Hoping to capitalize on the reputation it has built in the financial services industry, Nestor, Inc., of Providence, has launched a product that should help marketing directors mine data available to them on computer databases.
The announcement of CampaignOne’s launch in late October was followed by a slight upswing in the company’s stock activity early this month. Late morning on Nov. 6 the stock was up 12.20 percent to 1 7/16. On Nov. 23 it closed at 1.13. Its 52-week range, as of Nov. 6, was 5/8 to 3 1/8.
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“It’s a data mining tool but it’s a lot more,” explained Tom Spillane, director of marketing for Nestor’s Financial Solutions division. “We’re applying it to knowing your customers a lot better.”
The catchword “customer relationship management” is increasingly being used to describe such technology, at least in the software and high tech industries.
“Banks are really putting a lot of money into data warehousing, or data marts, there’s a wealth of information that to this point they haven’t been using,” Spillane said.
For example, he said, the program could help banks determine which customers would mostly likely take advantage of certain credit card offers and how successful a company is at retaining customers.
Sushmito Ghosh, vice president of Nestor’s Financial Solutions, said: “CampaignOne uses Nestor’s sophisticated modeling techniques to understand and predict customer behavior.”
Dave Kelly, an industry analyst who follows Nestor, said, “customer relationship management is becoming more critical every day, particularly because of the Web.”
“Understanding what your customers want and getting it to them is becoming more critical on the Web your competitor is a click away,” said Kelly, who is vice president of application strategies with the Hurwitz Group, Inc., in Framingham, Mass.
Kelly had not received a CampaignOne briefing as of Nov. 20 and could not comment on specific product features, although he could comment on the market.
“There are a number of other companies that are releasing marketing automation software,” he said. CampaignOne “is certainly aimed at a fast growing market.” The trick, he said, is for Nestor “to put the right products in front of the right people at the right time.”
“There’s probably actually a number of ideal markets, certainly banks and financial institutions are being driven more than ever to increase customer options and to understand how they should better serve the customer. It is a good target market,” Kelly said.
The technology is bundled with Windows-based software, which makes it easier for non-programmers to access an institution’s databases, then do something constructive with that data, according to Spillane. Often in-house marketing departments must rely on staff programmers and computer experts to help them, he added. The cost for such convenience, however, runs in the neighborhood of $250,000 to $300,000, according to Spillane.
“It’s really a front-end of the system so you can manage from start to finish your marketing campaigns,” Spillane said. Nestor only recently began marketing the product to its existing customer base and just demonstrated CampaignOne at the Nov. 8-11 Card Marketing Conference in Las Vegas. It has also been conducting a trial with a regional bank, which Spillane declined to identify.
Nestor was started in 1983 by two Brown University physics professors, Leon Cooper, a 1972 Nobel laureate, and Charles Elbaum. The company produces three distinct and sophisticated software products, including a credit card fraud detection system and a traffic monitoring system. Nestor executives restructured the company over the past year, establishing three divisions for each of the company’s product lines. That move was among the factors that helped Nestor raise $5 million through the sale of common stock to Transaction Systems Architects, Inc., last spring.
Nestor released its third quarter earnings report two weeks ago, which indicated its revenues of $1.1 million had decreased 68 percent over revenues from the same period last year. Although Nestor officials indicated the figures were affected by a one-time initial license fee payment of $487,000 last year for one of its financial service products.
In a statement on the quarterly report, David Fox, president and chief executive officer, said part of the reason for the decrease in revenues is due to the fact some potential clients are spending money addressing Year 2000 compliance problems instead of investing in new technologies.
Up until now Nestor’s PRISM CardAlert system has been its sole money maker. It is a neural-network fraud risk management system. It looks at thousands of credit card purchases and identifies potentially fraudulent transactions. Mellon Bank Corp. has used the system since 1992. It is those customers that Spillane said they are hoping will first use CampaignOne. They are planning to “leverage” their existing relationships “to get in the door with CampaignOne,” he said.
This strategy of building on the established financial services customer base may have caused, in part, the blip in Nestor’s stock prices this month, Spillane agreed.
“People investing in the company are seeing this as another product offering, and it’s not too diversified,” he explained. “We’re able to cross sell CampaignOne — we’re not going into a brand new field.”
