Patent Publication Number: US-2011060663-A1

Title: System and Method of Providing Customer Purchase Propensity Information to Online Merchants

Description:
CROSS REFERENCE TO RELATED APPLICATIONS 
     This application claims the benefit of U.S. Provisional Application No. 61/241,268, filed Sep. 10, 2009, which is incorporated by reference herein. 
    
    
     FIELD OF THE INVENTION 
     The present invention relates to data processing, and in particular relates to a method and system of providing customer purchase propensity information to online merchants. 
     BACKGROUND OF THE INVENTION 
     In conventional electronic commerce (eCommerce) transactions, a prospective customer working on a computer may establish a browsing session with an online merchant (e.g., a merchant web site over the Internet), and select items offered for sale on the merchant web site for purchase. After the selection, a checkout process begins in which the customer provides payment information such as an account number of a financial presentation device. 
     A financial presentation device is a device that can be presented to sellers of goods or services for payment and includes, but is not limited to, credit cards, debit cards, prepaid cards, electronic benefit cards, charge cards, virtual cards, smart cards, key chain devices, personal digital assistants, cell phones, stored value devices and the like. 
     In an attempt to increase sales, during the selection or checkout process, the online merchant may review the user-selected items and try to offer additional related items to the customer. However, without knowing more about the customer, the attempted additional offer based solely on the items selected is likely to generate little interest by the customer. 
     Therefore, it would be desirable to provide a system and method for providing more detailed information about the customer to online merchants so that targeted offers that are more relevant to each customer can be made while the customer is online with the merchant. 
     SUMMARY OF THE DISCLOSURE 
     In one aspect of the invention, a system for providing online merchants with purchase propensity information is provided. The system includes a processor and a purchase propensity module executable by the processor. The purchase propensity module receives, from an online merchant computer, a message containing a customer identifier that identifies a customer who has established an online browsing session with the online merchant. In response, the purchase propensity module transmits to the online merchant computer purchase propensity data associated with the identified customer while the browsing session is in progress. This allows the online merchant computer to determine a targeted offer for the user while the user is in the online browsing session. 
     In another aspect of the invention, a system for an online merchant to provide a targeted offer based on purchase propensity information is provided. The system includes a processor and a sales management module executable by the processor. The sales management module interacts with a customer computer to establish an online browsing session with a customer, retrieves purchase propensity data associated with the customer, and determined a targeted offer for the customer based on the retrieved purchase propensity data while the browsing session is in progress. 
     In another aspect of the invention, a method for providing online merchants with purchase propensity information is provided. The method includes receiving, from an online merchant computer, a message containing a customer identifier that identifies a customer who has established an online browsing session with the online merchant. In response, the purchase propensity data associated with the identified customer is transmitted to the online merchant computer while the browsing session is in progress. This allows the online merchant computer to determine a targeted offer for the user while the user is in the online browsing session. 
    
    
     
       BRIEF DESCRIPTION OF THE DRAWINGS 
         FIG. 1A  is a functional block diagram of a system for providing purchase propensity data according to one embodiment of the invention. 
         FIG. 1B  is a functional block diagram of a system for providing purchase propensity data according to another embodiment of the invention. 
         FIG. 2  is a functional block diagram of a computer that can be used by any entity shown in  FIGS. 1A and 1B . 
         FIG. 3  illustrates an exemplary purchase propensity data of a customer according to the invention. 
     
    
    
