By Klaus Hölbling, Olaf Acker, and Florian Gröne
You’re in the middle of a business trip. You’ve left your cell phone charger at home, your phone’s battery is dead, and a big client is calling you in two hours. So you make your way to your mobile operator’ nearest retail outlet to buy a new charger, and maybe a battery too. You walk in, hoping to complete this tedious errand quickly. Much to your surprise, you walk out 20 minutes later with a complete travel kit, including a spare charger, a battery, and a three-month trial subscription to the mobile company’s basic e-mail and Internet service package. How did that happen? Chalk it up to next-generation marketing IT: the new wave of technology-driven marketing.
Here’s how it works. While your phone is charging, the sales agent enters your phone number into the sales terminal, activating the customer relationship software maintained on a global network. Its purpose is to help the clerk recognize your individual needs and predispositions, and to offer you products likely to interest you. While you wait, the program brings up your record and identifies you as a high-value client, who makes a lot of phone calls and occasionally runs over your monthly allotment. You also do a lot of text messaging, regularly check your account online, receive your bills via e-mail, and have an up-to-date, multimedia-ready phone.
The system analyzes this information for a few seconds and then, based on pre-calculated scores, the campaign engine determines that you’re likely to be an early adopter: the sort of person who is willing to try new technologies. In addition, the loyalty generated by the free travel kit should makes it less likely that you would switch to a competitor, increasing your expected “high-roller” lifetime value to the company by a significant percentage. The system leads the agent, step by step, to make you a series of offers. A natural talent for salesmanship may play a part in the agent’s success, but the real secret lies in the information he or she receives from the computer. It tells the sales agent precisely what to offer you, based on the statistical likelihood that you (or people like you) will be interested in the product or service. Under the circumstances, how can you refuse? You’re surprised and delighted by the travel kit, which in turn makes you feel more loyal to the company. Like many “high-value” users of the online trial, you will probably end up keeping the e-mail service, at the non-discount price, for many years to come.
None of those decisions—or the business results that followed—would have been possible without the help of the next generation of marketing technology. These new forms of information technology require a transformation of current direct marketing technology architectures, with three primary goals in mind. The first goal is the ability to instantly collect data from a variety of channels—including retail outlets, the Web, or and the call center—and then to distribute relevant information back to those channels. The second is the capacity to compile and generate a coherent view of every customer, taking into account his or her histories and preferences. And the third goal is the creation of business rules that will govern every customer interaction, including which messages to send and which deals to offer. That’s a tall order, and the only way to get there is to make sure CIOs work closely with marketers to lay out the overall marketing strategy, and then to translate it into the processes and rules that will play out at every point of contact.
In Marketing, Knowledge Is Power
Consider how much more value your visit to the shop generated for the phone company than a traditional marketing campaign would have. Before that visit, you might have received dozens of generic mailings, at great expense, from the phone company. None of them illuminated your individual needs and interests. And you probably threw them all away with hardly a glance.
What are those traditional marketing campaigns missing? They lack the analytical rigor, driven by information technology, that might allow the company to establish a better dialogue with its customers. The next generation of marketing campaigns can go beyond today’s rough efforts at customer segmentation, using IT to gather much more refined perspectives on customers and their behavior. Messages and offers can be generated through dynamic, rules-based software engines, and tailored to a “segment of one”—that individual business traveler standing in the shop with a dead phone, for instance, or any one of hundreds of other people with different attitudes and needs—making the right offer to the right consumer at the right time (see Exhibit 1).
Next-generation campaign systems will give marketers the ability to integrate data into their calculations from all touch points—the Web, the phone, the physical retail outlet—through which they interact with their customers and learn about them. With that knowledge, marketers can also design flexible, real-time “inbound” campaigns that listen actively and respond to customer behavior and preferences. Should a customer complain about a product in an e-mail or during a customer service call, for instance, the business rules programmed into the IT system might determine that he or she should be sent an offer for a product upgrade. In effect, this type of IT system maintains an ongoing conversation with customers, reacting to every customer action and learning more and more through each contact.
A large UK-based bank set itself the goal of achieving better customer insight in rethinking its marketing IT. After the implementation of a new design, the bank was able to gather transactional data and customer information across its entire product line, from mortgages to credit cards to savings accounts. That information enabled the system to generate a single view of each customer, including an accurate portrait of the bank’s profits from each customer, on a monthly basis. The bank now uses that portrait to segment customers, based on both their present and potential future value to the bank. For any given customer, a bank teller can bring up a screen containing detailed information about that person, his or her overall value to the bank, and the types of offer they are likely to consider seriously. Much of this information is based on “propensity analysis”—what this customer is likely to buy, based on how similar customers have behaved. The results so far have been strong, and the bank is now widely recognized as the most effective cross-seller of financial products in the U.K.
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