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Not Your Typical Marketing Campaign: The Next Wave of Technology- Driven Marketing


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In a world overrun with marketing messages, the next wave of marketing technology will cut through the clutter, building automated marketing campaigns that address your customers’ wants and needs individually. The result: greater customer intimacy, improved loyalty, and higher revenues. Moving quickly will gain real competitive advantage for you, so start planning for the future now.

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Not Your Typical Marketing Campaign: The Next Wave of Technology- Driven Marketing

  1. 1. Perspective Klaus Hölbling Olaf Acker Florian GröneNot Your TypicalMarketing CampaignThe Next Waveof Technology-Driven Marketing
  2. 2. Contact InformationVienna ChicagoKlaus Hölbling Mike CookePartner Partner+43-1-518-22-907 mike.cooke@booz.comFrankfurt New YorkOlaf Acker Jeff TuckerPrincipal Partner+49-69-97167-453 jeffrey.tucker@booz.comBerlin BeirutFlorian Gröne Ramez ShehadiSenior Associate Partner+49-30-88705-844 Booz & Company
  3. 3. EXECUTIVE In a world overrun with marketing messages, the next wave of marketing technology will cut through the clutter, buildingSUMMARY automated marketing campaigns that address your customers’ wants and needs individually. The result: greater customer intimacy, improved loyalty, and higher revenues. Moving quickly will gain real competitive advantage for you, so start planning for the future now. Here’s how. You’re in the middle of a business generation marketing IT: the new trip. You’ve left your cell phone wave of technology-driven marketing. charger at home, your phone’s battery is dead, and a big client is calling Here’s how it works. While your you in two hours. So you make phone is charging, the sales agent your way to your mobile operator’ enters your phone number into the nearest retail outlet to buy a new sales terminal, activating the customer charger, and maybe a battery too. relationship software maintained on a You walk in, hoping to complete this global network. Its purpose is to help tedious errand quickly. Much to your the clerk recognize your individual surprise, you walk out 20 minutes needs and predispositions, and to later with a complete travel kit, offer you products likely to interest including a spare charger, a battery, you. While you wait, the program and a three-month trial subscription brings up your record and identifies to the mobile company’s basic e-mail you as a high-value client, who makes and Internet service package. How a lot of phone calls and occasionally did that happen? Chalk it up to next- runs over your monthly allotment.Booz & Company 1
  4. 4. You also do a lot of text messaging, in the information he or she receives marketing technology architectures,regularly check your account online, from the computer. It tells the sales with three primary goals in mind. Thereceive your bills via e-mail, and have agent precisely what to offer you, first goal is the ability to instantlyan up-to-date, multimedia-ready based on the statistical likelihood collect data from a variety ofphone. that you (or people like you) will be channels—including retail outlets, the interested in the product or service. Web, or and the call center—and thenThe system analyzes this information Under the circumstances, how can to distribute relevant informationfor a few seconds and then, based on you refuse? You’re surprised and back to those channels. The secondpre-calculated scores, the campaign delighted by the travel kit, which in is the capacity to compile andengine determines that you’re likely turn makes you feel more loyal to the generate a coherent view of everyto be an early adopter: the sort of company. Like many “high-value” customer, taking into account his orperson who is willing to try new users of the online trial, you will her histories and preferences. And thetechnologies. In addition, the loyalty probably end up keeping the e-mail third goal is the creation of businessgenerated by the free travel kit should service, at the non-discount price, for rules that will govern every customermakes it less likely that you would many years to come. interaction, including which messagesswitch to a competitor, increasing to send and which deals to offer.your expected “high-roller” lifetime None of those decisions—or the That’s a tall order, and the only wayvalue to the company by a significant business results that followed—would to get there is to make sure CIOspercentage. The system leads the have been possible without the help work closely with marketers to layagent, step by step, to make you a of the next generation of marketing out the overall marketing strategy,series of offers. A natural talent for technology. These new forms of and then to translate it into thesalesmanship may play a part in the information technology require a processes and rules that will play outagent’s success, but the real secret lies transformation of current direct at every point of contact.These new forms of information technologyrequire a transformation of current directmarketing technology architectures.2 Booz & Company