     DETAILED DESCRIPTION OF THE INVENTION 
     When a financial presentation device is used for payment, an authorization procedure takes place during the checkout process in which the online merchant passes transaction data in an authorization request to an authorizing entity such as the issuer of the financial presentation device via a financial transaction facilitator such as Visa™. A financial transaction facilitator is a network that acts as a switch between acquirers and issuers for routing messages therebetween for purposes of authorization, clearing and/or settlement of financial transactions. 
     Financial transaction facilitators such as Visa typically maintain databases that store information regarding the customer accounts. The stored information includes records of past purchase transactions performed by the customers using their accounts. 
     Since the stored information includes transaction records from not just one merchant but all of the merchants that have processed the transactions through the financial transaction facilitator, the information data set is much larger than the amount of information that can be collected by a single merchant. Accordingly, the large historical purchase data of the financial transaction facilitator may more comprehensively reveal customers&#39; purchase habits and propensities which may be very valuable to online merchants. 
     The present invention provides a system and method for providing such purchase propensity information to online merchants while the browsing session with the customer is in progress so as to assist the online merchant to make more precisely targeted offers for that customer. 
       FIG. 1A  shows a system  100  for performing financial transactions using a financial presentation device according to the present invention. A customer at a computer (e.g., desktop, laptop, mobile computing device, mobile phone or the like)  102  is communicatively coupled to a computer network such as the Internet  103  and may access sites hosted by online merchant (merchant computers)  104  on which goods and/or services offered by the merchant are displayed. Online merchant computer  104  is coupled to a private secure network over which transaction data are transmitted. The private network includes acquirer (acquirer computers)  106  which receive data from merchants, data centers of the financial transaction facilitator  108  where processing may take place and issuers (issuer computers)  112  of financial presentation devices such as credit and debit cards. 
     A communication link  105  connects the online merchant computer  104  to the financial transaction facilitator computer  108  over which the purchase propensity data are transmitted which will be discussed in detail later herein. A purchase history database  110  coupled to the financial transaction facilitator  108  stores historical data for purchases made from a plurality of merchants for a plurality of customers that use financial presentation devices for payment. A purchase propensity database  116  also coupled to the financial transaction facilitator  108  stores purchase propensity data of customers based on the historical purchase data contained in the purchase history database  110 . These databases will be discussed in more detail later herein. 
     In operation, when a financial presentation device is used to make an online purchase, an authorization request including data pertaining to the purchase transaction flows from the online merchant  104  to the acquirer  106 , and from acquirer  106  to the financial transaction facilitator  108 . Financial transaction facilitator  108  determines the issuer that issued the presentation device and routes the authorization request to the determined issuer  112  among a plurality of issuers. The issuer  112  determines whether the account (financial presentation device) is authorized and prepares an authorization response to either authorize or decline the transaction. The issuer authorization response is then transmitted to the merchant  104  through the transaction facilitator  108  and then the acquirer  106 . During the transaction, the transaction facilitator  108  stores in a database  110  details of the transaction data. In some embodiments, the issuer  112  stores at least some of the transaction data details which the financial transaction facilitator  108  may then access. 
       FIG. 1B  shows a system  100 ′ for performing financial transactions using a financial presentation device according to another embodiment of the present invention. A payment service (payment service computer)  114 , such as CyberSource Corporation of Mountain View, Calif., may be positioned between the online merchants and acquirers to assist the merchants with payment services. 
       FIG. 2  illustrates a computer system  20  that can be used as the customer computer  4 , merchant computer  104 , issuer computer  112 , payment service computer  114 , acquirer computer  106 , or financial transaction facilitator computer  108 . A computer that manages analysis and determination of purchase propensity data may be a separate computer or a part of the financial transaction facilitator computer system  108  that routes messages for purposes of authorization, clearing and/or settlement of financial transactions originating from the merchants  104 . 
     For purposes of this application, the terms “code”, “program”, “application”, “software code”, “software module”, “module” and “software program” are used interchangeably to mean software instructions that are executable by a processor. 
     The system  20  includes a communication interface  12 , a processor (CPU)  16 , a memory  14 ,  18  coupled to the processor, and software or software modules  17  executable by the processor. The elements  12 , 14 , 16 , 18  are all connected to each other through a common bus  11 . 
     As a merchant computer, the module  17  may include a sales management module that interacts with the customer computer to establish a browsing session, manage sales transactions and make targeted offers based on the customer&#39;s purchase propensity data. As a financial transaction facilitator computer, the module  17  may include a purchase propensity module that derives purchase propensity data from the purchase history database  110  for storage in the purchase propensity database  116  and that interacts with merchant computer  104  to provide such data. 
     When the customer visits or logs in to the online merchant site through the Internet  103 , the sales management module  17  of the merchant computer  104  interacts with the customer computer  102  to establish a browsing session. The sales management module  17  of the merchant computer  104  can implant and retrieve data/code in customer computers in the form of ‘cookies’ that allow the merchant to automatically recognize the customer. While the user is browsing the pages of the online merchant, the sales management module  17  assembles a request message (request to retrieve purchase propensity data about the customer) containing a customer identifier. 
     The customer identifier preferably is a financial account number of the customer, but it can be anything that can identify the customer to the financial transaction facilitator  108  such as the name of the customer and address. The customer identifier may be retrieved from the merchant&#39;s database or from the cookies themselves. For example, the online merchant  104  may automatically detect that the customer has used a particular financial presentation device (FPD) in a past transaction with the online merchant. The assembled message is then sent to the financial transaction facilitator computer  108  through either the link  105 ,  107  or acquirer computer  106 . 
     The purchase propensity module  17  of the financial transaction facilitator computer  108  receives the message. Preferably, the purchase propensity module  17  has derived the propensity data by analyzing the purchase transaction history of the customer in the purchase history database  110  and stored them in the purchase propensity database  116 . 
     Based on the account identifier contained in the received message, the purchase propensity module  17  retrieves the customer&#39;s purchase propensity data from the database  116 . Alternatively, purchase propensity module  17  of the financial transaction facilitator  108  may retrieve the customer&#39;s purchase history from the database  110  and generate the customer&#39;s purchase propensity information upon receiving the message from the merchant computer  104 . 
     It is to be noted that the customer&#39;s propensity information can be derived without using the purchase history and solely from customer&#39;s personal information such as residential address, zip code, annual income, age and the like. Alternatively, the customer&#39;s propensity information can be derived with the purchase history and customer&#39;s personal information. 
     The purchase propensity module  17  then transmits the customer&#39;s purchase propensity data to the online merchant computer  104  through either the link  105 ,  107  or acquirer computer  106 . 
     The sales management module of the merchant computer  104  uses the received purchase propensity data to determine a more targeted offer for the customer while the customer is in the browsing session so that such an offer can be made before the customer leaves the merchant site. 
     As can be appreciated, because the transaction facilitator computer  108  is connected to a plurality of merchants including online and brick and mortar merchants, the purchase data for a particular account includes data from many merchants. Also, because the transaction facilitator  108  is connected to a plurality of issuers  112 , it is possible for the transaction facilitator to pass customer identifying information to the issuers and obtain other financial accounts that the customer owns so that the historical purchase data of the customer may include not only those of one account but multiple accounts from different issuers. 
     In one embodiment, the purchase propensity data includes propensity scores that are based on one or more of the following parameters although other parameters can be used: 1) number of transactions and amount of spend by merchant; 2) number of transactions and amount of spend by merchant type or category; 3) velocity of spend; 4) seasonality of spend; 5) quantity and mix of spend by channel (online, face-to-face, mail order/telephone order transactions); 6) past responsiveness to special offers and/or discounts; 7) spend by financial presentation device type (debit, credit, prepaid); and 8) average transaction amount of spend. 
     The online merchants can be provided with a guideline as to how to interpret the propensity scores. For example, the following table illustrates one guideline for online merchants. 
     
