1. Dana Hayman
VP, Marketing Strategy & Insights
Madhu Ghosh
VP, Analytics
Infogroup Targeting Solutions
Oct 16, 2012
1

2. Leveraging Data and Analytics
to Make Strategic Investment Choices:
A Case Study in Assessing New Geographic Markets
Challenge: Client Background & Key Questions
Solution
• Approach
• Results & Deliverables
• Business Impact
Key Takeaways
Q&A
2

3. Challenge
Background
• Leading wholesaler of domestic and industrial supplies (B2B)
• Operates in:
– 6 different businesses/industries (heating, plumbing, etc.)
– 200+ geographic markets (US)
• Considering expansion into Current Markets and New Markets (US)
Key Questions Pertaining to Strategic Planning and Investment
• Which markets to pursue next?
• Which business to “emphasize” in which markets?
• How to assess the competitive environment in “high interest” markets?
• How to create a proper foundation for market and segment-specific
marketing plans?
3

4. Solution: Data, Models & Practical Analysis
Identify High-Value Markets via Market Value Model
Phase 1 • Assess Total Market Value of 942 CBSA’s
Total
• Rank markets
Market Value
Model • Visualize results – Grids & heat maps to show high opportunity locations
• Select a subset (311) of current and new CBSA’s for Phase 2 analysis
Assess Industry-Specific Market Value via Industry-level Models
Phase 2
Industry- • Assess Market Value relevant to 6 business units for all 311 CBSA’s
Specific Value • Rank 311 CBSA’s within each industry/BU
Models • Determine high-interest new markets (n=4)
Phase 3 Produce Assessments of Competitors & Prospects for High-Interest Markets
Market • Leverage Infogroup Data
Assessments • Provide Reporting Package and Visuals
Phase 4 Initiate Custom Analysis and Planning
Analysis &
• Corporate Level  Market  Store and Customer
Planning
4

5. Phase 1: Built Total Market Value Model
Prepare & Build Model & Apply Aggregate Spend &
Aggregate Data to Total Business Pool Validate Results
Collected customer data Split Sample: Calculated Total Market Value
from client - Model Build = Sum Est. Annual Spend
- Validation across all customers &
Aggregated transactional prospects in a CBSA
data (invoices, $, timing, Built model to estimate
etc.) at customer level Annual Spend or “Total Calculated Share of Customers
Determine Annual Revenue Potential Revenue” per = Current / Total Customers in
for each Customer customer or prospect a CBSA
Appended Infogroup data Applied to subset of Validated Twice:
incl. prospects, competitors 13.5MM Business DB based 1. Actual Customer Data
and firmagraphics (SIC, etc.) on SIC matching criteria 2. Third Party Sources
5

6. Phase 1: Visualizing Results (942 CBSA’s)
Bubble Size = High-Value Markets
Current Revenue Already Capturing Decent Revenue
Very Small Share of Customers
Market Value
Lots of Low-Value
New Markets
Low-Value Markets
Selected 311 Low Current Revenue
markets to include High Share of Customers
in Phase 2 (industry-
specific valuation)
Share of Customers
6

7. Phase 1: Identified 45 High-Value Markets…
311 Total Selected
247 Current Markets > $200mm < $200mm MARKET VALUE
64 New Markets Rev > $500k Rev < $500k
NEW
MARKETS 4 60
Market Value
CURRENT
MARKETS 41 206
Identified the 45
highest-value markets
(above the red line)
Share of Customers
7

8. …including 4 High-Interest New Markets
> $200mm < $200mm MARKET VALUE
Rev > $500k Rev < $500k
NEW
MARKETS 4 60
Market Value
CURRENT
Identified 4 MARKETS 41 206
“High Interest”
New Markets Identified the 45
highest-value markets
Market A
(above the red line)
Market B
Market C
Market D
Share of Customers
8

9. Phase 1: Ranking Methodology (Sidebar)
“High Interest” new markets were selected based on considerations beyond just “market value”
Share of Customers & External Factors (e.g., construction activity) played role in “Final Ranking”
Market Final Rank
CBSA Market
Value (Based on External
Description Value*
Rank Considerations)
Market A 1 $ 900 MM 1
Market B 4 $ 510 MM 2
Market C 5 $ 470MM 3
Market D 7 $ 450MM 4
Market E 15 $ 200MM 5
Market F 12 $ 220 MM 6
Market G 17 $ 180 MM 7
Market H 2 $ 800 MM 8
Market I 19 $ 150 MM 9
Market J 3 $ 650 MM 10
* The numbers are illustrative 9

10. Phase 1: Heat Map (Value) of all 311 CBSAs
10

11. Phase 2: Built Six Industry-Specific Models
311 CBSA’s from Phase 1
Built 6 Industry-Specific Models to
Estimate Market Values at Industry Level
Produced Market Values and Rankings
for 6 Industries in all 311 Markets
11

