In a business class of its own
Expedia travels to new heights using SAS® Business Analytics
In the highly commoditized world of e-commerce, which has historically been focused on high transaction volume versus better customer insight, Expedia — a pioneer in offering online hotel, plane and car reservations — exemplifies the definition of a modern-day, data-driven organization. Expedia is using SAS Business Analytics to optimize online customer experiences, as well increase the lifetime value of each customer.
By striving to better understand its customers' needs, Expedia is using analytics to mine terabytes of business and online transactional data to discover innovative ways of increasing customer satisfaction and loyalty, while increasing annual gross bookings and revenue.
Competing on analytics
After a significant project by Megibow's team to centralize the company's data into a global data warehouse and apply standardized data definitions, Expedia is effectively using analytics to: understand what marketing promotional channels influence and drive revenue conversions on the site; optimize its marketing spend by channel; increase customer lifetime value; and improve the overall experience of customers while on the site. The latter, of which, recently helped the company avoid millions of dollars in reservation losses.
"Rather than doing a more traditional regression or clustering analysis, we tried this model out and had phenomenal success," explains Megibow. "We employed a model that looked at all touches across all customer sections to figure out what really influenced a transaction with us. We discovered that we weren't even close with our prior models. What this means is that we spent increased levels to drive incremental transactions, which, using the old model, would have looked inefficient but was actually more profitable. We would have spent too little and made less money — we didn't know that we were leaving money on the table.
"SAS inspires creative analysis," he continues. "We may know what the problems are or know where we've done something wrong, but SAS helps us figure out how to do things better. We actually have a backlog of opportunities from research that we've done. We've been able to capitalize on SAS' experience in solving so many different problems in so many industries. This is an unsung asset of SAS that helps creative thinkers apply solutions in new ways to solve challenging problems."
Customers for life
"Our industry has some commodity aspects, which can make it tempting to focus more on transactions than customers; increasing lifetime value requires a long history of customers, not transactions," he explains. "We spent significant time building data sets, clusters and predictive models to determine which customers are most likely to buy. We can determine how much we are willing to spend to acquire a customer on the first transaction, and which types of transactions or campaigns have the highest probability of driving a second or third transaction. Customer lifetime value analysis also demonstrates that the cost to drive future transactions declines among loyal customers. We can spend more to acquire customers early on, but the overall cost for transactions declines as we come up with programs that build loyalty."
On the subject of loyalty, Expedia recently launched a loyalty program with partners, which was enhanced based on the customer lifetime analysis project.
"A good rewards program isn't about just giving money back to good customers," explains Megibow. "A good rewards program is about understanding who customers are so that you can encourage the right purchasing behavior and improve their overall experience with your brand. For example, if I have a loyal shopper who books lots of flights but never buys a hotel, we want to offer them a good discount to try out our hotels or packages. The program will allow us to do that and it's a win for our customers. We can give them something we wouldn't otherwise just give away to everyone."
Relevant offers, increased conversions
"We built and trained a utility model, using real-time pricing data from hoteliers and historical customer data, to predict what would be most relevant to consumers. We've been doing it for a couple of years and have seen multiple percentage point increases in conversions," Megibow says.
Improved usability saves millions
"We are now able to fund new projects as a result of all the analysis we've done, and make the informed decisions we've always wanted to make," he concludes.
The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.
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Needed a solution to discover innovative ways of increasing customer satisfaction and loyalty, while increasing annual gross bookings and revenue.
SAS Business Analytics
Expedia can now identify what marketing channels influence and drive revenue conversions on the site; optimize its marketing spend by channel; increase customer lifetime value; improve the overall experience for customers while on the site; and discover usability glitches that can lead to lost revenues.
“"We've been able to capitalize on SAS' experience in solving so many different problems in so many industries. This is an unsung asset of SAS that helps creative thinkers apply solutions in new ways to solve challenging problems."”
Vice President and General Manager, Expedia US
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