Data analytics isn’t just the realm of high-tech industries any more. It’s making inroads into a wide variety of organizations, from financial firms to sports teams to medical institutions. One sign of the times is that New York City recently passed a bill to make the Mayor’s Office of Data Analytics a permanent part of city government, according to StateScoop.
It was against this backdrop that the Wharton Customer Analytics Initiative (WCAI) held its second annual Analytics Accelerator Challenge. Companies of all stripes submitted their marketing analytics problems for a chance to have a Wharton/University of Pennsylvania student team come up with solutions. At the end, the chosen organizations are presented with data analytics coding, models, and tools they can apply going forward.
This year, 30 firms applied and four were selected: The Barnes Foundation, a museum; Fuel Cycle, a market research firm; Hachette Book Group, a publishing company; and Reed Smith, a law firm. Of the 200 students who applied, 24 were chosen. They ranged from undergraduates to MBAs to post-docs, and hailed not only from Wharton but other disciplines at the University of Pennsylvania such as engineering and computational biology. Teams were given only four weeks to meet their goals.
An art museum famous for its French impressionist works, the Barnes Foundation is nearly 100 years old. It underwent a transformation six years ago when it relocated from its original home in suburban Pennsylvania to the heart of Philadelphia’s arts and culture district, the Benjamin Franklin Parkway.
“We’ve been very successful in our first six years on the Parkway,” said Peg Zminda, who wears several hats as executive vice president, CFO and COO. She explained that the museum has welcomed more than 1.7 million visitors — about triple the number it had at its original location in suburban Merion, Pa. — and has signed up 16,000 member households compared to about 300 previously.
“So you’re probably saying, gee, this all sounds really good, what’s the problem?” Zminda notes. It turns out that since the move, attendance has not been consistently strong as expected. And unlike some nonprofits with large endowments, the Barnes is relatively under-capitalized, so earned revenue is important and predicting visitation is crucial.
Tackling the Barnes’ problem was the student team headed by Anuj Gupta and Catherine Bache. They decided to create a demand forecasting model. The team tested three drivers of attendance: Actions controlled by the Barnes such as pricing and special events or exhibits; competitive actions such as peer pricing and competitor institution attendance; and macro factors such as seasonality and local and national jobless rates.
A significant finding was that if the Barnes continues on its current course, it could suffer an attendance decline of about 10% a year. To arrest the decline, the museum could implement modest reductions in price that would stabilize non-member attendance while remaining revenue-neutral. Specifically, if the Barnes were to reduce its average ticket price after discounts by 8.5% (dropping the price of adult admission from $25 to $23, for example), attendance would stay stable over the following year.
The team said their demand forecasting model could be embedded in the foundation’s current reporting templates with little extra effort to use and update. Gupta and Bache handled “a humongous amount of data” in a short four-week period, yet created a model that was “implementable and simple, according to Wharton marketing professor Raghu Iyengar, a co-director of the Wharton Customer Analytics Initiative. He pointed out that data analytics can help non-profit organizations like Barnes. “Many of us think about analytics for social good. You see this in action [here],” he said.
The next company was Fuel Cycle, a Los Angeles-based market research firm.
