Alvin Electronics leaps into realm of machine learning

Small Australian wholesaler uses power of predictive analytics to improve customer retention and find sales growth

Specialist independent wholesaler, Alvin Electronics, is using the power of analytics and machine learning to assist in its customer retention efforts, a move that helps level the playing field for this small business provider.

Alvin Electronics executive director, Stephen Hanlon, told CMO the $5 million company has adopted Spyglaz software in a bid to take the business to “the next level” in its data analytics strategy. Specifically, the technology will deliver key insights on customer retention efforts, customer behaviour and comprehensive information on the high probability of customer churn.

Spyglaz’s platform offers predictive analytics and machine learning for customer retention. Its business intelligence platform is designed to identify insights around churn and predict potential customer loss before it happens.

Alvin Electronics has been in operation since 1987 and chalks up significant transactions across a large number of customers by selling a large number of products to a large number of customers.

“Even though we are a small business, there's a lot of product data floating around. We have over 250 active customers per month and over 2500 customers on our books,” Hanlon said.

But with just eight employees doing all sorts of different activities across the business, and no dedicated staff allocated to sales territories, the team needed help gathering customer insights to drive a focused plan for targeting sales activities.

“You can often lose sight of customer activity and while you can measure it at the global level - I can measure the number of active customers per month and I can look at overall product category sales - it’s probably in the detail where the little bits of gold sit,” Hanlon said.  

“I see trends in my overall business performance, such as being up in a particular product category, up or down in a particular customer type, or a particular brand that’s moving well. But the opportunity for improved business performance sits in the details.”

In particular, Alvin Electronics was looking for ways to glean greater insights and information about likely interactions based on a customer’s past experiences. While overall sales may be growing, Hanlon said he needed to go deeper TO find areas of improvement, and identify where and when the business should make contact with certain customers based on the evidence of the past.

“There may be customers who had drifted away for a whole variety of reasons. This technology allows me to bring attention to those customers, and bring some special focus to the table to say, ‘Is there something we can do and what are you working on?’” he explained.

“Interrogation of the data at that line item level allows me to be more focused in the business.”

Bringing analytics to SMBs

Spyglaz was engaged by Alvin Electronics to help define and diagnose problem areas to ensure better customer engagement, according to its managing director, Steve Emanouel.

Recognising there’s a trend afoot for small companies to embrace advanced analytics and machine learning, he said the technology is giving small players, like Alvin Electronics, the chance to have the power of analytics, but more importantly, to give them actionable insights.

“The idea is to access the power of big company thinking and capability, but also make sure that power is affordably put in the hands of small to medium organisations as well,” he said.  

As part of the process with Alvin Electronics, Spyglaz investigated two-year’s worth of transactional data in order to determine business issues and hatch the customer retention strategy.

“While Alvin did a good job of bringing new business in, the company losing business out the back door through existing customers that were churning, or walking away from them, for whatever reason. And with such a relatively small workforce, and so many customers to manage, it was impossible for them to be able to stay ahead of the game in managing customer retention or reducing customer churn,” Emanouel said.  

Spyglaz then ran the data through algorithms and produced a series of insights to review in terms of the structure and makeup of the business.

“We were able to identify a whole raft of things the company wasn’t necessarily aware of,” Emanouel continued. “Most people are across the intricacies of their business, but there were quite a few insights were able to share that really opened up some opportunities.

“In a nutshell, the algorithm provides the customer with a probability score of all of their customers, in terms of the relative probability of churning. In this particular instance, the churning focused on the top 20, and the list was handed to the sales team.”

At that point, the sales team were tasked with making contact with the top 20 identified. Off the back of this, Alvin Electronics achieved a 70 per cent retention rate.  

“The team was able to focus on and reengage with a smaller group of customers as opposed to what often a lot of other businesses do which is ‘spray and pray’,” Emanouel said. “It was a great exercise for the team to do in order to be able to reconnect with those most likely to churn.”

The Spyglaz team is undertaking additional assessments on a quarterly basis. These saw Alvin Electronics grow business by just under $9000 in the first month simply by re engaging with customers that were otherwise disengaged and likely to churn, Emanouel said.

Key insights centred around where opportunities lie in terms of the composition of their transactions.

“They were able to determine the actual churn rate, the average transaction value, the average time between transactions, and in turn, understand where the opportunities lie,” he said. “It gives them insights to not only address the customer churn issue, but also their overall marketing and engagement areas.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu


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