about not only what to order, but into the most minute details about the 22,000 transactions it
about what products to promote. processes daily at 18 Web sites.
Meanwhile, technology vendors see untapped poten- Like many companies that have invested heavily in on-
tial for businesses to spend money on software and hard- line sales, VistaPrint found itself drowning, more than a year
ware that lets them use data to make more sophisticated ago, in Web log data tracked from its online operations.
business decisions. “Companies who operate with the Analyzing online customer behavior and how a new feature
greatest speed and intelligence will win,” says Teradata might affect that behavior is important, but the retrieval and
CEO Michael Koehler. analysis of those data were taking hours or even days using
Like many companies, Travelocity.com has lots of un- an old custom-built application, says Dan Malone, senior
structured data contained in e-mails from customers, call manager of business intelligence at VistaPrint.
center representative notes, and other sources that contain “It wasn’t sustainable, and it wasn’t scalable,” Malone
critical nuggets of information about how customers feel says. “We realized that improving conversion rates by even a
about the travel site. To offset the inability of business intel- few percentage points can have a big impact on the bottom
ligence tools to search for unstructured data, Travelocity has line.” So VistaPrint set out to find a Web analytics package
launched a new project to help it mine almost 600,000 that could test new user interfaces to see whether they could
216 ● Module II / Information Technologies

increase conversion rates (the percentage of online visitors ness card. The test showed that the new upload path had the
who become customers), find out why visitors left the site, same conversion rate as the control version. “We were a lit-
and determine the exact point where users were dropping off. tle disappointed because we put in a lot of time to improve
The search first identified two vendor camps. One group this flow,” he adds.
offered tools that analyzed all available data, without any up- When the company added Visual Site to the operation,
front aggregation. The other offered tools that aggregated it found that although the test version was better than the
everything upfront but required users to foresee all the que- control in three out of four pages, the last page had a big
ries they wanted to run, Malone says. “If you have a question drop-off rate. “We were able to tell the usability team
that falls outside the set of questions you aggregated the data where the problem was,” Malone says. VistaPrint also re-
for, you have to reprocess the entire data set.” duced the drop-offs from its sign-in page after the Visual
The company finally turned to a third option, selecting Site tool showed that returning customers were using the
the Visual Site application from Visual Sciences Inc. Visual new customer-registration process and getting an error no-
Site uses a sampling method, which means VistaPrint can tice. The company fixed the problem, and “the sign-in rate
still query the detailed data. but “it is also fast because you’re improved significantly and led to higher conversions,” he
getting responses as soon as you ask a question. It queries says. While Malone concedes that it is hard to measure an
through 1% of the data you have, and based on that . . . it exact return on the investment, the company estimates that
gives you an answer back. It assumes the rest of the 99% [of the tool paid for itself several months after installation.
the data] looks like that. Because the data has been rand-
omized, that is a valid assumption,” notes Malone. Source: Adapted from Heather Havenstein, “Use Web Analytics to Turn
VistaPrint, which has been using the tool for just over a Online Visitors into Paying Customers,” Computerworld, September 17, 2007;
year, runs it alongside the 30–40 new features it tests every Mary Hayes Weier, “Applebee’s Exec Preaches Data Mining for Business
Decisions,” InformationWeek, October 8, 2007; and Heather Havenstein,
three weeks. For example, the company was testing a four- “Travelocity.com Dives into Text Analytics to Boost Customer Service,”
page path for a user to upload data to be printed on a busi- Computerworld, November 14, 2007.

CASE STUDY QUESTIONS REAL WORLD ACTIVITIES


1. What are the business benefits of taking the time and 1. Go online to the Web site of Attensity (www.attensity.
effort required to create and operate data warehouses com) and research which other products are offered by
such as those described in the case? Do you see any the company that complement those discussed in the
disadvantages? Is there any reason that all companies case. What other examples can you find of companies
shouldn’t use data warehousing technology? that have benefited from using these technologies?
2. Applebee’s noted some of the unexpected insights ob- Prepare a report to summarize your findings.
tained from analyzing data about “back-of-house” per- 2. In the opening of the case, Randall Parman of Applebee’s
formance. Using your knowledge of how a restaurant International compared data to gold. Although it is easy
works, what other interesting questions would you sug- to figure out the value of gold at any time, valuing data
gest to the company? Provide several specific examples. has always been subject to controversy. Search the Inter-
3. Data mining and warehousing technologies use data net for alternative methodologies to putting a price tag
about past events to inform better decision making in on the data assets of a company. Contrast different
the future. Do you believe this stifles innovative think- approaches and share your findings with the class.
ing, causing companies to become too constrained by
the data they are already collecting to think about unex-
plored opportunities? Compare and contrast both view-
points in your answer.

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