Triggered Marketing Drives Higher Sales
Triggered marketing. Event-driven marketing. Event-based marketing. Whatever the name, it’s the talk of the town these days. Essentially, it sets up marketing communications to be generated individually, when some event occurs between the customer and the marketer.
You might say that triggered marketing is simply the latest stage in the natural evolution of database marketing. It takes the power of CRM software tools, which analyze data and spit out a message based on predefined decision rules, and adds the power of the Internet, which allows quick, cheap and interactive message delivery, via email.
The theory behind triggered marketing is that the most productive message is a relevant message. And, the most relevant message is one that is based on what’s going on in the life of the customer. Instead of conducting a campaign focused on the marketer’s agenda, a triggered program is based more on the customer’s need. An event of personal importance, like a birthday or a new baby. Or an event concerning both the marketer and the customer, like a transaction. Or a recent lull in activity. Whatever the designated event, the marketer sets up a series of if-then rules that generate automatic outbound communications. Each one triggered by the event, and intended to stimulate new spending, or strengthen the relationship, or whatever is the marketer’s objective.
The beauty of this kind of marketing, of course, is that each message is working as hard as it can. There’s little waste. Customers receive sales offers and service messages that are of interest to them at the moment, and marketers avoid the shotgun approach typical of most campaigns.
To get onto the triggered marketing bandwagon, what you need is a marketing database; plus analytic tools to score and segment customers; and campaign automation software to make queries and identify the events when they happen. At that point, you can execute the campaigns in a highly automated way, using an email server, or you can use other communications channels, like sending the file to a call center for outbound phoning.
While triggered marketing is gaining ground in a variety of businesses, leading the trend is financial services. Banks, insurance companies and brokerages were early to see the value of observing such indicators as deposits, balances, and withdrawals, and taking immediate action. One early adopter is Scotiabank, a leading Canadian financial institution, with $296 billion (Canadian) in assets.
According to Jonathan Huth, VP of Relationship Database Marketing, the bank’s basic objective is to help its customers become “financially better off,” so all marketing communications support that mission. But the secondary objective is to make the branch sales force more productive. So Huth’s first step was to visit the branches, talk to the salespeople, and discover their views on the most effective drivers of new business. Their answer: deposits of greater than $10,000 in any given month. If the sales people noticed a large deposit, they would call the account and probe for additional business opportunity.
So Huth’s team began by automating this sales strategy. He set up a program to generate a monthly list out of the legacy system, and send it to each branch for action. The salespeople loved the help, but Huth recognized that there was no tracking, and no true ability to analyze the results. Also, he couldn’t tell whether $10,000 was really the right number or not.
Meantime, Scotiabank was installing Unica’s Affinium software. Huth realized he could take the new-deposits program up a notch by analyzing data about a large number of accounts and looking for patterns. He reviewed 600,000 past deposits over an 8-month period, and developed an algorithm that would indicate for each customer what was a deposit of true significance. Then, as part of a pilot program in a few branches in June 2002, the system began reviewing 3,000 transactions nightly. When a significant deposit occurred, it generated a web-based message to the contact management system of the branches involved.
Early feedback was positive from both customers and branch sales teams. The sales people commented that the program saved them time, and made it easier than ever to build a relationship with their accounts. Better yet, they were following up on 84% of the leads, and gaining $5,000 in new balances, on average, for every lead they contacted. Huth calls the program ROI “ridiculously high,” even accounting for the cost of the software and the sales reps’ time.
The program was rolled out across Canada in November. And now Huth has several other pilot programs in the works, based on such triggers as:
- the terms held by mortgage customers
- likelihood to cash out of a mutual fund
- purchase of investment certificates
- paying off a mortgage
- high-value customers who haven’t been contacted in several months
And he has plans to develop a program for new movers, plus another based on significant withdrawals—in effect the flip side of the significant-deposit program that was such a success.
Huth has a philosophical view on the nature of the triggers he has identified. “As we say in our training programs in the branches, the ‘event’ is not actually the transaction that we see at the bank. The transaction is simply a clue to something that is going on in the customer’s life—a marriage, a new job, a promotion. Harnessing that real trigger—that’s what drives the power of this kind of marketing.”
Another application of triggered marketing in financial services is attrition prevention. As banking has become more competitive, banks are losing as much as 10% to 20% of their customers a year. Whatever they can do to prevent this loss can pay off big, not only in saved assets but also in the cost of acquiring replacement customers. Fifth Third Bank, a Cincinnati-based institution with $75 billion in assets (www.53.com), used Harte-Hanks’s Allink Daily Deposit Builder software to institute a program called Save or Sell, or S.O.S. Using modeling to identify defection predictors, like decreased transactions on credit accounts, changes in ATM usage, or increased balance inquiries, First Third’s system spits out a daily alert to bank managers, asking them to call the at-risk customers. The program paid for itself twice over in the first six months. Bankers were not only able to prevent defection, they also found opportunities to cross-sell other products, like loans or mortgages.