  5. 5. IN MARKETING, Consider how much more value your visit to the shop generated for the rules-based software engines, and tailored to a “segment of one”—thatKNOWLEDGE phone company than a traditional individual business traveler standingIS POWER marketing campaign would have. Before that visit, you might have in the shop with a dead phone, for instance, or any one of hundreds of received dozens of generic mailings, other people with different attitudes at great expense, from the phone and needs—making the right offer to company. None of them illuminated the right consumer at the right time your individual needs and interests. (see Exhibit 1). And you probably threw them all away with hardly a glance. Next-generation campaign systems will give marketers the ability to What are those traditional marketing integrate data into their calculations campaigns missing? They lack the from all touch points—the Web, the analytical rigor, driven by information phone, the physical retail outlet— technology, that might allow the through which they interact with company to establish a better their customers and learn about them. dialogue with its customers. The next With that knowledge, marketers generation of marketing campaigns can also design flexible, real-time can go beyond today’s rough efforts “inbound” campaigns that listen at customer segmentation, using actively and respond to customer IT to gather much more refined behavior and preferences. Should a perspectives on customers and their customer complain about a product in behavior. Messages and offers can an e-mail or during a customer service be generated through dynamic, call, for instance, the business rulesExhibit 1The Next-Gen Campaigning Equation PAST DATA ABOUT THE CLIENT CURRENT DATA ABOUT THE CLIENT SUPERIOR RESPONSE TO CLIENT NEEDS • Products bought • ontact reason (such as product C • ositively surprise clients with tailored P + = • Usage patterns inquiry or complaint) offers and superior customer service • Past complaints • ustomer touch point (e.g. location C • nsure that offers make economic E • Client lifetime value and type of store sense, customer by customer • Recent client interactions • eal-time transaction data R • ther information gathered during O client interactionSource: Booz CompanyBooz Company 3
  6. 6. programmed into the IT system might including an accurate portrait of thedetermine that he or she should be bank’s profits from each customer, onsent an offer for a product upgrade. a monthly basis. The bank now usesIn effect, this type of IT system that portrait to segment customers,maintains an ongoing conversation based on both their present andwith customers, reacting to every potential future value to the bank. Forcustomer action and learning more any given customer, a bank teller canand more through each contact. bring up a screen containing detailed information about that person, hisA large UK-based bank set itself the or her overall value to the bank,goal of achieving better customer and the types of offer they are likelyinsight in rethinking its marketing IT. to consider seriously. Much of thisAfter the implementation of a new information is based on “propensitydesign, the bank was able to gather analysis”—what this customer istransactional data and customer likely to buy, based on how similarinformation across its entire product customers have behaved. The resultsline, from mortgages to credit cards so far have been strong, and theto savings accounts. That information bank is now widely recognized as theenabled the system to generate most effective cross-seller of financiala single view of each customer, products in the U.K. 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.4 Booz Company
  7. 7. DESIGNING Next-generation direct marketing demands a front-to-back rethink of of the customer data. Using the new architecture, all of those channelsA NEXT- the overall IT architecture, with the now connect to a central integratedGENERATION ultimate goal of better understanding the customer. Exhibit 2 lays out the engine. This engine, available throughout the network, mediatesARCHITECTURE essential differences between the old between channels and the customer architecture and the new. In the past, data and back-end processing. The each channel would feed customer central campaign engine also contains information individually into the the business rules that govern every back-end customer relationship interaction with every customer. management (CRM) and enterprise resource planning (ERP) systems that Key to the success of the architecture processed transactions and held much is the creation of a flexible model ofExhibit 2Past- vs. Next-Generation Direct Marketing IT Architectures TYPICAL MARKETING-IT SYSTEM OF THE PAST NEXT-GENERATION MARKETING SYSTEM DESIGN Marketeer Marketeer Data Data Front-End Warehouse Data Data Front-End Marketing Warehouse Warehouse Data Channels/ Warehouse Back-End Channels/ Workbench Back-End Warehouse Touch Points Systems Touch Points Systems Channel Silo A1 Middle- Data Data Mail/Fax ware Warehouse Mail/Fax Inbound Warehouse Channel Silo A2 Channel Abstraction Integration Enterprise Enterprise Voice Channel Silo B Data Resource Voice Outbound Resource Data Abstraction/EAI Mart Planning PlanningCustomer Customer Customer Integrated Customer Retail Dash- Retail IT IT Channel Silo C board Relationship Campaigning Relationship Management Architecture Management Service Analytics Service Web Channel Silo D Web Reporting Platforms Platforms Workflow E-channels Channel Silo E ... E-Channels Resource ... ManagementSource: Booz CompanyBooz Company 5
