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 Overview Success Stories
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The Death of Outbound Marketing?
The direct marketing industry has suffered a hard time in recent years. Escalating mailing volumes, intrusive marketing calls and poorly targeted campaigns, coupled with negative media coverage, have collectively eroded the consumer’s patience. The industry is still reeling from the BBC’s Brassed Off Britain television programme which found direct marketing to be the largest irritant to the British general public. Marketers have come to realize that there needs to be a fundamental change in the way organizations communicate with consumers, whether they be existing or potential customers. Outbound direct marketing, more popularly branded “junk mail”, has become an inefficient means of reaching out to customers and prospects. Outbound DM results in the consumer being plied with high volume, poorly timed, pseudo-targeted communications which serve to irritate the recipient, creating an attitude of cynicism and distrust. Poorly received, this form of marketing has a success rate of less than 2%. In fact, as Marketing Direct’s recent ConsumerWatch survey has found, only 6 per cent of British householders have been persuaded by outbound telemarketing to request further information or buy products and services. A major European bank has estimated that banks, for example, have three hours and 22 minutes of customer-initiated inbound interactions, which can be used for commercial purposes and would create a marketing opportunity with an effect of 40 times the marketing budget. This highlights the importance of getting it right when the time is right. At the moment businesses are wasting the very few opportunities they get to talk to their customers each year. This is because they either fail to create any opportunities for inbound conversation and rely solely on outbound marketing, or because they try to take every opportunity to sell their customers more untargeted and irrelevant products and services while also bombarding them with DM, all too often for services they already have. This is despite the fact that on most occasions the customer does not want to discuss their broader needs at that point and therefore is simply frustrated with the company when it tries to do so. Inbound micro DM enters the fold The future for direct marketing lies in inbound micro DM. There is now a demand for faster cycles of analysis and more accurate targeting, with much smaller volumes of more personalized material. Marketing communications should now be aimed at starting a conversation with the consumer. Inbound, intelligent conversations aimed at very human-like conversations with the customer are driving success in the inbound channels. These conversations are not aimed at selling, but at exposing the benefits of the enterprise’s facilities to the customer. The ‘C’ in CRM should now stand for ‘conversation’ and not ‘customer’. Today, DM is either utterly about the customer and very much an invitation to a specific conversation or an exposure with an implicit invitation to come and explore a business’s services. For example, a telecommunications provider may contact a customer to offer them best talk-plan advice, offering them more cost-effective tariff charges or usage information that would help a customer to get the most value out of a product. This could involve alerting the customer to a capability that their mobile handset has that they are not using, for example, Multi Media Messaging (MMS). There is also a growing recognition that the world is moving towards customers taking the lead in their relationships with businesses. These customer configured, or “mutually managed” relationships see the customer drive the interaction with a company and explore what that company can do for them. Each customer will prefer to have a different type of relationship with a business than the next. For example, some customers will like a high-touch, ‘nurturing’ approach, while others will take a consultative route, only contacting a company when they are seeking information. Therefore, segmenting your customer base according to what your customer wants this relationship to be, as opposed to more common characteristics, will lead to more accurate targeting. There are solutions on the market which allow marketing departments to be much more precise in their targeting of DM. However, the reality is that these are reliant on the marketing department having both the know-how to use it properly and more importantly the sort of measurement that rates such niche targeting, as opposed to simply playing the numbers game. It also has to overcome the marketing department’s tendency to want more money to reach out to more people rather than being proud of a more modest budget that achieves higher quality results among niche target groups – i.e: micro DM. Businesses need to be able to recognize, entice or react to customers when they are in the right frame of mind. At the moment, no company can do this uniformly, although some pioneers can do this in certain niches. O2 takes the lead O2 is an example of a business that is pioneering the use of inbound micro DM. The leading mobile telecoms operator is working with Chordiant, their provider of multi-channel customer interaction software. Chordiant’s software enables O2 to tailor its services to individual customer profiles rather than grouping them into generic customer segments based on factors such as age, sex and occupation. When Chordiant began working with O2, the operator had a large department of analysts carrying out project-based analysis of their customers