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TitleChordiant Next-Best-Action Marketing White Paper
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Document Text Contents
Page 1

Next-Best-Action Marketing



Increasing Profitability

Through More Customer-Centric

Communications

White Paper

Page 2

Next-Best-Action Marketing

Increasing Profitability through More Customer-centric Communications

About Chordiant Software

Chordiant helps leading global brands such as HSBC, Barclay’s, CIBC and Capital One deliver the best

possible customer experience. Unlike traditional business applications, Chordiant Customer Experience

(Cx) front office solutions blend multi-channel interaction management with predictive desktop

decisioning, enabling companies to capture and effectively anticipate and respond to customer behavior

in all channels, in real-time. For global leaders in banking, healthcare, insurance, and

telecommunications, this deeper understanding cultivates a lasting, one-to-one relationship that aligns

the most appropriate value proposition to each consumer. With Chordiant Cx solutions, customer

loyalty, operational productivity and profitability combine to deliver new levels of return on investment.

Headquartered in Cupertino, California, Chordiant maintains offices across the United States and

Europe, including regional offices in Boston, London, Amsterdam, and Munich. For more information,

visit Chordiant at www.chordiant.com or call us at 1-888-CHORDIANT.

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Next-Best-Action Marketing

Increasing Profitability through More Customer-centric Communications

becomes even more important when the Decision Hub is used–as it should be–for experimentation

and trying out alternative strategies in a champion/challenger fashion. Such feedback can be at the

level of whole strategies or individual business rules and predictive models that make up Decision

Logic. Figure 4 illustrates the use of experimentation. In this case two retention strategies are

randomly tested once the decision has been made to try to retain a customer. This decision, in turn, is

based on the risk of defection and the expected customer value, the combination of which

determines the retention budget, if any.

• Comprehensive monitoring stores each decision as well as the basis for that decision, allowing

internal and external auditors to replay the interaction and assess the underlying policies and

assumptions. For some areas of decisioning, this is becoming a legal requirement, such as the Basel II

framework that governs capital requirements in banking.

Total Control

As is the case at O2 and other companies, strategies fed to the N-B-A Decision Hub are developed and

maintained by line of business management rather than IT. The advantage of this approach is that the

company can adapt its strategies (and, by implication, its profitability and aspects of branding) on the

fly. It is important to note that this ability does not mean strategies should be implemented casually.

They will need to be tested before they go into production as in any normal business practice. However,

with the Decision Hub as the central location for making all customer-facing decisions, changing the

instructions changes the way the company does business. For example, O2 is making changes to their

extensive customer experience strategies a few times each week for a variety of reasons such as:

• Experiments (Figure 4) have shown that a particular challenger strategy should be promoted to the

default strategy.

• Agents in the call center complain about a conversational flow (script) that is not producing the

desired effect and requires modification.

• The strategy needs to be changed in reaction to an action by a competitor and requires a same day

response.

O2 can do all of these things because line-of-business management, including CRM and marketing

managers, have total control over the customer strategies.

While many changes require redeployment and retesting, some tactical changes need to take immediate

effect. Suppose a company is running out of stock for a particular incentive. Operational management

needs to be able to change the Silver Pen incentive to the Leather Wallet instantly. Similarly, if a flu

epidemic strikes the call center staff, strategies may need to be adjusted to route inbound contacts to

other channels or reduce call handling time by shifting to faster-to-complete propositions. With an N-B-

A Decision Hub, such tactical changes can be made by adjusting certain control parameters that are part

of the Decision Logic itself. Thus, rather than changing the structure of the strategy to any degree,

parameters used within the strategy are modified. The Decision Logic does not have to be redeployed,

as the extent of adaptation has been predefined and pre-approved, and the effects are merely tactical.

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Similar to the modern Fly-by-Wire aviation approach where a pilot moves the joystick to steer the plane

without interfering with the mechanics, the company becomes an agile and adaptive Fly-by-Wire

enterprise with all checks and balances firmly in place.