       
         
           
               
               
             
               
                 TABLE 1 
               
               
                   
               
               
                 Propensity 
                   
               
               
                 Score Range 
                 Description 
               
               
                   
               
             
            
               
                 0 to 20 
                 Customer has made no purchases in this category nor in 
               
               
                   
                 complementary categories 
               
               
                 21 to 40 
                 Customer has made no purchases in this category but has 
               
               
                   
                 made purchases in complementary categories 
               
               
                 41 to 60 
                 Customer has made less then 5 purchases in this category 
               
               
                   
                 in the last time period 
               
               
                 61 to 80 
                 Customer has made 10+ purchases in this category and 
               
               
                   
                 5 in complementary categories 
               
               
                 81 to 100 
                 Customer has made 10+ purchases in this category and 
               
               
                   
                 10+ in complementary categories 
               
               
                   
               
            
           
         
       
     
       FIG. 3  shows a table including exemplary purchase propensity data of an example customer “John Doe”. The table  200  includes a list of categories  202 - 212  of goods and services and indicates a propensity score for each of the categories, where a higher propensity score indicates a greater propensity to purchase goods or services of the particular category. The category  204  with the highest propensity score is “Books”, indicating that book sellers may be interested in targeting this customer. One of the categories  212  indicates the propensity of the customer to respond to targeted offers, and may be particularly useful to merchants. For example, a merchant may target a customer that has a high propensity to respond to offers regardless of whether the merchant offers goods or services that a customer tends to purchase. This type of information as well as other types and categories, including actual historical purchase data, may be provided to online merchants while the customer is in the browsing session according to the present invention. 
     In an alternative embodiment, the propensity data can be provided to an online merchant in advance so that the merchant can set up a targeted marketing program to target a specific set of its customers. That way, as soon as the customer establishes an browsing session with the merchant&#39;s website, the online merchant can check its own purchase propensity database to determine whether the logged-in customer is part of the targeted set of customers without sending the account identifying information to the transaction facilitator  108 . 
     The foregoing specific embodiments represent just some of the ways of practicing the present invention. Many other embodiments are possible within the spirit of the invention. Accordingly, the scope of the invention is not limited to the foregoing specification, but instead is given by the appended claims along with their full range of equivalents.