RESEARCH & RESOURCES

CASE STUDY - StubHub Scales to Explosive Growth

Commentary by Rob Singer, Director of Business Intelligence, StubHub
Summary

StubHub, a rapidly growing online marketplace, had limited visibility into current data, customers, and business drivers, which threatened the long-term survival of the business. The root of these problems was an inadequate technology infrastructure, but StubHub did not have the resources to make an expensive overhaul to address its IT needs.

Faced with these challenges, StubHub invested in a business intelligence (BI) and data warehouse (DW) initiative, using limited resources. The StubHub BI/DW initiative emphasized investing in specific technologies to empower end users and to free up existing staff resources, reusing existing technology investments, and employing open source technologies where possible.

With a total budget of $750,000 (42 percent staff, 42 percent new licenses, and 16 percent training), and ongoing maintenance of less than $100,000, StubHub realized $22.4 million in savings in 2006—directly attributed to returns from improved processes and reduced staff. Additional savings sprang from enhanced reporting capabilities, giving StubHub executives and end users invaluable insight into current data, customer behavior, and key business drivers.

Business Impact

StubHub is an online marketplace where fans buy and sell tickets for live events. Since its founding in 2000, it experienced triple-digit year-over-year growth, becoming a market leader and putting strains on its existing information management infrastructure.

Through mid-2005, StubHub’s business intelligence function relied entirely upon a Microsoft Access database—the source for about 40 Microsoft Excel pivot tables residing in a shared network file directory. The company had minimal insight into customer behavior and no visibility into the dynamics of its Web site. (It had no Web analytics function.)

Because of the two-gigabyte storage limit for Access databases, StubHub constantly pruned the database to make room for new data, reducing the richness of its data in the process. By June 2005, StubHub devoted an average of 16 hours a week to loading the data warehouse, refreshing the pivot tables, and notifying employees via e-mail when refreshed reports were ready. With delayed and static reporting, StubHub had minimal understanding of its customers, it competitors, or its key business drivers, and decision making was based on gut feel instead of being data driven. Clearly, it had to make significant changes—fast.

StubHub assembled a steering committee and a business intelligence team to assess requirements, evaluate options, and ultimately build a scalable BI/DW infrastructure that could support StubHub’s explosive growth and contribute to business value. Composed of executives, BI professionals, and end users from different disciplines at StubHub, the steering committee established key goals, which included:

  1. Creating a scalable and extensible IT infrastructure to enable dynamic reporting, provide access to rich current and historical data, and reduce data latency.
  2. Providing actionable customer insights, to include defining key customer segments, quantifying customer lifetime value, and creating customer behavioral profiles.
  3. Providing tools to maximize site conversion rates, marketing effectiveness, and customer loyalty.
  4. Identifying key business drivers and defining key company metrics.

The team also needed to accomplish these goals using creative approaches and leveraging existing resources wherever possible. It developed a detailed roadmap and project plan with clear, measurable milestones to meet the objectives and stretch investment in the initiative. Combining open source technology with best-of-breed software tools from Business Objects, Oracle, Omniture, and SAS, StubHub used a phased approach to deploy an extensible BI/DW infrastructure, leading to the following measurable results:

  1. By moving from Access and Excel to Oracle and Business Objects, StubHub migrated to a best practices model for data warehousing and report distribution that reduced data latency and switched from a manual, weekly data refresh to an automated nightly data refresh. Migrating to the automated environment, StubHub cut costs through staff reduction, resulting in $150,000 in annual savings.
  2. Creating a marketing allocation report (called NORAD) that calculates key marketing performance metrics, such as cost per order (CPO). NORAD merges transactional data with several external data feeds to associate transactions with the marketing channels that drove them. The report enables StubHub to understand the dynamics of its numerous marketing channels and enables the marketing team to optimize its marketing spend on a daily basis. In 2006, NORAD reduced CPO by 33 percent—a savings of $15.6 million.
  3. The new infrastructure permitted the development of a daily report that tracks each StubHub seller’s dropped-order rate. These dropped orders—where a seller is unable to provide the purchased tickets—negatively affect customer satisfaction and increase operational costs by creating significant customer service activity. Reducing StubHub’s overall dropped-order rate was a key strategic priority for 2006. Using the daily report, which includes alerts to the customer service team, enabled StubHub to work proactively with sellers to improve their performance, and resulted in a decrease in its dropped-order rate by 31 percent— saving $600,000 in costs. Using the report to monitor dropped orders and alerting the customer service team to potential problem areas has enabled rapid problem resolution and, ultimately, a significant increase in customer satisfaction
  4. StubHub continually monitors Web site activity using Omniture. With its real-time reporting capabilities, Omniture enables StubHub to make ongoing changes to its Web site, which increased the site-conversion rate of 8.5 percent in 2006—resulting in $5.4 million in additional revenue.
  5. StubHub moved from an exclusively “push-based” reporting environment, where BI analysts developed all the reports, to a “push-pull” environment, where end users are more empowered. End users, including marketing, business development, finance, and customer service, now access more than 300 customizable standard reports. Further, StubHub established “sandboxes”—highly interactive subjectarea reports—that business owners use to tailor reports to fit their own business needs. Because StubHub’s business users can answer their own questions, StubHub’s BI analysts could focus on answering strategic business questions. In 2006, they were able to quantify customer lifetime value, identify key customer segments, and develop high-impact reports like NORAD and the dropped-order report.
  6. Executives and business users now have visibility into key company drivers. They are engaged with the data and constantly respond to customer and competitive activity. With greater understanding of customer buying patterns, StubHub is able to anticipate demand and deploy changes to its marketplace in near real time to accommodate market-changing events.
Maturity

StubHub achieved all objectives of its BI initiative: It successfully replaced its failing Access database with a stable, scalable, and extensible data warehouse environment that enables dynamic reporting and provides access to current and historical performance data. StubHub now has a 360-degree view of the customer, company-wide dissemination of critical company data, and the quantification and monitoring of key company metrics.

The new database and reporting environment was developed and deployed in eight months (six months of coding, two months of parallel testing). StubHub completed phases one and two of its enterprise reporting goals, migrating key Excel pivot tables to Business Objects reports, delivering sandboxes for scalability, and producing value-added reports, such as the marketing allocation report. Another key achievement was StubHub’s standardization of terms, including the definition of all metrics.

StubHub now continuously maintains a rolling two-year roadmap to build on the platform and continue driving business value through actionable intelligence. The next phases include the deployment of Business Objects Dashboard Manager to monitor StubHub’s key performance indicators. The dashboards will give executives focused, efficient delivery of mission-critical data. The long-term roadmap includes enhancing operational reporting capabilities; StubHub is building the foundation for providing business activity monitoring, balanced scorecards, and predictive analytics.

Relevance

StubHub leveraged industry best practices that can be adopted easily by similar organizations. These practices include:

  • Obtaining executive buy-in upfront by securing an executive sponsor and implementing a proof of concept
  • Assembling a cross-functional team to ensure full organizational buy-in and to provide an appropriate enterprisewide perspective that aligns deliverables with business goals
  • Developing a detailed project plan that includes a phased approach and clear milestones with minimal external dependencies (to maximize success rates)
  • Using an ROI-driven approach for project prioritization
  • Running in parallel environments until core functionality and reports are fully migrated and fully tested
  • Adhering to industry-standard best practices, including using a traditional star-schema data model, a software development lifecycle methodology, and data quality techniques
  • Delivering “quick wins” with key reports to demonstrate and reinforce value to the organization
  • Adhering to a 12-month rollout and threeyear strategic plan for implementation
Innovation

StubHub, like many midmarket companies, is focused on keeping costs as low as possible, and the team needed to find innovative ways to achieve an enterprise-class implementation on a limited budget. The team used novel approaches to that goal, including:

  • Using open-source, on-demand, and free/bundled software for its commodity technology needs so that it could focus its limited software expenditures on value-added and best-of-breed tools
  • Extensive use of sandboxes, minimizing BI headcount and enabling the BI team to focus on delivering value-added projects
  • Repurposing hardware to reduce capital expenditures further
  • Collaborating with partner groups to create new reports and functionality to ensure that the BI team does not build anything that goes to waste. All participants understand the value of what is built and are taught how to use it, resulting in organizational buy-in and a high adoption rate.

 

StubHub's innovative solution received a 2007 Best Practices Award from TDWI.

This article originally appeared in the issue of .

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