You’ve got Data, So Use It: Why You Need to Go Beyond Traditional DM

According to a Forrester survey, only 7 percent of U.S. consumers think the marketing e-mails they receive are relevant. And only 10% of direct mail pieces are thought of as relevant. My recycling bin is a testament to this. Why, with all the sophisticated, 21st-century technologies at our disposal, are we marketers still missing the mark so widely?

Clearly, today’s consumers are not asking us to be omniscient. But they do want us to understand some fairly basic information about them. And with all the customer data that we collect, this should be achievable. It confounds me when formula manufacturers send product samples to folks whose youngest kid is in college, or when retailers send a weekly catalog to a customer who has bought only one item since 2005.

So, how do we improve? When you serve more than a handful of customers, there is really only one way to get to know them well enough to engage in meaningful dialogue — analyze the data you have on them. And when I say analyze the data, I don’t mean a simple query-and-report approach — I mean really dig down deep using predictive analytics. Let’s examine a couple of options.

Event-Based Marketing

Event-based marketing identifies key milestones for customers and ties actions to them. Key events can take several forms:

• Major life changes (having a baby, buying a house)
• Interaction with an organization (purchase a product, call customer service)
• Environmental or market changes (interest rates, price)

Such events are perfect opportunities to send customers messages that have strong relevance (e.g., a special mortgage offer to someone shopping for a house) and proactively influence a customer’s future behavior. Analytics enable an organization to identify insightful indicators about events, such as the likelihood a customer will leave for a competitor, and use these indicators to trigger targeted, meaningful communications. These indicators can also help prioritize which messages are sent. The more meaningful the message, the more likely it is to cut through the clutter and capture the customer’s attention.

Next Best Action

“Next best action” is a fundamental marketing technique for understanding customers and using this knowledge to anticipate their needs. This approach has been successfully practiced for years. What has changed is the reason for using it, the ability to implement it with a large customer base, and the ability to measure its effectiveness.

In the past, someone needed to manually track information about a customer. That was easy at the corner store, where employees could talk and work personally with each customer. While this method was possible with large numbers of customers, the costs and resources required often limited it to high-end hotels and organizations with big enough budgets to invest in the effort. Today, advancing technology makes a next best action strategy far more practical for a wide variety of companies working with large numbers of customers.

As an example, a large European bank implemented a next best action strategy as a basis for personalized offers in its service centers and other channels (Internet, etc.). By making the up-to-date information available to its customer-facing representatives, the bank was able to have much better conversations with its customers. If the status of a customer had changed, the representative knew that and could factor that into the discussion. As a result, the initiative was very successful; close to 95% of all buyers had the right product selected for next best action. Purchases of the suggested next best action were up 16-times above previous averages.

While next best action is often associated with inbound channels, it is equally appropriate for outbound marketing. But a word of caution: It is imperative to coordinate communications to avoid delivering conflicting messages via different channels. The process that determines the next best action for each channel must take all communication channels into account and have the ability to make changes as necessary.

This is where marketing technology comes into play. Marketing technology can monitor and manage customer contact and response history across all communication channels, enabling you to coordinate which offers go to which customers, and the channel they are delivered over.

I hope the results of the next survey are more heartening. I don’t know about you, but I have no need for free baby formula coupons in the mail. Now, a coupon for some Sam Adams for when I have to open my kids’ college tuition bills — that’d be a welcome surprise.

Larry Mosiman is worldwide product marketing manager for SAS Customer Intelligence Solutions.