Event-based marketing is
gaining ground because it drives value-producing action and can be
tailored to individual customers
VP Teradata CRM Marketing
July 08 - 14, 2002
More than ever before, leading-edge companies are
lining up to invest in a highly compelling dimension of CRM (Customer
Relationship Management) event-based marketing. The term 'event' is
tossed around loosely and often exploited to refer to a wide variety of
marketing solutions and software products. Even well informed marketing
professionals use the term to describe many different capabilities or
methodologies. That's why it is important to provide a clear and
definitive framework for industry and business client discussions.
Event-based marketing is gaining ground because it
drives value-producing action and can be tailored to individual
customers. It thrives on detailed customer interaction and specific
behaviour. Best of all, it is calculated to produce rapid responses, or
intervention, aimed at creating pre-defined business value. In short,
event-based marketing is appealing to pragmatic, payback-minded
executives because event technology has in many cases paid for itself
several times over within months or weeks of implementation.
Event-based marketing has come a long way. Mature
technology tools and methodologies are available to make it happen.
Teradataฎ is ranked a global leader in this field by analysts because
of our years of experience defining, developing and automating 'events'
with our customers. Through this experience, we have defined four major
customer 'event' categories based on programs our customers actually
execute with success. For each type of event, we have also identified,
in terms of percentages, the dramatic returns that marketers can expect
based on our experiences with Teradata clients.
In a broad sense, event-based marketing is a
strategic business process designed to enhance the dialogue and
relationships a company has with its individual customers. To work as
promised and deliver positive results, it requires advanced technology
and carefully crafted marketing plans. The extreme complexity of
marketing one-to-one across multiple channels to millions of
customers demands no less than detailed process design and
technology integration to ensure effective, automated dialogue that
is relevant, timely and produces business value.
More specifically, event-based marketing refers to a
number of technology-enabled communication tactics that can be
implemented in the context of a company's CRM process. And, from this
CRM point of reference, any changes in a specified condition (an event)
could be managed as an opportunity to contact a customer with a sales,
service or information message. We see event-based marketing happening
at four levels: Simple, Complex, Real-Time and Sophisticated. Each
successive level represents increased event complexity and an increased
data detail requirement yet yields ever-higher specificity and
actionable customer insight.
Looking for customers that meet a certain condition
constitutes a Simple event. For example, "Tell me everyone that
purchased a new bike yesterday." These are typically followed up
with a targeted communication to all who meet the criteria. This type of
event is driven by scheduled segmentation schemas and usually run on a
monthly basis, because time is not critical for execution of Simple
Examples of Simple events include product purchases,
age thresholds, birthdays, address changes or purchase thresholds. While
on the surface they appear intuitive, these 'simple events' when
coupled with relevant communications can deliver double-digit
returns on marketing activity. Simple events can be automated to occur
at regular intervals, so it is not up to the marketers to remember to
execute their associated campaigns. Simple event-based marketing
benefits the company by improving customer perceptions of your company's
knowledge of them. Companies that use 'Simple' event-based marketing
have reported returns in the ten to twenty per cent range.
However, limitations exist at this level. Simple
events are focused on common condition changes at a point in time, and
typically are not performed with an eye to the context of the overall
relationship for each individual.
Complex events are based on marketing responses to
changes in customer behaviour over time. They are thus a bit more
complicated to create and are often developed by marketing teams that
collaborate with IT people. This activity consists of leveraging the
data you have about your customers to understand behaviour trends over
time. For instance, you want to know whether certain customers' spending
or other activity is increasing or decreasing.
Complex events also require a level of knowledge
about the data so even though defined by marketing, the execution
might require a user who is technically capable more of what we call a
'power user.' Complex events begin by building formulas such as
purchase patterns/activity between Date A and Date B to determine a
score that identifies the general direction of the data positive or
negative. Complex events like these bring more behavior and interaction
history to the marketer's view of the customer relationship and can
generate higher returns.
Marketing can build and leverage this through an
"SQL builder" that can be scheduled to either select all
customers that meet a condition or provide a value positive or
negative and "score" those customers with the result. This
result can then be used to determine how and when to treat the customer,
based on this value.
Complex events are scheduled and executed based on
the frequency determined by the marketer. This type of event can be
leveraged with other data to determine how to treat the customer.
Therefore, complex events do not have to be tied directly to one
campaign only. Multiple campaign or communication strategies may be
applied to personalize the communication for the several scenarios.
Teradata clients have realized returns of fifteen to twenty-five per
cent on campaigns based on 'complex' events.
Real-Time events occur in two forms or types: these
are session-specific, and non session-specific. First, session-specific
Real-Time events are normally associated with web-based interactions.
For instance, a customer purchases a PC printer, and then, while still
"in session" at the web site, the customer is delivered an
additional offer for paper and ribbons as an up-sell or cross-sell
message. The purchase "event" is driven from a predefined
product profile or bundle that might reflect "items that other
customers have purchased who also purchased this product."
Non session-specific Real-Time events enable the
marketer to leverage the event by combining it with additional
information from the data warehouse, and responding with an enhanced
offer back to the customer. This response could occur on the same
channel, in a different session or on a different channel. For
example: a complaint e-mail received from a customer could be quickly
transmitted to the outbound call center, allowing immediate remedial
action. Another example: a customer visits a bank web site to check
mortgage rates for refinancing, then quickly after, while interacting at
an ATM, receives a message about attractive financing options soon
followed by a phone call from a personal banker with a personal mortgage
package offer. Returns on 'Real-Time' event-based marketing are reported
to range from twenty-five to thirty per cent.
When trying to decide which Real-Time event approach
to take (session-specific or non session-specific), consider two key
factors. First is the importance of the time dimension to the data. If
it is less than 24 hours to a purchase, the potential value or
importance needs to be balanced against the 'refresh rate' on the data
warehouse. Second, consider the type, amount, and purpose of the data
and whether it will be used for other purposes in the data warehouse.
Sophisticated events enable marketers to find
carefully calculated opportunities to communicate with individuals. They
are defined and initiated to find patterns or a specific
circumstance that indicates a significant change in an individual's
situation. These are questions asked daily scheduled queries of all
of the detail data in your data warehouse that find changes in customer
behaviour over time that represent opportunities to communicate with
that individual. Sophisticated events might include this banking
scenario: "Notify me any time that someone withdraws 180% more than
his average withdrawal amount over the last 12 months."
This type of event is Sophisticated because it
requires the data engine to scan all of the day's withdrawals, calculate
the percentage related to all other withdrawals for each individual for
the last 365 days and then, if it is 180% of today's action,
identify this as a lead. These events are typically followed up with
highly individualized communications, frequently through a human channel
sales, service center, or other personal point of contact.
Customer communications based on Sophisticated events
have produced dramatic returns for those companies that use them.
Figures in this category range from forty to sixty per cent.
All four of these event categories, in combination
with each other, can create sustainable competitive advantage that
protects your customer asset base. As you think about the potential
event opportunities in your business, make sure to also build a
technology foundation that will enable you to define, detect and
automate events across all four of these levels. This will help ensure
your marketers can respond with rich relevance to specific customer
interaction and deliver the rapid payback your executive team
expects on its technology investments.