Digital Alchemy - Event-Based Marketing Whitepaper

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Digital Alchemy - Event-Based Marketing Whitepaper

  1. 1. www.digitalalchemy.asia © Digital Alchemy Limited. All rights reserved. Event Based Marketing: What You Need To Know Growing customer relationships and driving revenue by offering products and services to customers in a relevant and personalised way, at the right time through the customer’s preferred channel is the holy grail of marketing. Increasingly, organisations are migrating their marketing programs from product to customer centricity by investing in Event-Based Marketing (EBM). This shift is explained by the overwhelming outcomes being achieved by EBM, resulting in significant improvements in ROI. So what is it, how does it work and how can you benefit from it? Event-Based Marketing (EBM) or Event-Driven Marketing (EDM) is a marketing discipline where commercial and communication activities are based on relevant and noticeable changes in customer behaviour. More importantly, Event-Based Marketing (EBM) is a strategic process that combines with technology to identify and react to significant changes in a customer’s state, turning customer monologues into value-producing dialogues. A significant change or event, also known as a trigger, is a valued opportunity to communicate - they frequently provide a viable, justifiable and effective reason to contact the customer. For example: Personal events that signal life-stage or lifestyle changes such as a major purchase, a new job, change of address, marriage or children reaching college age Customer complaints and inquiries can offer powerful opportunities when handled well For financial institutions, events may be large deposits, large transactions, a new zero balance, or large pay downs For telecommunications, events can include a change in usage, excessive roaming charges, or patterns of service disruptions Let Changes Guide You
  2. 2. www.digitalalchemy.asia © Digital Alchemy Limited. All rights reserved. The significance of events or triggers may vary across industries, implying that a range of different response criteria may be required for organisations from finance to telecommunications, retail to manufacturing and so on. Not every noteworthy change in a customer’s circumstances is a useful trigger. Furthermore, what a customer does not do is often as telling as the actions they do exhibit. Often there are millions of transactions and events to sift through to find the ones that are meaningful. Detecting sequences and complex patterns of events and behaviours, i.e. the groupings of current and historical events in customer data that add to each individual’s behavioural profile, are often more important than a single event. After detailed needs-analysis and assessment is completed, the ensuing communication must be relevant, personalised and channel appropriate. Hence, every component of EBM must integrate to create a seamless, synergetic effect, capable of delivering results greater than the sum of the individual parts. Today, customers are in control of what, when and how they want to be contacted by your organisation. The reversal of roles is rendering traditional direct marketing methods less effective. Instead of starting the process by finding a group of people who are likely to be interested in an offer (product push), marketers now have to listen and wait for the ‘trigger’ and then interpret the customer’s need. This is when EBM comes to the fore. EBM provides you with the ability to capture and identify meaningful events, then associate them with the appropriate communication necessary to generate a relevant, timely, and ongoing dialogue with each individual customer. It is not surprising that a successful EBM deployment can generate response rates up to 50%. The More Relevant, The Better
  3. 3. www.digitalalchemy.asia © Digital Alchemy Limited. All rights reserved. Significant Improvements You can benefit from: Higher response rates Better Return On Investment Not only are your customers more receptive to your offer because it is more relevant and timely, but you can also benefit from reducing your volume of communication. Total # of SMS sent Communication Type # of responders in communication period # of messages per responder Response rate to each communication Proactive invitation (sent on 1st day) Reminder upon low Balance threshold Proactive reminder (scheduled to certain day) 350,000 345,000 108,000 6,682 4,389 15,351 53 79 7 2% 1% 14% source: pantis.com Not only will more customers respond at a higher rate, but you will also spend less on marketing because you are offering something that the customer wants, when they want it. That means you gain more responses and spend less to get each sale. Figure 1: This study from a European telcommunication company confirmed that the 3rd message type (trigger-based message) generated a significantly higher response rate, compared to the 1st and 2nd “segment-based’ messages. The number of SMS messages sent were also greatly reduced. Improved customer retention Customers who receive trigger-based communications are less likely to attrite. This is primarily because of the relevance and timeliness of the contact, resulting in higher customer satisfaction and in turn, improved retention rates. Generated 570,00 sales leads representing $4.4 billion in new business in one year Achieved greater velocity - initiating 100 distinct campaigns in the first six months of the year Achieved the highest share of wallet, customer satisfaction, and retention rates for high net worth clients Achieved retention rates of 98.4% 88% of customers said they would recommend the bank to acquaintances A leading international bank using EBM: Achieved 28.7% increase in net profit for the six-month period
  4. 4. www.digitalalchemy.asia © Digital Alchemy Limited. All rights reserved. Essential element to customer lifecycle management Effective lifecycle management starts with being sensitive to a customer’s situation and their position in the cycle. EBM is an essential element of any Customer Lifecycle program because it involves all aspects from On-boarding through to Retention. Relevant proactive contact bolsters customer satisfaction 105 100 No pro-active contact Relevant proactive contact Customer Satisfaction (indexed) Customer stay longer 68 100 No pro-active contact Relevant proactive contact Attrition Rate (indexed) Estimated Response Rates 10x Increase 6x Increase 1% Traditional Direct Marketing Event Triggered Marketing First Cut Event Triggered Marketing Refined Revenue outpaces the traditional approach 450-500 100 Traditional Direct Marketing Event Triggered Marketing Revenue Generated by marketing Programs (indexed) Figure 2: An EBM strategy deployment can generate higher revenue, improve customer satisfaction and reduce attrition rates, compared with traditional direct marketing according to Council of Financial Competition “Gartner research suggests that a trigger-based campaign can save up to 80% of a traditional direct mail budget.” 6% ~10%
