Alesco Data
Using Machine Learning for Smarter Marketing

Direct marketing has always been a tricky business, with most companies struggling to squeeze the maximum value and performance out of every marketing dollar. The adage about brand advertising being important for a successful business is not that relevant anymore. Companies want to see results. They require that their agencies and service providers show proof that their advertising dollars are bringing in new customers and they relentlessly pore over the results to determine which campaigns are producing the best results.

This is where Florida-based Alesco Data comes in. Alesco provides data-driven solutions for direct marketers with its proprietary Machine Learning (ML) platform and Big Data assets. Alesco’s ML platform is purpose-built for marketers who use direct mail and email for new customer acquisition. By analyzing a client’s customer database, the ML platform identifies the best prospects for new customer acquisition campaigns. This approach is generating results 30 to 50 percent greater than traditional segmentation models.

Direct mail has become increasingly expensive and, correspondingly, there has been a reduction in overall response rates. The latter part holds true for email, as well. This has left direct marketers in a dilemma regarding how to best and most cost-effectively acquire new customers.

Considering these dynamics and the need to develop better performing solutions, Alesco transitioned away from conventional methods of statistical analysis towards Artificial- Intelligence-based data sciences (AI) that are tapping into approaches like support vector machines and artificial neural networks to develop its’ ML algorithms.

While many competitors continue to use traditional statistical analysis to optimize their marketing efforts, Alesco has embraced ML to generate superior results for clients. “The amount of information we’re capturing these days is staggering and the volume and complexity of that data is unmanageable using traditional techniques. ML is the perfect technology to leverage this proliferation of data to generate greater results for our clients”, said Paul Theriot, President of Alesco Data.

The company’s internal repository of data contains hundreds of millions of records of third-party prospecting data. Their team of data scientists combines clients’ data with their data repository and then utilizes the ML platform to develop algorithms which optimize prospect list selection. The algorithms can also be leveraged for up-sell, retention and reactivation campaigns.

The firm’s cost-to-value ratio is extremely high when looking at the overall cost of direct mail; a 10 percent improvement in response rate can yield as much as 75 percent increase in a client’s ROI. Since clients look for more profitability for less cost, Alesco’s ability to have a positive impact in terms of response rates and customer retention utilizing its ML platform is enormous.

Alesco Data works with a large services organization that has been in the business for over 100 years and has a highly penetrated market. The client faced challenges finding new customers and members on a cost-effective basis. The ML platform itself had a very high discriminative outcome concerning its ability to identify high-value prospects. In their initial head-to-head test with the organization’s incumbent vendor, Alesco Data was able to produce a 2.25 percent conversion rate against a 1.04 percent rate of the incumbent. This translated to a 115 percent increase in conversion for their client. “With results like this, the increase in profitability is a game changer for our clients,” concludes Theriot.