  8. 8. the metadata that controls customer marketers to design cross-channel through mass mailings, rather thaninformation. This gives marketers campaigns that can rapidly shift understanding customers’ behavior andthe ability to tap into any number of direction from one combination of buying patterns. Its call center agentscustomer data warehouses, without channels to the next. had no access to truly useful customerthe time and effort required to inte- information other than raw monthlygrate all that information into a single The system is designed to support bills, and its marketers had no faith indatabase. This model also allows all critical processes and workflows the concept of predictive analytics.every channel to tap into the same required by each campaign, fromcollection of customer information. campaign planning and the build- A re-architecture of the company’sThe single most critical innovation, ing of the rules engines to campaign direct marketing technology providedhowever, lies in doing away with the execution and the orchestration of a new marketing portal to its customertypical siloed, channel-specific archi- multiple campaigns—even monitoring service agents, which gives them up-tecture on which most current direct and reporting dynamically on the sys- to-date information on customers andmarketing and campaigning technol- tem’s success. Business users benefit their phone usage habits. Agents nowogy depends. No customer-centric further through increased usability: have instant access to predictions ofmarketing effort can be truly success- Users can create “dashboards” to aid customer behavior, and more than 50ful if the technology is still organized in interacting with customers, manag- rule models are dynamically updatedaround interaction channels, rather ing campaign workflows, monitoring as new transactions are entered. Agentsthan those all-important customers a campaign’s progress, and assessing are instantly given offers to make towho naturally interact with the busi- its performance. each customer (“Would you like toness through multiple channels. try our MP3 download package?”), a A large European mobile carrier, with message to convey (“By receiving yourThe new architecture also provides more than 10 million customers, bill via e-mail, you can do somethingunprecedented flexibility. Because the almost 4,000 call center agents, and 2 for the environment!”), and a ques-system is increasingly integrated into million monthly visitors to its Web site, tion to ask (“Would you mind sharinga suite of marketing tools, campaigns was struggling to build the capabil- your e-mail address?”). The resultscan be designed and executed without ity to accurately target its marketing have been impressive: The offer-to-saleneeding to be tied to individual chan- campaigns in this way. Prior to its conversion rate is now greater thannels . All the business rules required shift to next-generation campaigning, 75 percent, while both customers andby each channel are captured and the company’s marketing efforts had agents report significantly higher satis-integrated by the system, allowing been oriented around selling products faction with the new system.6 Booz Company
  9. 9. THE PATH TO Success in next-generation campaign- ing depends on how you design the involves a refinement of three general campaigning requirements: planning,THE NEXT new system and incorporate it into analytics and execution. The firstGENERATION your company. Each step of the way will require the willingness to rethink stage, which many large companies have already built, provides the your overall marketing strategy, the essential ability to design specific tactical processes by which you plan campaigns, analyze and segment and carry out each campaign, and customers based on their behavior, the IT tools you need. You must and create outbound campaigns. develop the skills required to design Exhibit 3 lays out the order in which and execute analytic campaigns and, these capabilities might be developed. of course, you will need to build the technologies to enable those cam- At the same time, it’s critical to paigns. Most important, from begin- remember that next-generation ning to end, the CIO and the CMO campaign systems demand significant must work together as partners to changes to marketing practices and design, build, and test the necessary processes, and they don’t come cheap. infrastructure, and to expand it, step CIOs and CMOs must think carefully by step, throughout your company. about their company’s real needs as they plan and design the system, and Sequence is critical. Think of the then evaluate the technology and capabilities you’ve decided to build software products on offer to see how as a set of building blocks that must closely they meet those needs. A lot of be put together in a certain order. money can be saved by being realistic These capabilities should be built in about your company’s requirements, multiple stages, with each subsequent and not overbuying. stage dependent on the success of the preceding stage, and all sharing For example, is having the ability to in the final victory. Each stage process new inbound information in Exhibit 3 Campaign Capability Building Blocks Customer Recurring Campaign- segmentation outbound specific plans behavior Stage 1 campaigns analysis Campaign Rule-based Trigered portfolio decision Stage 2 campaigns plan making Campaign Real-time, Inbound portfolio iterative Stage 3 campaigns optimization decision making Planning Analytics Execution Source: Booz CompanyBooz Company 7