  5. 5. www.digitalalchemy.asia © Digital Alchemy Limited. All rights reserved. Case Study from Nationwide (UK) (Unica campaign management solution implementation) Situation: After bad debts rose in 2007 due to repayment defaults by borrowers and mortgage lending fell during the recession, Nationwide rethought its CRM strategy. Outcome: Achieve more at a lower cost: Nationwide is already seeing cost savings of £300k per year; the company’s small database marketing team of nine is able to send approximately 600 targeted campaigns per month, an increase of 100 percent Sales increased and losses improved: sales figures increased more than double over three years and 18% of loss report was improved Best practice from a leading telecommunication company cited that “During an on-boarding phase - from service activation to month six - they were able to shape the right-size product for each customer, they also used triggers which helped to identify and curb events that would normally lead to churn.” Solution: Nationwide developed implemented personalised customer offers through their interaction touch-points. The integrated CRM system combined with Event-Based Marketing provided a comprehensive view of each customer relationship. Nationwide also developed event-based campaigns that detected changes in customer behavioural patterns; when relevant were indentified they immediately triggered the appropriate cross and up-sell communications. This helped Nationwide to meet its customer needs and improved customer loyalty. Higher response rate: event-based direct marketing campaigns now deliver four times more than traditional segmentation based campaigns
  6. 6. www.digitalalchemy.asia © Digital Alchemy Limited. All rights reserved. Requirement for EBM Implementation You should consider the following conditions before implementing an EBM program: Client action database Communication channels To implement an EBM program you will need to start with a number of accessible triggers. Ultimately you should aim to capture every interaction that a customer has with your organisation, but start with what is easy to record and build up a portfolio of proven triggers over time. Instead of relying on one offering for an extended period of time, EBM requires a library of event- based triggers, offers and executions that are available for rapid deployment. Make sure your channels are ready to handle this, you need the capability to mix and match channels to maximise effectiveness. Shifting to a series of small day-by-day and customer-by-customer campaigns is not easy. It often requires your organisation to change the way it works in order to support EBM. Gone are the days of big campaigns and long development cycles, campaigns need to be developed and executed within days and weeks, not weeks and months. Organisation structure Slow marketing responses to trigger events, caused by a failure to automate the EBM process, introduces a considerable opportunity cost to the business. Delays in sending out messages can lead to a significant decline in response rates if a trigger is not executed frequently enough. By the time customers receive the offer they may have transacted elsewhere because the offer is no longer relevant. Customer lifestyles are now far more volatile and changeable than previously, automation with a continuous feedback loop is therefore essential to ensure that offers are delivered while customers are still in market. Automation Effectiveness of contact after an event has been detected time (days) effectiveness% 1 2 3 4 5 80% 50% 20% Figure 3: This research that 60-80% of respondent activity happens within 24-28 hours of detection of the event because good events occur before the purchase decision
  7. 7. www.digitalalchemy.asia © Digital Alchemy Limited. All rights reserved. In conclusion, EBM is a strategic tool that helps leverage the customer information you posses by turning insights into action. To deliver positive results, EBM requires access to appropriate technology and marketing automation; the capture, maintenance, manipulation and analysis of relevant data; well structured marketing planning able to define an integrated communication framework based on the customer lifecycle with each contact optimised and relevant. When these components are in place, you can start acting on the different event types, generating a meaningful, ongoing dialogue and building strong customer relationships that over time will grow your business. Moving to an automated, high frequency marketing environment increases the risk of over-contacting a customer.Contactoptimisationwhichisarule-baseddecisionmakingengineshouldbeinplacetoavoid contact fatigue by ensuring that only the most suitable and profitable offer is delivered to customers. Contact optimisation About Digital Alchemy Digital Alchemy Limited (DA) is Asia Pacific’s leading Database Marketing Services Provider. DA’s team of professionals are dedicated to working with clients to improve their marketing efficiency and to capture latent customer value. Established in 2003 and operating in Sydney, Melbourne, Auckland,Bangkok,HongKong,Nanjing,andSingapore,DAhasbeencontributingtothesuccessofan expanding breadth of clients including leading companies in financial services, telecommunications, motoring services, media and other industry sectors. “This document has been prepared for the purpose of providing general information and should not be relied on in substitution for individual professional advice. Copyright in this document is owned by Digital Alchemy Consulting Pty Limited, and except as permitted under the Copyright Act 1968, no part of it may be reproduced by any process, electronic or otherwise, in any material form or transmitted to any other person or stored electronically in any form without the prior written permission of Digital Alchemy Consulting Pty Limited.”
  8. 8. www.digitalalchemy.asia © Digital Alchemy Limited. All rights reserved. Reference Cited Shu, L. and S. Bell (2002). Real-Time Strategy Process for a Changing World, WP-1102-0007,Gartner Group. Daniel Tehan, “Event Based Marketing”, <http://www.sims.monash.edu.au/subjects/ims5028/resources/Teradata.pdf> Chris Twogood, “The Power of Event-Based Marketing”, <http://www.cesconi.com/library/EventBasedmarketing.pdf> “How Nationwide more than doubled its sales with a new CRM strategy”, <http://www.utalkmarketing.com/Pages/Article.aspx?ArticleID=14445&Title=How_Nationwide_ more_than_doubled_its_sales_with_a_new_CRM_strategy>

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