Mark Smith, CMO and president of Quadstone Inc., leads a well-rounded organization with technological expertise, high levels of market awareness and a healthy philanthropic streak. In addition to contributing to various charities through staff fundraising and corporate activities, Quadstone is currently sponsoring a yacht in the BT Global Challenge ­ an event conducted to raise money for the Save the Children charity. Quadstone has successfully used their boat, which calls at ports around the world including Boston, Sydney and Cape Town, to raise their global profile, forge high-level business contacts through corporate events and also provide a few lucky staff members with the experience of a lifetime by sailing competitively in the race. With the 2001 race underway, Smith relates how the race highlights two very important Quadstone concepts.

"Although masters of customer prediction, not even Quadstone can predict who will win the race ­ although once they win we could predict how they will spend the prize money! In fact, our boat has already won the first leg of the race (UK to Boston) and was first to round Cape Horn, showing that the small players can win and can deliver value to match even the huge global corporations that also participate in the race," states Smith. Quadstone hopes that these are signs of its own future ­ a future focusing on providing the best customer analysis software available.

Quadstone Fact Table

Quadstone is a privately held company.

Number of Employees: 175

Number of Customers: 60 software, 50 services

Number of Licenses: 200+

Revenue: Approximately $10M

Quadstone's mission is to provide companies with the ability to predict individual customer behavior so they have the intelligence necessary to implement effective CRM strategies. Their solutions are easy to use, easily implemented, quick, scalable and seamless. Quadstone solutions are built for marketing and business analysts, rather than IT experts or statisticians, as these users have the knowledge to conduct tactical marketing. Quadstone solutions turn billions of transactions into meaningful indicators of customer behavior through visual exploration and analysis, data mining and finally segmenting and scoring millions of customers in minutes and inserting the results into operational systems. These results are achieved through integration with major campaign management tools and other operational CRM systems as well as direct links to most sources of relational and non-relational data.

Quadstone's flagship product, the Quadstone System, does it all ­ from preprocessing and analyzing customer data to deploying the customer rules or target lists. The system has three components: Transactionhouse collects data from all channels (including the Web) and converts it into key behavior indicators; Decisionhouse provides analysis of customer data with best-of-breed analytic capabilities, gaining valuable insights into customers' needs; and Actionhouse deploys this learning into various customer touchpoints to implement the most profitable CRM action.

In 1993, while working as a consultant in Edinburgh, Smith conducted an intensive 18-month market research initiative during which he studied the customer database applications of major European financial institutions. This research identified the market opportunity for Quadstone. Smith explains, "In a previous life, Nick Radcliffe (CTO of Quadstone), Neil Heywood (CEO of Quadstone), Kevin Collins (European Managing Director of Quadstone) and I specialized in very high-performance, high-scale data analysis and software development on a consulting basis. We were working at a large computing center at Edinburgh University (Edin-burgh Parallel Computing Centre). At the time, it was a fairly novel practice in the UK for an academic institution to have a business dimension such as this. Basically, our group served as a government-funded exercise to encourage new technology use within businesses in Europe. Primarily as consultants, we introduced a new technology ­ high-performance database and analysis systems ­ to European companies such as British Telecom, Barclays Bank and British Petroleum (BP). We helped these companies evaluate the radical advances they could make if they used these new, high-performance computing systems. When I look back at this period from 1990 to 1994, the real value of the work we were doing was the collection of information about businesses' needs, requirements and problems. I recognized a consistent theme among our clients during this time. Commercial organizations had significant amounts of customer-specific data, yet there weren't any tools available to enable business people to do anything with this data. The data was owned by the IT/data processing department ­ and the employees who needed this information felt they had limited access to it, certainly not access to perform beneficial analysis and usefully employ this information. The four of us set out to close the gap we had identified by bringing those business users closer to that data, specifically in the areas of customer data and customer behavior, so we bought ourselves out of EPCC. Along with 11 others, the four of us created Quadstone in 1995 as an independent company," he states.

"The fact that we all had diverse positions at the computing center was beneficial to our partnership," Smith continues. "Heywood was the general manager of the entire center, Collins was the commercial manager on the business side and Radcliffe and I ran two of the applications groups. However, it was a very equal four-way partnership when we created Quadstone, and this partnership has been a driver for our success as it gives us coverage and balance because we make decisions in the middle of four focused views. We're all still with Quadstone. However, a year ago, Heywood and I moved to the States full-time to lead the expansion here, while Radcliffe and Collins remained to run the business in the UK. I've been the marketing director for Quadstone from day one and am still the CMO globally. However, with my move to the States, I became president of Quadstone Inc. ­ a wholly owned U.S. subsidiary of Quadstone Limited."