But it’s not just financial applications that are winning new converts to triggered marketing programs. Consider Rogaine, the hair growth stimulator from Pharmacia. Rogaine had been spending money in print advertising and direct mail trying to explain to customers that it takes 6 months of consistent use before results are visible. But the ads were failing. New users would drop the program after the first month’s prescription.
So Pharmacia began a triggered email campaign using Pivotal MarketFirst software. Each new customer received a 6-month email campaign, customized to his behavior and his progress with the product. At two weeks, for example, the message might be about reassurance, with a coupon for the next month’s prescription. Later, the message explained that the user might feel some itching, which meant that the product was working and results would be visible later.
According to MarketFirst’s founder, Anurag Khemka, the program was so successful that Pharmacia has moved the bulk of its retention dollars to this campaign. “The beauty of this is, the campaign is different by customer, each of whom is at a different state at any given time. It’s a 6-month campaign, but it’s been running for a year and a half.”
Starwood Hotels & Resorts is experimenting with triggered marketing. The company hired John Kaufman away from Priceline to launch a new CRM initiative last year. Kaufman had spent 10 years prior to Priceline at American Airlines, where he started their CRM initiatives. At Starwood, Kaufman built a triggered marketing message system based on reservations booked through the Internet or Starwood call centers. For example, HTML email confirmations will include messaging unique to the guest’s profile and the dates of the visit. The property may designate special offers or service messages to appear as well. Currently, the W Hotel in Times Square is offering a free foot massage to visitors who reserve another spa treatment before they arrive.
Starwood now considers the reservation system a revenue source, instead of merely an operating system. “The exciting thing is that we can now begin the business relationship earlier,” says Kaufman. “We are marketing prior to the guest’s arrival, in addition to the post-visit follow-up marketing that we’ve conducted in the past. Because the messages are stay-related, the guest feedback is positive, our response rates are high, and we are delivering a better experience.”
Kaufman has some refinements in the works. First, he is setting up control groups, to provide detailed metrics on the results. Second, he is migrating the customized reservation messages beyond the email channel to include fax and direct mail as well. “We feel it’s important to take these measures in reasonable pieces. We will add new functionality month by month. This stuff is hard. It’s more challenging than you expect. So it’s important to focus, and move deliberately,” Kaufman cautions.
Lessons learned
This kind of caution is important to note. For all its whiz-bang appeal, triggered marketing can create problems if it isn’t planned and implemented carefully. Some other rules of the road include:
- Don’t show your hand to customers. As Rusty Langford, VP of eCRM at Harte-Hanks reminds us, “It’s important to think through how to take advantage of the data without alarming your customers. You must train your salespeople to be sensitive. They shouldn’t be saying things like, ‘Hey, we know you just moved $10,000 into your account.'”
- Automate your existing processes first. Scotiabank’s Huth credits his success with triggered marketing to his approach with the branch sales teams. He first found out what worked for them, and set about making it faster and cheaper. That way, they already “owned” the idea, and the sell-in to the field was relatively painless. * Start with a pilot, and then refine and roll out. Huth’s pilot at one district allowed him to get the bugs out of the system, and to solicit both advice and support from the teams in the field. As soon as the program worked for them, word spread, and his roll out to the other regions went easily. In fact, they were demanding it.
- Use control groups, and test everything. Most software packages allow control groups to be set up easily.
- Looks for opportunities everywhere. According the Kevin Cavanaugh, VP of Technology at Unica, “Adding a personalized up-sell to operational messages is cheap. The business case is easy to make.”
- Plan—and budget—for change. As Cavanaugh points out, data infrastructure is constantly evolving. “The number of segments you want to manage is going to continue to grow. Their size will continue to shrink. You’ll need to plan for an increase in the complexity of your campaign logic.”
- Just because it’s automation doesn’t mean it’s easy. Campaigns need not only judgment, but also careful process management. As their complexity grows, so does the need for templates and other tools that allow best practices to be recycled efficiently.
- Think about triggers across channels. Says META Group’s vice president Liz Roche, “Monitoring the events is not what’s new here. What’s new is the dialogue, which crosses marketing, service and sales. To me, the question is: are companies really doing multi-channel dialogues?”
