Beauty means business for the global leader in salons, hair restoration centers and cosmetology education. Our client's salons are the salon of choice for women who like to experiment with the latest beauty products. These all-in-one retail and full-service salons offer contemporary women exceptional beauty and professional hair products at value prices.

Business strategists frequently cite the "80-20 rule", long held that 20% of your customers provide 80% of your sales. But what if you got the "20" wrong? How would you know it and what would be the impact of that knowledge? A Business Intelligence process applied by SHC Direct realigned the confidence our client had in long-held assumptions about its own 80-20.

The Company built an enviable business on the assumption that its primary customer was female, 18-26 years old, with household income of $50,000. They currently have 635 locations across the United States, Canada and Puerto Rico.

Working together since 2006, we launched a consumer loyalty program that grew to include over one million members by 2007. The program's success provided our client with a robust reward participant database and unparalleled purchasing data.

That success began with SHC Direct's initial challenge, moving the loyalty effort from a punch-card program to a true consumer loyalty and acquisition initiative. Like so many other punch-card programs, the existing program yielded little data about customer behavior and was easily abused by employees and customers. Their aspiration, and SHC Direct's task, was to create a program that would produce usable raw data that could generate insights and better marketing decisions.

The program quickly reached a point where data mining and business intelligence insights forced client management to challenge assumptions about which customer segments produced the majority of their profits. New insights—including reliable data on marketing ROI and day-by-day purchasing patterns—allow for the building of unparalleled predictive models of member-mailing response patterns.

In effect, business intelligence told client management that their "20" wasn't on target. SHC Direct's Data Analytics team was able to cross-match the participant database with external demographic data to determine a new "20". The insight was that their new 20 was older and more affluent, something that has had far-reaching repercussions across the entire enterprise.

What began as a drive to create a loyalty program to increase basket size and influence purchasing behavior has now emerged as a powerful tool for more effective customer acquisition. Management's assumption about their 20% had been the basis for decisions about everything from location to staffing to store design. With the new 20 came the insight that the target segment's household income was two-times the old assumption, exceeding $100,000 per year. And the new 20 was older, fitting comfortably in the 36-55 population.

Reward participant databases are just the beginning of a new level of business intelligence. Data Analytics is providing SHC Direct's clients with new solutions for decision support. The solution enables secure handling of the large amounts of data necessary for meta-analysis and deeper intelligence into customer segments.