March 22, 2001, 12:00 AM

Mining a database of “unfathomable proportions” helps Fingerhut cut costs

Better database analysis at Fingerhut is reducing catalog mailings by 7% while boosting profits by $3.5 million in Year 1

Multi-channel direct marketer Fingerhut says horizontal marketing analytic technology and services from IBM cut its catalog mailings by 7% while adding $3.5 million in extra profit in its first year of implementation. The IBM solution helped Fingerhut organize and mine a customer database of marketing contacts that had grown to what the company calls “unfathomable proportions,” over the years, with some customers receiving as many as 60 catalog mailings per year.

The horizontal marketing approach stripped redundancy from the system and allowed Fingerhut to analyze trends and behavioral patterns from more than 30 million customer households. The system retains as many as 1,400 data elements on each household, including demographics, purchase and payment history, product preferences and key events.

“The actionable data derived form the system is helping us determine the appropriate mix of channels and marketing materials as well as contact frequency,” says Randy Erdahl, Fingerhut’s director of business intelligence. “It allows us to score each of the promotions available to be sent to a specific customer to determine which are the most effective and will elicit the best response.”

Fingerhut says it will this year apply those analytical capabilities on to cross-sell on its web site and on partner sites popular items from its catalogs. “We’ll be able to eliminate some of the catalogs we might have sent to Internet customers and replace costly outbound mailings with less expensive postcards pointing to web sites,” Erdahl adds.


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