Interview: Jack Noonan, SPSS

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High-end analytics and data mining software provider, SPSS, recently introduced a new product, PredictiveCallCenter, that it claims transforms inbound call hubs from cost centres to profit centres. The application integrates with call-centre CRM and call management systems to determine on-the-fly the best way to market to inbound callers.

SPSS reckons that the software achieves highly accurate customer recommendations and can increase cross-sell and upsell hit rates by 50 per cent or more using predictive analytics, scanning all of the sales channels used by a customer to anticipate the customer's needs, preferences and attrition risk.

PredictiveCallCenter is able to analyse each inbound call. It then combines this analysis with the customer's historical and transactional data gleaned from all other sales channels. Based on those results, the software evaluates potential cross-sell and retention offers against the customer's profile, using predictive analytics and business rules to determine which offer is likely to be accepted by the customer. In turn this should generate the highest financial return for the company.

The software can also prompt and coach the call agent on the sales strategies and arguments that are most likely to appeal to that customer, including suggestions about which tone of voice to use and whether to approach the customer aggressively depending on the customer's predicted preference.

SPSS also recently introduced PredictiveMarketing 2.0, an outbound product that uses similar techniques to increase the profitability of marketing campaigns. The application helps marketers determine who should receive offers, which offers to send, when to send them and which channels to use. One new feature is the cross-campaign optimisation which provides the ability to improve customer targeting across multiple campaigns.

In a nutshell, SPSS PredictiveMarketing turns conventional campaign marketing upside down. Rather than focusing on choosing the best customers for each campaign, it reviews an entire set of campaigns and then selects the best one for each customer. SPSS reckons this approach can result in 25 to 50 per cent increases in campaign revenue by identifying which channels a customer is likely to respond to best.

Analytics is big business and none more so than predictive analytics. Most of the main CRM vendors are claiming some proficiency in this field, but SPSS CEO Jack Noonan does not perceive their offerings to be comparable. "We are focusing on predictive analystics, based on 35 years of e xperience" he argues. "We are complementary to the CRM players. We sell into existing Siebel sites for example. Siebel has some small data mining capabilty and they licence some predicitive funtionality, but frankly it’s not the same as we offer".

"One of the large banks has revolutionised the way they do direct marketing using our technology" he expands. "Direct marketing has traditionally been done by the marketing department putting together a campaign. If they’re good at what they do, they use our technology to segment their customers and they do that time and again. At the end of some period of time, they stop and they find that some of their customers have been contacted five times with offers while others have not been contacted at all.

"Now using our technology, they can score each customer in terms of customer contact. They can score each customer against each campaign and get as close as you can to one to one marketing. They can score against hte most appropriate campaigns".

SPSS targets a variety of markets. "We have 250,000 customer sites worldwide" says Noonan. "We have substantial commitement to the government and academic markets that is quite different to most software companies. In the commercial sector, we have presence in the finance, banking and telco markets. In academia, it’s getting more competitive to attract students so they use it to acquire pupils".

But acquisition is only one part of the picture. "We also tackle churn" adds Noonan. "We use our analytic modeling to build a churn model. This is especially useful in the telco market. I was talking to recent prospect in the telco market and said wouldn’t they love to have a red light on the call centre and point of sale system that showed that the person they were interacting with was vulnerable to churn".

So given that the technolgy clearly meets a set of needs in the marketplace, what are the business prospects for SPSS - and for the market as a whole. Noonan is cautious, reluctant to be too optimistic given unstable world events, but says that the first quarter saw new licence revenue up significantly.

Preliminary figures for the first quarter, to March 31, show net income of $1.9 million - 44.1 per cent above the previously released figure for last year and on the same basis revenue shows a 16.2 per cent rise to $57 million. SPSS says the internal rate of growth in new software licenses in the quarter was 26 per cent.

Nonetheless, a financial cloud hangs over the company and any detailed analysis of the company's performance will have to await a restatement of the company's figures from 2001 to 2003 after the discovery of 'anomalies' relating to deferred revenue recognition. It relates to a specific transaction and is being addressed, says Noonan.

Meantime it’s business as usual. Clearly there will come a time when greater competition is encountered from the main CRM players which are all playing up their analytics capabilties as a selling point, but Noonan is unruffled. "The challenge that they all have is that this is rocket science" he argues. "It takes a lot of work, not least to make sure that you don’t need to be a rocket scientist to use it. We publish all our algorithms, they are not what differentiates us. It’s how we put them together. It’s about how we handle dirty data. That’s the secret sauce that we have and they don’t".

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