in order to create specific segments and targeting models. However, this approach was too slow and did not deliver actionable results immediately. Rather than making predictions, they were simply “slicing and dicing” the data. Very traditional outbound marketing campaigns were carried out, and as the target ROI was much larger than the number of people from each segment, more people were targeted than necessary. Chordiant’s predictive data mining software was installed at O2. Chordiant worked with O2 to organize their data into a manageable form which then allowed the generation of intelligence. Chordiant’s software enabled the production of large volumes of predictions, very quickly. To begin with, this was used primarily for outbound campaigns, which saw a greater response rate than previously as they were far more accurate. Chordiant Chief Executive Officer Steven Springsteel commented: “Inappropriate timing and relevancy will always affect outbound marketing, and therefore, while the implementation of our software provided a benefit, it was an incremental rather than a revolutionary improvement. The ground-breaking changes were yet to come.” A real-time environment Chordiant then began to work on a real-time environment, and developed O2’s “Vision” application. Vision concentrates all of the intelligence and actions involved in talking to a customer and links to all other applications in order to fulfil this. The real-time environment is key, creating the most relevant dialog. Each conversation needs to be based upon the most current data you have on the customer, critically including information gathered during the current conversation, (i.e.:complaints, responses, etc.). Vision also has a record of where each conversation ended so that customers are not made the same offer twice. This can then be made available across all channels, which means that whether the customer contacts the company in a retail store, via the contact center or online, there is a ‘memory’ of what happened most recently. “Vision was designed and focused on getting a customer’s agreement to anything and everything”, adds Springsteel. “Here’s an application that helps O2 talk to its customers via a quality conversation, that deals directly with what the customer wants. It has the effect of making the interaction very human-like and manageable, with all the information needed for a call in one place. The conversational model works like a real interaction between two people – the customer says something, Vision “hears” it, takes it into account, applies logic to make sense of it which then prompts the next step of the conversation. This was not just another CRM project by CRM people, but a multi-disciplinary exercise”. O2 also has a real-time monitoring application that gives a minute-by-minute updates of the trading situation, daily, weekly and monthly reporting, as well as the ability to interrogate the data produced with the mining tool to get more ‘insight’ in to what is working and what is not. This is unheard of in large consumer organizations and gives significantly greater control over how the business is run. Taking agents into consideration Vision was developed in cooperation with O2’s call center agents who were very actively involved in designing the look, feel and core operation. Other departments, such as Marketing and CRM, also participated, which was key to the application’s success. Now, as O2’s call center agents trust the application they are using, their confidence and job satisfaction has been increased. No longer do they have to fear not making a sale, and they are able to service their customers efficiently and effectively. Chordiant’s Steven Springsteel explained: “Usually, when you phone a call center, the agent, after solving your query, will try to sell you a product or service which has the most value to the company. However, this may seem irrelevant to the customer and could be a totally pointless offer. O2 however, meets the need for the call, and then will make an offer that reflects why the customer called – it is not arbitrary. With Chordiant’s solution, instead of a call resulting in a service resolution and one sale, for example, O2 is now making the service resolution plus three sales in one conversation. In addition, call center agents enjoy giving customers great service, and helping customers with relevant propositions is great service. Getting buy-in here is what will really make the difference.” Success The results of inbound micro-DM speak for themselves. O2 has seen its response rate of less than 2% increase to over 50% with inbound micro DM combined, with an impressive sales conversion rate of 54%, and for certain products, even higher. Return on investment (ROI) is projected at 2500%, based on current results. Closed loop reporting also indicates a 3% average revenue per user (ARPU) uplift, not including customer retention benefits and customer experience measures (churn reduced by 3%). O2 has also abandoned its average handling time (AHT) measures in the call center, focusing on quality over quantity. The prediction process now takes one-seventh of the time it used to. With its use of Chordiant’s software, O2 represents a glowing example of how to replace outbound marketing with inbound micro-DM. By embracing the benefits that these intelligent processes can bring, O2 is going from strength to strength. Being able to treat the customer as an individual with personalized, human-like conversations and relevant and timely offers, O2’s customer relationships are continuing to grow and this is only possible because technology is playing such a crucial role. |  | |
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