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How Customers Are Making Referrals Without Even Knowing It

Posted by Bill Lee on January 9, 2012 at 10:33 AM

Schwan Foods (based in Minnesota) delivers frozen pizzas and other foods to homes in the Midwest using some 6,000 sales people driving vans. The firm's sales had been  going nowhere over the last four years due to customer churn and poor inventory management, when it decided to instal an Amazon-like recommendation system developed by a data analytics firm called Opera Solutions.

As a result, when sales people are in a customer's home delivering an order, a system pushes additional recommendations for the customer right to the sales person's handheld. Recommendations include "somebody on this route a lot like you really likes X" -- which is generated by the systems' algorithm. Others include "you haven't bought this in awhile," or deal targeted specifically to the cusotmer based on his or her data profile. Opera says that Schwan's revenues are now up 3 to 4% as a resul--a substantial rise for a firm in the food services industry.  

The data driven "customer recommendation" -- which introduces the element of peer influence -- is particularly interesting of course. I'd be curious how much impact those recommendations make vs. the others. To read more see: Business Edge and THe Wall Street Journal.



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