  10. 10. real time, as soon as it is received, The more complex the requirements, ware as a service and service-orientedreally necessary? Or might it be suf- naturally, the more support and auto- architectures make integrating theficient to use pre-calculated, batch- mation you’ll want. various elements of a best-of-breedprocessed responses that correspond architecture significantly real-time customer input? Truly The decisions you make about trade-dynamic real-time capabilities are offs between wants and needs will Whichever path you decide to follow,relatively expensive to build, and also affect how you choose your the time to think systematically aboutcompanies need to consider care- vendors. Should you buy a marketing your marketing technology is now.fully whether the difference between suite or should you take a more open, Building the means to gather andinstantly updated customer profiles best-of-breed approach? Many of the analyze your customer data and thenand hourly or daily updates, for so-called suites came about as the put it to work in clearly defined cam-instance, will make a significant dif- result of vendors buying or merging paigns is no easy task. But you can beference in their overall success. with other vendors. Too often, such sure that your competitors are already suites still suffer from poor integra- at it, or at least thinking about theSimilar trade-offs should be taken tion of their various modules, and problem. To keep a step or two aheadinto account when considering the that can cause problems in areas such of them, start working toward thedegree to which you want the system as the creation of working metadata kind of marketing campaigns thatto support the marketing organiza- models that pull data from various would really drive growth, and thetion’s workflow, and to what extent databases. That’s why some compa- IT systems and tools you’ll need toyou want those processes to be auto- nies may prefer to follow a best-of- drive those campaigns. Build a planmated. These decisions will be based, breed approach, buying modules as for achieving those goals quickly. Andin turn, on the size of the marketing needed, and integrating them into a rally your marketing and IT troopsorganization, the complexity of your preexisting campaign-management to action now. The fast mover in thecampaigns, and the number of differ- system, for instance. This approach is race to next-generation marketingent channels you expect will need to also beginning to look more and more will gain a huge competitive advan-be integrated into the overall system. attractive as technologies such as soft- tage. Don’t be left behind. From beginning to end, the CIO and the CMO must work together as partners to design, build, and test the necessary infrastructure, and to expand it, step by step, throughout your company.8 Booz Company
  11. 11. About the AuthorsKlaus Hölbling is a partner Florian Gröne is a senior asso-with Booz Company in ciate with Booz Company inVienna. He supports leading Berlin. He works with telecoms,businesses in consumer- IT service providers, and otheroriented industries, such IT-enabled businesses toas telecom, high tech, and enhance operating models andtransportation, in enhancing technology platforms, espe-their marketing, sales, and cially in their marketing, sales,customer-service capabilities. and customer-managementHe can be reached at klaus. functions. He can be or at or+43-1-518-22-907. +49-30-88705-844.Olaf Acker is a principal withBooz Company in Frankfurt.He works with communications,media, and technology com-panies, focusing on technologystrategy to enhance their prod-uct development, marketing,sales, and customer care-related capabilities. He can bereached at or +49-69-97167-453.Booz Company 9
  12. 12. The most recent list of Worldwide Bangkok Madrid Dubai South Americaour office addresses and Offices Brisbane Milan Riyadh Buenos Airestelephone numbers can Canberra Moscow Rio de Janeirobe found on our website, Asia Jakarta Munich North America Beijing Kuala Lumpur Oslo Atlanta São Paulo Hong Kong Melbourne Paris Chicago Mumbai Sydney Rome Cleveland Seoul Stockholm Dallas Shanghai Europe Stuttgart Detroit Taipei Amsterdam Vienna Florham Park Tokyo Berlin Warsaw Houston Copenhagen Zurich Los Angeles Australia, Dublin McLean New Zealand Düsseldorf Middle East Mexico City Southeast Asia Frankfurt Abu Dhabi New York City Adelaide Helsinki Beirut Parsippany Auckland London Cairo San FranciscoBooz Company is a leading global managementconsulting firm, helping the world’s top businesses,governments, and organizations.Our founder, Edwin Booz, defined the professionwhen he established the first management consultingfirm in 1914.Today, with more than 3,300 people in 58 officesaround the world, we bring foresight and knowledge,deep functional expertise, and a practical approachto building capabilities and delivering real impact.We work closely with our clients to create and deliveressential advantage.For our management magazine strategy+business,visit to learn more aboutBooz Company.Printed in USA©2008 Booz Company Inc.