Collecting More Than Spare Change

The U.S. Mint profits by using data to turn itself into a customer-oriented enterprise

Behind every consumer who holds up a checkout line to dig through his pockets so he won’t have to give up the latest state quarter is more than a line of annoyed customers. Behind that most casual of collectors – one of an estimated 112 million Americans habitually saving the quarters out of their pocket change – is the transformation of the U.S. Mint from a traditional federal agency to a customer-oriented enterprise.

Beginning with its conversion to a Public Enterprise Fund in 1995 – allowing it to operate through its own profits rather than government appropriations – the Mint has seen its revenues from collectible coin sales double to more than $2.4 billion annually and its customer base grow to 1.2 million.

Central to that transformation has been a new emphasis on the Mint’s relationship with its customers – 95% of whom are individual collectors scattered across the nation. “We started at the foundation of customer relationships,” says Philip N. Diehl, director of the Mint, who set the agency’s new course after coming on board in 1994. “The Mint had to strip off the insulation and get much closer to its customers.”

SYSTEM UPGRADE

The Mint took a crucial step forward with the replacement in November 1998 of its computer and data systems with an agencywide enterprise resource planning system that coordinates financial, manufacturing and marketing functions. The new system not only allows the Mint to improve its ordering and fulfillment operations but provides tools for database management and customer service that enable the once-distant agency to interact with its customers more effectively than ever before.

The Mint has also, over the course of its transformation, employed two consumer surveys to mark its progress. It received high marks from the American Consumer Satisfaction Index, issued by the University of Michigan’s School of Business – most recently, in 1999, it scored 86 out of 100 points, on a par with companies such as Mercedes Benz, Maytag and Whirlpool. A second survey, by national research firm Schulman, Ronca and Bucuvalas Inc., serves the Mint annually with a report card of sorts from its customers, detailing, says Diehl, “what they like and don’t like, where we’re improving, and where we’re not.”

Now incorporated into the new computer system, the Mint’s marketing and customer service database serves up 12 years of purchase history and modeling capabilities far beyond what was possible before. “Some of the segmentation that would have taken four to five business days now takes two or three minutes,” says Paul Becker, Strategy & Planning Consultant with the Mint’s Numismatic Strategic Business Unit.

Using purchase data, the Mint has been able to identify four primary segments: the casual collector (accounting for about 21% of the market), gift-givers (27%), sophisticated collectors (33%) and impulse buyers (19%). The Mint does not currently use overlay data in its segmenting, says Diehl, and information gathered from customer transactions does not go beyond the standard name, address, telephone number and – when warranted – e-mail address. “We’re very cautious and very aware of our unique position as a government agency in protecting the privacy of our customers,” says Diehl.

Nonetheless, notes Becker, “As a result of modeling and other analytics, we have a pretty good feel for how customers migrate and cross-purchase.” And by drilling down into product purchase segments – for example, the group of customers who regularly buy annual proof sets – the Mint can isolate clusters as small as several thousand. Products can then be targeted using either direct mail or e-mail.

The latter has proven successful: In October, the Mint sent out 130,000 e-mails announcing the sale of bags of the new Connecticut quarter. The bags – holding a total of 7 million quarters – sold out in less than five hours.

The Mint’s Web site (www. usmint.gov) can be credited with a large share of its growth: Becker attributes 20% of the past year’s 27% jump in collectors to online sales. In the fourth quarter, roughly six months after online sales were launched in April, the site sold $26.5 million worth of coins, one-third of the quarter’s total transactions. And about 20% of online customers had never purchased from the Mint before.