Loblaw Wins FICO Decision Management Award | Analytic Excellence

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Decision Management & Optimization

TORONTO—August 7, 2014—FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced that Loblaw Company Ltd., Canada’s top food retailer, has won the 2014 FICO Decision Management Award for Analytic Excellence. Loblaw launched a revolutionary new loyalty program — PC PLUS™ — in the grocery category that delivers a true one-to-one customer experience.

Since the program was launched nationally six months ago, more than one-third of all households in Canada have begun participating in the PC PLUS™ program.

Loblaw launched this project in a highly competitive grocery marketplace, with several new entrants each with well-established loyalty programs. FICO Analytic Offer Manager enables the PC PLUS™ program to provide each member with a personalized set of offers every week. Loblaw’s product assortment contains hundreds of thousands of SKUs, which require thousands of specific offer templates. Each offer template has its own predictive model that is scored against each member, every week. The FICO system produces 10 billion scores every week, which lead to more than 35 million offer recommendations.

“We were in a unique position to design a next-generation loyalty program that would embrace customer analytics for one-to-one marketing,” said Uwe Stueckmann, senior vice president, marketing, Loblaw Companies Limited. “Our analysis showed us that the best customers accounted for more than 60 percent of revenue, but market data suggested that we were only capturing about 50 percent of the grocery spend of these customers. We have a large opportunity to grow sales with our best customers.”

The FICO analytics allow Loblaw to allocate marketing investment according to a member’s current value to the company, their potential value (opportunity for share-of-wallet growth), where they shop (discount versus conventional grocery stores), or any other identifiable attribute of interest. This enables precise tactical investments across a pinpoint set of stores. FICO analytics must also balance the conflicting objectives of offer relevance (something the customer would likely buy) and product incrementality (something the customer would be unlikely to buy without the offer).

“The program’s biggest challenge is fine-tuning our predictive models to ensure that they work effectively for new members with thin transactional history, while delivering very relevant offers to members with rich transactional history,” said Stueckmann. “In order to overcome this challenge, FICO has redeveloped the program’s modeling approach four times to ensure the model output is more personalized for each member. These changes have not gone unnoticed by the membership, as offer response rates have increased by over 200% during this period.”

“Loblaw is known as an innovative retailer in general, and its PC Plus loyalty program suggests that its innovation also extends to analytics,” said Tom Davenport, co-author of Competing on Analytics, distinguished professor at Babson College and director of research at the International Institute for Analytics, who was among the panel of independent judges. “The program is highly granular and predictive, and it makes personalized offers to customers that they really want. The program has also benefitted Loblaws' suppliers. The FICO Decision Management Award judges were all very impressed by the Loblaw application. It's one of the most well-designed loyalty programs I've ever seen.”

The FICO Decision Management Awards honor companies that have achieved outstanding business results using FICO predictive analytics and decision management solutions. Winners will be featured in presentations at FICO World 2014 in San Diego, November 11-14.

Winners were selected by a panel of esteemed industry analysts and journalists: Tom Davenport, co-author of Competing on Analytics; Brian McDonough, research manager in IDC's Business Analytics Solutions research service; John Rymer, vice president and principal analyst serving Application Development & Delivery for Forrester; and David Bannister, editor of Banking Technology.

About FICO
FICO (NYSE: FICO) is a leading analytics software company, helping businesses in 90+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company’s groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption. These include the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health. FICO: Make every decision count™. Learn more at www.fico.com.

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