12. Phase 2: Produced Look-Up Tables
Industry-level market valuations helped client understand
industry-specific opportunities within each market
Market A Overall Industry A Industry B Industry C Industry D Industry E Industry F
Rank 1 1 20 16 7 3 2
Market Value $ 130,000,000 $ 14,000,000 $ 31,182,000 $ 21,023,000 $ 9,819,000 $ 21,274,000 $ 32,573,000
Actual Revenue $ 1,025,000 $ 532,000 $ - $ 85,000 $ 78,000 $ 91,000 $ 237,000
Opportunity $ 129,137,000 $ 13,756,000 $ 31,182,000 $ 20,937,000 $ 9,741,000 $ 21,183,000 $ 32,335,000
Market B Overall Industry A Industry B Industry C Industry D Industry E Industry F
Rank 2 15 4 13 7 7 9
Market Value
Actual Revenue
Opportunity
Market C Overall Industry A Industry B Industry C Industry D Industry E Industry F
Rank 3 16 17 10 1 16 5
Market Value
Actual Revenue
Opportunity
Etc. for all
311 Markets
12

13. Phase 3: Produced Market Assessments
4 High-Interest New Markets
Leveraged Infogroup B2B data assets to
“paint a picture” of each CBSA
(Included 7pp Market Profile for Each)
2 Areas of Focus
Prospect Competitive
Pool Environment
13

14. Phase 3: Example Market Profile (p. 1 of 7)
Market A
Market B
Included a Picture of the Market Skyline Here
Market D Prospects # Competitors Local Regional National Total
Market C
> $20K 900 > $7.5 MM 35 10 10 55
$10K - $20K 1,200 $2.5 – $7.5 MM 50 5 15 70
< $10K 450 < $2.5 MM 80 10 20 110
Total 2,550 Total 165 25 45 235
Note: Bubble Size = # Prospects Heat Map of Prospects by Zip Heat Map of Competitors by Zip
0 50 0 10
Rank out of 4 Featured Markets:
Overall Market Value = $___ MM
Targeted Market Value = $___ MM
Market Value/Prospect Rank = __
# Prospects Rank = ___
# Competitors Rank = ___
Note: The numbers are illustrative 14

15. Phase 3: Example Market Profile (p. 2 of 7)
Top Client Customers:
•
•
•
•
•
Top Client Prospects:
•
•
•
•
•
Top Competitors:
•
•
•
•
•
15

16. Phase 4: Analysis & Planning
Markets w/ High Growth Opportunity
Corporate Other
View Market A Market B Market C Markets
Analysis on the Customer Base
1. Revenue Model: YOY Trends on Key KPI’s
2. YOY Frameworks: Assess Health of Customer
Base and Key Dynamics
3. Custom Analysis: Leading to Targeting
Frameworks, Opportunity Identification and
segment-specific marketing plans
16

17. Phase 4: Revenue Model
Provides a simple way to Quickly Understand Business
Performance and Assess Key Revenue Drivers / Dynamics
Customers with Purchases in Year
Revenue & Key Drivers 2010 2011 Delta
# Customers ##,000 ##,000 -3%
# Invoices ###,000 ###,000 3%
# Invoices / Customer ## ## 4%
Revenue / Customer $##,000 $##,000 9%
Revenue / Invoice $### $### 6%
Revenue $### MM $### MM 10 %
17

18. Phase 4: YOY Frameworks
PURCHASES IN 2011
0 LOW HIGH
NEW & NEW &
0 LOST REACTIVATED REACTIVATED
PURCHASES IN 2010
(Low Value) (High Value)
LAPSED CONSISTENTLY VALUE
LOW INCREASING
(Low Value) LOW VALUE
LAPSED VALUE BEST
HIGH
(High Value) DECLINING CUSTOMER
18

19. Phase 4: YOY Frameworks
How many exist? PURCHASES IN 2011
Great resource
0 LOW HIGH
How much was spent to get
NEW & NEW &
these new & reactivated
0 LOST REACTIVATED REACTIVATED
PURCHASES IN 2010
customers in 2011?
(Low Value) (High Value)
Opportunity for Welcome/
Welcome back programs
LAPSED CONSISTENTLY VALUE
LOW INCREASING
(Low Value) LOW VALUE
LAPSED VALUE BEST Best Customer Program
HIGH
(High Value) DECLINING CUSTOMER
Look alike models for
acquisition
Set acquisition objectives/
Among which customers is attrition occurring? Custom Recognition plans & implement
Why do customers leave? (Research to Incentives &
quantify what’s fixable and make biz case) Retention
How big is the “reactivation pool” on database Programs
 pursue “lost” customers
19