N-B-A Marketing Realized—Shifting Operational Paradigms
The benefits of the N-B-A paradigm as discussed above are extremely valuable to any customer-focused

organization. And as the approach has been proven by some of the world’s most successful brands,

implementation is clearly feasible, and will be discussed later in this paper. However, as with all market-

driven paradigm shifts, there must be similar shifts in operational paradigms within your company to

fully realize the potential benefits. Both technical and organizational in nature, these shifts must be

examined in some detail as many large companies are organized in a way that resists this type of

innovation and change. Certain areas of the business will be impacted the most and may need to

modify their processes, and often, their ways of thinking. These areas include:

Marketing & Organizational Structure

Outbound Marketing

Call Center

Enterprise IT

Marketing—A Collaborative, Customer-centric Approach

Marketing faces perhaps the most important paradigm shift of all. Marketing strategists have to

abandon their natural product focus and adopt customer-centric thinking. This has been the CRM

mantra for some time, but the truth is that existing CRM technology has never allowed a truly

customer-centric approach. N-B-A marketing, in contrast, forces everyone in the organization to put the

customer first.

All staff involved in thinking about customer interaction strategies, including branding, product

marketing, risk management and CRM, will need to answer this Critical Question: What is the

approach we will take to maximize the relationship with each customer when contact occurs? The

answer triggers further questions and the full strategy unfolds. From the start, this rigorously top-down

strategy design is at odds with the traditional product-first approach when setting up campaigns and

selecting customers for the propositions.

The answer to the Critical Question immediately requires collaboration between departments that may

hardly interact. This lack of collaboration comes at a great cost, confusing the brand and bypassing

potential revenues. Without this collaboration, the first decision made will be owned by the business

function that happens to own the interaction. Customer-centric interactions demand that a company

agree on the answer to the Critical Question.

The first step to answering the Critical Question is for the company to agree on its priorities for the

business. Is risk more important than selling? Is selling more important than retention? Consider the

simple N-B-A logic example in Figure 5 that could be executed in any channel to answer the Critical

Question and the subsequent questions that follow that first answer.

Page 19

Further Reading

Published articles

• Business Intelligence on Call, Computing, February 2006

• O2 takes ‘softer’ inbound approach, Precision Marketing, December 2005

• Micro system improves call, Marketing Direct, January 2006

• The Positive Approach, Direct Marketing International, February 2006

• Upwardly Mobile, Database Marketing, February 2006

Chordiant white papers

• O2 Success Story: The Death of Outbound Marketing?

• An Objective Performance Evaluation of Chordiant Predictive Analytics Director

• A Closer Look at Chordiant Decision Management Predictive Analytics Techniques and Algorithms

• Chordiant Adaptive Decision Service - A New Approach to Predicting Customer Behaviors

• An Architecture for Intelligent Decisioning

• Innovate with “Customer Experience” in Banking

Page 20

World Headquarters
Chordiant Software, Inc.
20400 Stevens Creek Blvd.
Cupertino, CA 95014
Tel: 1 408 517 6100
Fax: 1 408 517 0270
1 888 CHORDIANT
(1 888 246 7342)

European Headquarters
Chordiant Software International, Ltd.
Building 10
Chiswick Park
566 Chiswick High Road
London
W4 5XS
United Kingdom
Tel.: +44 (0) 20 8987 3800
Fax: +44 (0) 20 8987 3902

www.chordiant.com

Learn More About Chordiant Customer Experience Solutions

Chordiant helps leading global brands such as HSBC, Barclay’s, CIBC and Capital

One deliver the best possible customer experience. Unlike traditional business

applications, Chordiant Customer Experience (Cx) front office solutions blend

multi-channel interaction management with predictive desktop decisioning,

enabling companies to capture and effectively anticipate and respond to

customer behavior in all channels, in real-time. For global leaders in banking,

healthcare, insurance, and telecommunications, this deeper understanding

cultivates a lasting, one-to-one relationship that aligns the most appropriate value

proposition to each consumer. With Chordiant Cx solutions, customer loyalty,

operational productivity and profitability combine to deliver new levels of return

on investment.

Headquartered in Cupertino, California, Chordiant maintains offices across the

United States and Europe, including regional offices in Boston, London,

Amsterdam, and Munich. For more information, visit Chordiant at

www.chordiant.com or call us at 1-888-CHORDIANT.

Copyright © 2007, Chordiant Software, Inc. All rights reserved. Chordiant and the Chordiant logo are regis-
tered trademarks of Chordiant Software, Inc. All other trademarks shown are property of their respective
owners.

The information contained in this document represents the current view of Chordiant Software, Inc. on the
content discussed as of the date of publication and is for informational purposes only. CHORDIANT MAKES
NO WARRANTIES, EXPRESSED OR IMPLIED, IN THIS DOCUMENT AND RESERVES THE RIGHT TO CHANGE
THIS INFORMATION WITHOUT ADVANCE NOTICE.

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