In Ann Arbor, Michigan, with $900 of borrowed money in hand, Thomas S. Monaghan founded what was to become Domino's Pizza, in 1960. Domino's is now recognized as one of the three largest pizza chains in the country, thanks to feats such as sales reaching $3.1 billion in fiscal 1997, making 1997 Domino's fifth consecutive year of increased sales. For the same fiscal year, the company also reported pre-tax profits of $61.5 million, up nearly 20 percent over the previous year, setting profit records for three consecutive years. Domino's, with more than 1,200 franchises, operates more than 6,000 stores throughout the United States and in 60 international markets. Domino's is scaling near the peak of what has become a $32+ billion (1997 sales) industry by rolling out pervasive marketing concepts, such as guaranteed 30-minute, free delivery and implementing a powerful data warehouse to expand its marketing reach.
Next to burgers, it is widely agreed that pizza is America's favorite fast food. And with more than a dozen pizza shops in most towns vying for consumer consumption, the competition is fierce. It's no secret then that Domino's is always looking for an edge.
And one way it has gained a decided advantage recently over its competitors is the validity and viability of its data warehouse.
In order to meet forecasted company expectations and continue its profitable ways through 2000 and beyond, as well as remain competitive, Domino's strategy was to become more aggressive with its direct mail campaigns. Those almost daily direct marketing efforts consist of coupons and flyers mailed from its headquarters in Ann Arbor, where its data warehouse is housed, to the primary market areas of its corporate stores-- nearly 20 percent of its total sites, or about 750 locations. This marketing strategy backed by a clean, accurate data warehouse was never before employed at Domino's.
Initially, Domino's needed to enhance and cleanse its 120GB, 12-million customer name data warehouse in order to obtain the desired results. That required harnessing the ability to do address standardization for direct mail, assigning block groups to customers for use with demographic packages and assigning latitude/longitude information to those customers for mapping applications, producing maps of Domino's customer locations.
Paralleling those needs, Domino's IS team also wanted to put in place a more efficient and effective process so that Domino's large and active marketing team could gain a better understanding of the company's direct marketing ROI.
Ultimately, Domino's need for a data enhancement and data quality solution was twofold.
It was difficult to measure returns from direct marketing because the list of addresses was being sent to a printer who cleansed and mailed it. However, Domino's did not know to whom the printer mailed and to whom it did not. Domino's felt the need to cleanse its data beforehand in order to establish a control group.
And, for the first time, Domino's wanted to understand delivery areas by geocoding and mapping the households that bought Domino's pizza and non-pizza items.
Domino's selected Qualitative Marketing Software Inc., (QMSoft) and its Centrus GeoStan solution--an embeddable address hygiene and geocoding technology--in July 1996.
GeoStan provided Domino's with a solution that in a single pass can parse each record, fix poorly formatted or misspelled address elements, correct ZIP codes and add ZIP+4. What's more, it appends records with carrier route, delivery point bar codes (DPBC), line of travel (LOT) codes, and check digits; creates Postal Form 3553; and assigns address-level and ZIP+4 latitude/longitude coordinates, block group, MSA, census block, census tract and other geographic information.
Domino's is now able to locate prospects for target, relationship and micro marketing; evaluate existing markets; create new sales territories; identify streets, neighborhoods or entire cities by level of penetration; refine direct mail lists and reduce postage; and perform point-in-polygon and radial analyses--all of which helped in the recent successes of its direct marketing campaigns.
Implementation on Domino's Informix 7.24 database, using QMSoft's 32-bit software in a batch mode, was immediate. The only additional requirement that needed to be met before GeoStan could be put into action was for an interface to be written so that GeoStan could call from Domino's 4GL programs, which the pizza company used along with Perl language prior to developing its data warehouse. That project took a couple of months, with help from a local 4GL C programmer.
Benchmarking GeoStan was not a priority. Domino's was primarily looking for functionality; response time was not that essential.
Yet, it has proven to be fast enough to handle the loading and cleansing of 12 million customer names in a 120GB data warehouse, which was built using an IBM RS/6000 hardware platform and IBM AIX 4.1 operating system on an Ethernet and TCP/IP network. What's more, Domino's implemented Cognos' PowerPlay software for its data warehouse to handle query and reporting as well as data mining, and Informix software to store data and manage the warehouse. The benefits of utilizing this setup are simple: it's flexible, it's top of the line and its common use throughout a number of industries has produced a lot of programmers who know how to work with it.
Thanks to implementing GeoStan, Domino's has had the ability to extract block group information for nearly two years. The information is retrieved from QMSoft to Domino's demographics database, allowing the pizza company to find out more about customers' characteristics. All of this has resulted in Domino's ability to segment its customers. And the ability to find the location of customers has helped the company in the relocation of stores or finding sites for new ones.
Since building its data warehouse and implementing GeoStan, Domino's was selected the fastest growing fast food company in the country in 1996 and reported record profits in 1997.
Basically, the combination of Domino's data warehouse and QMSoft's solution opened opportunities in areas of importance to Domino's--geocoding and area demographics. Both of Domino's recent accomplishments--recognition and record profits--can be attributed to address standardization and cleansing of its database. The entire data warehouse has become an integral part of how Domino's makes strategic decisions.
Domino's IS team is impressed with GeoStan and considers QMSoft an excellent source for marketing software products available for data warehouses. QMSoft has enabled Domino's to take its customer analysis marketing to the next level.
The best advice any company just beginning a major data warehouse initiative can receive is: take small steps. In other words, don't shoot too high and try not to accomplish too much at the same time. And, just as importantly, you need to invest in cleaning your data.
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