Formation

Offer relevancy drives customer engagement

Formation helps brands make the transition from mass discounts to personalized offers with data-driven personalization and optimization. Its Dynamic Offer Optimization Platform automates the execution, fulfillment, and measurement of personalized offers at scale. Brands can build deeper relationships with their customers, drive higher loyalty program profitability, and gain faster insights into changing consumer behaviors.

Formation’s patented gamified offer technology has driven over $2 billion of incremental revenue and powers offer optimization for some of the world’s largest brands, such as Starbucks, United Airlines, and Giant Eagle.

Personalized offers are a critical part of modern customer loyalty, and Formation’s platform enables brands to create a deeper emotional connection with their customers by creating a series of interactions between the brand and its customers. Formation’s machine learning-driven platform facilitates ongoing testing, learning, and experimentation, coupled with automation to scale dynamic engagements to every single customer.

Formation supports leading brands in creating deeper relationships, brand profitability, and nimble market execution.

 

The Opportunity

After setting the ambitious goal of becoming “the most personalized brand in the world,” Starbucks sought BCG Digital Ventures’ help leveraging a vast body of customer data, transforming antiquated internal processes, and building a platform capable of orchestrating individualized offers and real-time engagement with its loyalty program customers. The timing was good: developers at Digital Ventures were already working on ways to use machine learning to improve customer experience.

The shared goal became to formulate a data-driven personalization strategy for amplifying the existing components of Starbucks’s digital approach by creating compelling marketing offers that would be omnichannel, real-time, gamified, and hyper-relevant to individual customers’ needs. Highly relevant, personalized marketing offers would be the game changer, and a leading-edge, AI-based platform—capable of everything from data ingestion to decisioning to offer delivery and management—would be the key.

Our Approach

Attracting talent for business-building

With BCGDV’s investment, this new platform, now called Formation, quickly grew into an independent software company, attracting top talent to incubate, build, and operate the leading-edge technology while building a sustaining business to commercialize to the broader consumer market.

Bringing it all together

Data science, product development, and marketing teams were colocated in order to encourage cross-pollination of ideas, enable the rapid development of the campaign processes and technology requirements, and facilitate the absorption of more agile practices into the enterprise.

Turning research into tangible results

Through human-centered design research and data analytics, the combined team of BCG, GAMMA, Formation, and Starbucks developed an understanding of customer personas, frictions, and latent needs in order to create offer constructs and data models that would reinforce desired behaviors.

The impact realized

Scalable

First truly automated and scalable way for brands to send millions of 1:1 offers

100000x

Increase in Starbucks’ number of offer variations with Formation

3x

Increase in Starbucks’ revenue lift per personalized offer than with their previous segmented approach

Smart & effective

Smarter and more effective brand campaigns with each customer interaction using the platform

10x

Starbucks experienced a 10x reduction in the time it takes to develop, and launch offers after implementing Formation

Quick

Platform’s engine enables marketers to create and send unique offers for each customer in a matter of minutes and quickly adapt to changing market conditions

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