Smith is pleased with his move to the States and discusses Quadstone's good fortune during the rise and fall of the dot-coms. "Quadstone was at an advantage during the rise of the dot-coms because we weren't competing for development talent in the States during that time. All of our technology is developed in our center in Edinburgh. This has proved a great location because there's a consistent stream of great talent produced by the universities there, and not many high- tech companies in Europe are competing for this talent. As far as Quadstone recruiting, we have seen a significant change over the last few months in the States. We now have business development and sales personnel who consult to support customers and deliver projects. Fortunately for us, there's great availability, particularly in the Boston area, of this type people due to the downsizing of several of the big integrators," states Smith.

The Multidimensional Nature of Mark Smith

Last book read: A Prayer for Owen Meany by John Irving

Most memorable movie: The Great Escape

Favorite entertainer: Billy Connolly

Most entertaining game: Rugby

Most respected politician: Winston Churchill

Dream car: Mercedes E55 (AMG) Station Wagon

Perfect vacation spot: Saas- Fee, Switzerland

Most admired individual: Nelson Mandela

Best TV show: Inspector Morse

What sports team: Sheffield Wednesday

Hobby: Skiing

Music: Rock

Favorite food: Banana & Cinnamon Pancakes

Favorite beverage: Beer

Along with an identified need for Quadstone products and services and productive management, Smith attributes a great portion of Quadstone success to the company's single focus. "We are 100 percent focused on customer analysis and the provision of the ability to understand the customer. It is gratifying to watch Quadstone customers use knowledge obtained through our products and services to make their businesses more profitable and valuable. We're probably the largest company in our space that is totally focused on customer analysis. Several of the companies we find ourselves competing with promote a strong customer analysis message, but they are really focused on operational systems or more generic statistical tools. Quadstone is unique in that customer analysis is what we do and it is all we do. Our analytical piece is better because we've been able to focus on it exclusively and ensure that it is open to get data and provide customer contact rules to any operational CRM tool. With a good analytical piece, you're going to generate more revenue. Choosing one operational system over another, one database over another and other similar decisions are relatively marginal decisions in terms of value. However, the business-driven analytics, easily deployed to operations, can make a massive difference in returns, and that's why people want to buy our solutions," emphasizes Smith.

Smith and his team identify and tackle challenges and misconceptions regarding CBM (customer behavior modeling) and CRM practice. "One of the misconceptions about customer data analysis that existed for a long time was that large organizations already performed these types of analyses on their data ­ but they didn't. A startling truth for me when I started visiting and working in the financial sector 10 years ago was the realization that most of the companies had no idea that they could analyze customer data. Additionally, there are other potential Quadstone customers that understand this ability, but are fearful of CRM initiatives because they believe that CRM is a very large database implementation project when it is not. CRM is about good business practices ­ doing the right thing to target and retain good customers. CRM is supported by our predictive technology, and Quadstone's solutions enable companies to realize value from their CRM initiatives quickly ­ not three years down the road after a huge implementation at which time the original plans can be for naught as the entire business has changed. It's understandable that companies are fearful of CRM initiatives that they assume are two-to-three- year build projects. One of our challenges is to let our customers know that they don't have to wait that long to get value from analytical solutions," emphasizes Smith.

That said, a good embarkation point for a CRM initiative is the identification of your best customers. Smith elaborates, "Identification of your best customers is easily said, but not so easily accomplished and certainly difficult for any large organization with multiple data feeds ­ hence the reason the Quadstone System accepts data from all channels. Calculation of customer value involves the gathering of many different pieces of data and analysis of that data to calculate a customer's worth. Quadstone's solutions allow marketing and business experts to mix their expertise and knowledge with advanced statistical and analytical techniques to deliver the best business results immediately and interactively. The software also provides a complete view of the customer in real time, enabling users to develop strategic and highly effective marketing campaigns and thereby strengthen and grow customer relationships. Identification of your best customers forms a fantastic platform from which to operate and perform a variety of new marketing applications for your business."

In a competitive market, companies must enjoy and thrive on challenge. As a comment on the current economic downturn, Smith emphatically states that Quadstone solutions will benefit not only Quadstone customers but consumers as well, "The recession is unbelievable ­ yet it's good for us in an ironic way because it forces companies to look for real and measurable value before they commit to purchase. And that's what we provide for our customers."

"I'm pleased with the success we've had as a small company in a very emerging market, and our success with new customers in the States such as Scudder Kemper Investments is a sign of that success. We're also excited about our recent partnership with Data Miners that will help CRM-focused organizations optimize their operations and empower the business user through harnessing the predictive value of customer data. Profile raising and acceptance in the U.S. market are our largest challenges today at Quadstone, Inc. ­ we still have to jump the hurdle of being seen as just a European company. However, with the range of new products to be released this summer and our capacity for success, we're predicting a great future," states Smith.

Unfortunately, even Quadstone's predictive capabilities can't predict the winner of the BT Challenge on June 23, 2001. Even if Quadstone does not win the BT Challenge, it's obvious that Smith, the company's skipper, has set sail on a predictive course that will successfully tack the waves of challenge.

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