20. Phase 4: Custom Analysis FOR EXAMINATION:
Who customers are:
To understand where value and attrition exists in the customer base • Age & Gender
• Titles & Function
• SIC & # Employees
• Geo / Market / City
• Personas
Where they came from:
• DM vs. Web vs. Other
• Affiliates vs. Not
What they buy:
• Media/Mktg/Pd Content
• Multi vs. Single Product
• Triers vs. Repeaters
What tactics they use:
• On-Deal vs. Not
• Tactic-specific
Combinations of above
Note: Illustrative
20

21. Phase 4: Custom Analysis
To Identify Marketing Opportunities in more detail
To Understand Issues (Over/Underperformance) in the customer base, and
To provide a way to organize segment-specific marketing initiatives (Acqu, Loyalty, Retention,, etc.)
L-VAL / H-ATTRIT H-VAL / L-ATTRIT
OTHER
SIC A SIC B SICs SIC C SIC D
Persona/
Segment
1
Persona/ Implications on
Segment Prospect &
2 Customer
Marketing
Persona/
Segment and Leads to
3 Segment-Specific
Marketing Plans
Persona/ # Customers
$ 2010
Segment $ 2011
4 % Attrition
21

22. Business Impact
Market & • Provided immediate implications on business expansion plans  we
changed perceptions about relative attractiveness and market prioritization
Industry
Level Models • Provided critical input into strategic planning decisions
and Results - Cross-market investment allocation
- Pending store closures
• Provided local area knowledge:
Competitive - To facilitate and expedite “due diligence” process
Assessments - To help local-area store managers understand their market
- To help corporate leaders recruit new market talent (to run new stores)
• Understanding key revenue dynamics/trends and drivers, the health of the
Custom client’s customer base, and key issues (e.g., attrition)
Analysis - At Corporate level  by BU  by Market  by Store
& Planning • Leading to targeting frameworks, the identification of unique marketing
opportunities and will drive customer marketing plans and initiatives
- At Corporate Level  by BU  by Market  by Store
22

23. Implications for Strategy & Planning
• Most marketing organizations have a process for strategy and planning. Infogroup’s follows:
MARKETING STRATEGY AND PLANNING PROCESS
More Strategic More Tactical
Identify & What to How to Sell Where to Create/
Set Allocate
Prioritize Sell it Sell it Position
Objectives $$$
Opportunities (Products) (Tactics) (Channels) Content
Which customers What should How much What, Which Which How should
and prospects we try to should we specifically, tactics channels we maximize
represent the achieve with be willing to should we should should we relevancy?
brand’s best each customer? invest? sell? we use? leverage?
marketing (can we afford)
opportunities?
• We have been traditionally thinking about marketing opportunities in the context of prospect
and customer base – i.e., Who to acquire? Drive loyalty/customer value? Retain? Reactivate?
• Market value methodologies like the one presented today have enhanced our perspective and
approach to Opportunity Identification – i.e., we can now size opportunities at the geo market
level PLUS at the customer level  producing a more robust view (that will resonate with
execs who want to expand geographic footprint)
• It’s achievable via Quick-Turn Analysis
23

24. Prevailing Perspectives
Only 33% of global executives said their strategy rests
Little Differentiation on novel data & insights not available to competitors *
Lack of Data 57% of business executives cite lack of data or
analytical and other skills to translate data to
decision making as a barrier to use data in
Lack of Analytic Skills organizational decision making *
(Note: 20% cite company culture as a barrier)
* Source: McKinsey Quarterly Survey Report 24

25. Key Takeaways  It’s really not that difficult…
Little Differentiation The Data Exists
Lack of Data The Tools Exists
Lack of Analytic Skills The Talent Exists
25

26. Key Takeaways (Continued)
• Market value modeling can facilitate “strategic” discussions and inform strategic
decisions – e.g., Where do we build/buy next? How do we optimize sales coverage?
Manage capacity? Make acquisition decisions?
• For companies that want to size geographic markets and prioritize them:
– The data exists and is easily accessible – sources are not limited
– The methodologies are simpler than one might expect
– Simple to do for yourself, or external help is available
• Consider adding Geo-Market Valuations to more common customer-level
“Opportunity Assessments”  it adds a perspective that can relate to execs
• Combining the Competitive Assessment with customer/prospect analysis provides a
multi-dimensional, differentiated view of opportunities and barriers to entry
• Custom analysis and segmentation is a logical extension of market value
analysis…setting a more comprehensive backdrop for the development of
customized marketing programs & initiatives
26

27. Q&A
Madhu Ghosh  Madhu.Ghosh@infogroup.com
Dana Hayman  Dana.Hayman@infogroup.com
Have More Questions? Visit Us at Booth #801 27