- Refine, don’t change. Marketers have a tendency to get tired of their programs before the market does. But in the case of triggered marketing, the secret is in constant analysis and frequent adjustment. Quaero’s Ro King comments, “USAA insurance is one of the best at event-driven marketing, and it’s because they’ve been at it for 10 years. Even back when they had pitiful databases, they kept track of the birth dates of their customers’ children. And when the kids turned 16, bang, the parents got offers for auto insurance. It sounds basic, but it’s so effective.”
- Look for less-obvious triggers. In the apparel industry, for example, merchants think of seasons as the logical triggers. But there are others, says King. “I try to get my clients to think of inventory as a trigger. Say we have too many blue polka-dot blouses right now. So let’s send offers to customers who might like a deal on a blouse. Sell it earlier than the usual mark-down strategy—and at a higher price.”
- Make sure the event is meaningful to both the customer and the marketer. As King points out, “Any old birthday may have meaning to a customer, but a 65th birthday will have meaning to both.”
Why is triggered marketing so hot right now? Part of the reason is that the tools are available, and many companies now have working databases of customer behavior. But, perhaps most important, is a shift in the attitude of marketers themselves. They are realizing the need to let customers drive their efforts. This is what Gartner Group’s G2 calls the move from “push” to “pull.” According to G2’s November 2002 report, “event-based marketing will become a competitive requirement; differentiation will come from how the processes are orchestrated.”
Liz Roche, of the META Group, says that triggered marketing is simply a step closer to the end-state of CRM. “Marketing is a portfolio of processes,” she observes. “Planning and managing campaigns is one of them. Events underlie campaign execution. So event-driven marketing cannot be seen as separate and distinct from marketing itself.”
Ro King echoes the sentiment. “Triggered marketing is just back to the old days,” says King. “My dad worked in a department store 40 years ago. He knew Mrs. Smith’s wants and needs. When a nice fur-trimmed jacket arrived, he’d called her up. He checked in with her husband when her birthday approached. With triggered marketing, we are simply automating the same stuff that worked years ago.”
Where is triggered marketing going? Unica’s Kevin Cavanaugh thinks he has the answer: campaign optimization. “Triggered campaigners are testing the communications streams constantly, looking for ways to upgrade and improve. But how do you manage the various interests that are competing for attention? Triggered campaign systems will need to identify the optimal combinations and help make recommendations, based on models, and margins, and company priorities.”
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META Group’s checklist for getting started in triggered marketing META Group has developed a list of items for companies to consider before diving into triggered programs:
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Triggered marketing versus Real-time marketing Forrester Research’s Eric Schmitt points out an important distinction between triggered marketing campaigns and “real-time” marketing, the term that is used for customized messages created on the fly in reaction to an inbound contact from a customer. In this case, the offer can’t be queued up in advance because the context will dictate the best response. The marketer, however, can improve the process by creating decision rules to guide the company’s reaction to the customer contact. Schmitt gives the example of Chase auto leasing, which uses pre-defined rules to help call center agents handle inbound calls at the end of a lease. While the customer is on hold, the system pulls the record, checks the customer’s credit history using Acxiom’s Abilitec, and instantly feeds an offer suggestion to the agent. Real-time marketing is still relatively rare, says Schmitt, but is certainly one of the next steps in the evolution of database marketing. |
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Nine West Uses Triggers in an Unusual Way Nine West, the shoe brand operating within the Jones Apparel Group, uses event triggers in a way that drives their email response rates as high as 29%. What’s more, Nine West has managed to maintain these results over two years of regular outbound email contact, with none of the slow decline experienced by most marketers. The secret? Highly relevant, but infrequent, custom communications. Dianne Binford, Director of Consumer-Direct Corporate Marketing, is convinced that the reason for their consistent results over time is that they limit the outbound email to once monthly, and the triggers allow each message to be optimally valuable to the customer. “Our customers actually look forward to the emails,” she says. “Instead of bombarding them, we save up the triggered messages, and we pay careful attention to the offers and the creative treatment each month. Our open rates and click-through rates have remained steady since we began the program in October 2000.” Today, Nine West uses the following triggers:
Both the Nine West and the Easy Spirit brands use triggered monthly emails, to customers whose contact information was captured either online or at retail, when the sales associates ask for name and address at the cash register. In total, the brands send about 300,000 emails monthly. Although they do not have control groups, Nine West does compare the spending levels of the emailed group against the VIP customers who receive direct mail. It’s not perfect, but does allow them to see the resulting sales spikes. Binford estimates that the emails drive a 40-60% monthly lift in sales. The triggered emails are part of a larger outbound program that also includes direct mail, three to four times per year. “It’s important to us that the customers view the communications as coming from the brand, not specifically from the website or the store,” says Binford. Our objective is to enhance the entire customer relationship, regardless of sales channel.” |
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