Customer Solution Case Study
/ New Business Intelligence Solution Reduces Customer Churn by 25 to 30 Percent
Overview
Country or Region:France
Industry:Manufacturing
Customer Profile
e.l.m. leblanc, a subsidiary of Bosch, is based in Paris, France. It specializes in wall-mounted boilers and water heaters, employs 700 people, and delivers after-sales servicing for its products.
Business Situation
The company needed new data analysis tools to discover the causes of lost customer business and help enhance loyalty.
Solution
It deployed a new business intelligence infrastructure based on Microsoft® SQL Server™ 2005, deployed with support from Microsoft Certified Partner Quatrax-Conseil.
Benefits
Customer turnover estimated to be reduced 25 to 30 percent.
Dynamic analytical solution tracks changing customer requirements.
High levels of performance for fast, accurate data analysis.
Single offering that includes advanced tools for analysis and reporting.
Return on technology investment in less than two years. / “We will know exactly what type of marketing campaign we need to launch and at what target audience. Following that, we can measure the effect of our activities on customer turnover.”
Éric Payan, Director of IT, e.l.m. leblanc
French heating and hot water system specialist e.l.m. leblanc historically managed its operational and customer data with a number of databases and analysis tools. This infrastructure could not effectively integrate data from across the entire business. As a result, it was difficult to understand the causes of lost business or ‘customer churn’ effectively. To address this issue, and enhance customer loyalty, the company deployed a new business intelligence infrastructure based on the Microsoft® SQL Server™ 2005 database infrastructure. This provides tools for high-performance data analysis and reporting. It will enable e.l.m. leblanc to enhance customer service and launch targeted marketing campaigns. As a result, the company will reduce customer turnover by as much as 25 to 30 percent and achieve an estimated 100 percent return on its technology investment in just two years.
Situation
e.l.m. leblanc is a subsidiary of Bosch, Europe’s market leader in heating solutions. The company employs 700 people and achieves an annual sales of €110 million (U.S.$133.25 million). As a major manufacturer of wall-mounted gas boilers, e.l.m. leblanc is the French market leader for hot water heaters. It also manages after-sales servicing for its products with a team of 300 technicians. Despite a heritage dating back 70 years, the company remains dynamic. e.l.m. leblanc does this by constantly evaluating new technologies that can increase its operational efficiency.
From this starting point, the company's management began to evaluate technologies that enhance customer satisfaction. The managers also wanted to prevent customer “churn”, meaning the loss of clients to competitors. Éric Payan, Director of IT, e.l.m. leblanc, advises, “It costs far more to gain a new customer than to keep an existing one. It is also very difficult to win back business that has been lost to competitors. To ensure customer satisfaction, we wanted to analyze the main reasons for churn and implement the necessary measures to prevent it.”
To achieve this, e.l.m. leblanc needed to analyze the behavior of its customers and search through variables to find the most common causes of churn. However, this analysis was not possible using the company’s existing business intelligence solution, which was based on technology from Business Objects and Oracle. To be able to analyze the data required the integration of information from several disparate databases and functionality from a range of analytical tools.
Solution
To address this issue, e.l.m. leblanc enlisted support from Microsoft® Certified Partner and Business Intelligence specialist Quatrax-Conseil. Payan explains, “After we contacted Quatrax-Conseil, the company gave us a presentation on the capabilities of Microsoft SQL Server™ 2005. After this insight, we realized that this technology was precisely the tool we needed to effectively analyze our portfolio of customers and their behavior.”
In a single offering, SQL Server 2005 combines the power of its database engine with data extraction tools such as SQL Server 2005 Integration Services. It also comes with an advanced reporting tool, SQL Server 2005 Reporting Services, and SQL Server 2005 Analysis Services, an online analytical processing (OLAP) engine that provides eight data mining algorithms. These technologies make it possible to analyze the causes of customer turnover. Then e.l.m. leblanc's management would be able to use the same technologies to forecast and implement the measures required to reduce customer loss.
In the interests of simplicity, in the first phase of the project, data from the e.l.m. leblanc Oracle database was not migrated to the new system. Instead, SQL Server 2005 accesses information directly in the Oracle database. During the next phase of the project, SQL Server 2005 will replace this Oracle database altogether, delivering significant performance benefits.
After the deployment of SQL Server 2005 had been approved, Quatrax-Conseil technical professionals began to create complex statistical models based on data mining algorithms in SQL Server Analysis Services. Quatrax Conseil’s method, known as “Predictive Marketing,” is based on several factors, including defining objectives, auditing data, preparing data for statistical processing, predictive modelling, performing actions, and measuring return on investment.
To ensure effective analysis of customer data, the Quatrax-Conseil team constructed a multidimensional OLAP cube, lift model, charts, and training samples. The model was applied to the new data and input packages were automated using software created with the Microsoft Visual Studio® 2005 development system.
The deployment of the statistical models and the SQL Server 2005 database engine was completed in just five months. Microsoft Corporation offered a number of consulting days to support the implementation, although few of these were required because of the trouble-free installation. Payan comments, “We were very pleasantly surprised. Knowing that we were dealing with a very innovative project, we expected some difficulties to arise during the deployment. Instead, we found ourselves with an extremely stable product from the very outset.”
Benefits
Effective Analysis of Customer Behavior Promises to Reduce Churn by 25 to 30 Percent
The new infrastructure is now fully operational and the first statistical model is being validated. As a result, e.l.m. leblanc will soon be able to launch new, highly-targeted marketing campaigns.
Payan advises, “We will know exactly what type of marketing campaign we need to launch and at what target audience. Following that, we can measure the effect of our activities on customer turnover. We are very optimistic and expect to reduce the percentage of customers we lose by 25 to 30 percent. We estimate that these new analytical capabilities will deliver a return on our technology investment in just two years.”
Constant System Refinements Support More Effective Data Analysis
The statistical model running in SQL Server 2005 can be constantly refined to deliver more effective analysis of customer behavior. Payan observes, “Our business is not static, nor is the new technology we have deployed. As a result, we can map the changing requirements of our customers and adapt our business to meet their future needs.”
High Levels of Performance Ensure Fast, Accurate Data Analysis
Using the new SQL Server 2005 infrastructure, e.l.m. leblanc has reduced the time required to conduct complex data analysis. This is because SQL Server 2005 offers significantly higher levels of performance than the company’s previous database infrastructure.
Payan concludes, “SQL Server 2005 offers us better performance than even benchmarking data suggests. We have been able to witness the benefits of this enhanced performance first hand. Using Business Objects, we started out with improved reporting across the business. High performance tools provided with SQL Server 2005 have taken us to the next level.”
Microsoft Windows Server System
Microsoft Windows Server System™ is a comprehensive, integrated, and interoperable server infrastructure that helps reduce the complexity and costs of building, deploying, connecting, and operating agile business solutions. Windows Server System helps customers create new value for their business through the strategic use of their IT assets. With the Windows Server™ operating system as its foundation, Windows Server System delivers dependable infrastructure for data management and analysis; enterprise integration; customer, partner, and employee portals; business process automation; communications and collaboration; and core IT operations including security, deployment, and systems management.
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