Next best action: Marketing's best kept secret?
Next best action marketing provides an alternative to the traditional push marketing strategy that has grown tiresome to the modern consumer. So why aren't more firms rolling out next best action marketing strategies?
By Neil Davey, editor
Pssst. Wanna know a secret? Customers are tired of the traditional marketing model. In the UK alone, 15 million consumers are sufficiently fed up with telemarketing that they have effectively opted-out of it via the telephone preference service. Meanwhile, traditional media are becoming less effective or efficient for marketers than they used to be - in the US, for instance, TV advertising time is getting more expensive even though studies show that the public is watching less television.
Consumers are changing, and the advent of the internet, social networking and customer generated content has created an environment where customers demand control of the flow of information – marketing or otherwise. "A lot of customers now control what they want to hear," says Naras Eechambadi, CEO of marketing and technology services firm Quaero and author of 'High Performance Marketing: Bringing Method to the Madness of Marketing'. "It is not that customers don’t want to hear from brands at all – but they want to hear the right message at the right time through their preferred channel, which might even be friends or trusted people in their network."
Naras Eechambadi, Quaero
But this isn’t the secret – because of course these changes have been well documented for some time. And in terms of marketing efficacy, the issues are pure common sense. "If I asked you how would you feel if somebody offered you information about something you were actually interested in at the time, most likely you would be interested to hear – it wouldn’t be an inconvenience or annoyance," suggests Umporn Tantipech, director of Teradata’s CRM Centre of Excellence for Financial Services, and a seasoned consultant with over 12 years CRM experience. "What becomes an annoyance is when you have already said 'no' to a credit card offer three times through different mediums, and they still try to do it! It is like a McDonald’s approach to marketing – 'do you want fries with that?'"
The secret isn’t even that there is an alternative approach to marketing - because next best action marketing has been around for several years, evolving from the need to deliver the right message on the right channel at the right time, as opposed to just pushing the product at any and every opportunity. "It is particularly frustrating for a customer if they have contacted your call centre and then you apply your outbound strategies, totally ignoring everything the customer is telling you because it has already been targeted," says Rob Walker, director of decision management solutions and technology at Chordiant. "That is a problem. So in inbound thinking, this is where the whole 'next best action' paradigm emerged."
No, the secret may in fact be that the handful of high-profile advocates of next best action belies the growing popularity of the strategy – and the rising number of firms that are exploring its application as a competitive differentiator.
The nuts and bolts of next best action marketing
A quick recap on next best action marketing: if traditional blanket outbound marketing is based on trying to find the right customers for your product, next best action marketing is about finding the right proposition for the customer. This involves creating a mini business case to guide customer actions and communications for every channel and line of business and – particularly in the case of inbound contact – this must be possible in a matter of seconds.
Umporn Tantipech, Teradata
To enable this, next best action marketing strategies are built upon a corporate decisioning hub – an analytical solution that calculates marketing decisions based upon the present conversation with the customer (i.e. an inbound call to the helpdesk) and further historical customer data including financial data, risk of attrition data as well as past responses to marketing communications.
With access to this information via dashboards, the company can ascertain the most appropriate marketing manoeuvre whilst employees such as contact centre agents can engage in an informed two-way conversation with customers and deliver real-time actions related to their needs. "Wherever the customer touches the company, whether it is an ATM machine or website or call centre, all the information specific to that channel is passed straight to the decision hub whereupon it will comes up with a recommendation for the next best action to take," says Walker. "And that also means that by definition all the decisions you make will always be consistent, because there is only a single decision authority in the company."
"The key is to make the appropriate offer at one of those key moments of truth, whether that is the call centre, the internet or the sales situation," adds Tantipech. "For instance, a scenario a gate consultant at an airline could find himself in, when two passengers have been delayed and are going to miss their next flight – which one of those two customers is he going to move in for the next flight when there’s only one seat left? It is not necessarily the most profitable customer. It could be that the other customer has been bumped off his flight for the last five times whereas the more profitable customer has never been bumped off his flight and has always got an upgrade."
And the most important thing to emphasise is that, opposed to traditional product-based marketing, the next best action may not even be a conventional marketing or sales activity at all. "Sometimes it is not about selling the next product but having the right dialogue," says Eechambadi. "The next best action may be a retention-oriented activity, a reward, a thank you message or a service action – instead of just trying to sell the next widget. The objective is to close the deal only when appropriate. If a sale is not appropriate, your action must make the customer more likely to return when they are ready to buy."
Different sectors are approaching next best action marketing from different perspectives – the retail industry, for instance, is approaching it on a relatively simple transactional level, looking at market basket and presenting offers as next best action to make, whereas customer behaviours are more complex in the likes of the telco and financial services sectors, so more advanced processes and actions are being examined.
Naras Eechambadi, Quaero
In other areas, however, there is more consistency in how next best action marketing is being deployed. "Gartner actually stated that in the inbound environment an organisation can get ten times performance uplift in terms of response rate compared to the traditional standard mass market push approach," highlights Tantipech. "So it is increasingly being put in place in the inbound environment, in the call centre."
And although there are few case studies in the public domain, and only a handful of advocates who have discussed their experiences, the implication is that next best action marketing is far more pervasive than its fairly low key reputation suggests.
"Some companies are more willing to talk about what they are doing than others," says Eechambadi. "Both 02 and Orange have been very open about what they do and similarly in North America the Royal Bank of Canada has been very vocal and willing to share its best practices. But there are plenty of other companies that do excellent work but don’t like to talk about it. Many don’t like to publicise what they are doing because they feel it is a competitive advantage for them. Financial services in particular is embracing it."
"There is a lot of activity going on, but it is low key in terms of what is available out in the public," agrees Tantipech. "Like anything that is new, it is something that can actually provide key competitive advantage, so they don’t want to make a song and dance about it until they have actually got it bedded down."
And next best action marketing may indeed require some bedding down. Specifically, it isn’t just a technological concern – there are also important cultural issues that need to be addressed before it can be successfully integrated into the organisation. If firms remain stuck in the mindset of cross-selling and up-selling, next best action marketing won’t meet its potential.
"It’s going to require change management in some organisations, not only inside of marketing but also in terms of sales and service, and even in product development," suggests Eechambadi. "For instance, if marketing is going to take over the cultivation aspect of the customer from sales, then sales needs to have confidence that marketing will do a good job - and that is going to take some doing in many organisations."
Umporn Tantipech, Teradata
"To really use next best action marketing to its full effect and make the extra revenue that it can generate, you really need to change your organisation," adds Walker. "Many organisations have KPI structures, reward schemes, and budgets and targets at a product level. What next best action marketing wants to optimise is the customer experience and the bottom line for the whole company."
With customers changing, there is a necessity for firms to evolve their marketing philosophies accordingly. And for a growing number of firms this means next best action marketing - a strategy which seems to have been successful enough for some companies to want to keep news of its rewards within their own organisation.
"For some companies, the objective of doing inbound marketing is to cross-sell more. For some organisations who have taken a more strategic next best action approach, however, it is about capturing their customer relationships so that they don’t go somewhere else," Tantipech concludes. "Companies in the financial services, telecommunications and the airline industries want to keep this secret, keep it within the organisation so that the customer stays and belongs to the company."