Here is an excerpt from our Decision Management Systems Platform Technologies Report on Marketing:
The use of Decision Management Systems to focus marketing efforts more effectively is becoming increasingly common as the cost of building and operating Decision Management Systems drops. Where in the past the value of each individual decision had to be quite high to justify a Decision Management System (thus fraud and risk-based decisions dominated), modern platform technologies and pre-configured Decision Management Systems can be used even when the value of each decision is very low. For instance the difference between a good cross-sell decision and a bad one may not be very great, while the difference between a good loan origination decision and a bad one may result in thousands of dollars of losses.
Organizations focused on becoming customer-centric are increasingly turning to an approach known as next best action or next best activity (some more grammatically precise organizations talk about best next action). Such an approach involves considering every action that the organization could take towards a customer—making a cross-sell offer, collecting new information about customer preferences, reminding them to use a product they already own—and ensuring that each opportunity for interaction uses the “best” one for long term customer value. This focus on actions—not just offers—and a desire to centralize and systematically improve the selection of the best action drives a need for a Decision Management System focused on this decision. While these are not limited to marketing actions (they include service and support issues) they are typically rooted in Marketing. See also personalization below.
Organizations are trying to ensure that their marketing is more relevant and targeted. They are dividing customers and prospects into increasingly small segments using analytics and then focusing messaging on these segments. Combing business rules and predictive analytics to effectively target every prospect, this approach to targeted marketing relies on a Decision Management System at its core. The need to replace blanket campaigns that send the same offer to everyone with something more focused drives the need for a Decision Management System.
Next Best Offer
The classic marketing Decision Management System is to calculate the next best offer for a customer. Such systems apply best practice and contact rules as well as predictive analytic models for propensity to buy to determine which of a company’s products are most appropriate as the “next product” for a customer. This then drives promotional activity.
Related to the next best offer approach is the use of Decision Management Systems to drive cross-sell. Companies are developing these systems to suggest appropriate cross-sell offers in call centers as well as driving them into the check-out process online. Some are even using them in store locations. Improved cross-sell drives higher basket value and can improve loyalty by creating customers with more (product) connections to a company. These decisions are increasingly managed across product lines or lines of business, further increasing the value proposition of a centrally managed system.
In an almost identical fashion, companies are using Decision Management Systems to identify a product from within the line of business that is more profitable or advantageous than the one the customer is currently planning to buy. These systems tend to stay within a line of business and are evolving from being rules-based to including analytics to predict what is likely to be accepted so that upsells are not made when they will simply irritate a customer.
As noted, some organizations are evolving their marketing and support systems to a next best action approach. These Decision Management Systems coordinate all possible actions (sell this additional product, encourage use of this service the customer already has, recommend this product fix or FAQ answer, ask the customer for this clarification on their data) and selects the one that is most likely to move the customer conversation along and build long term value. These systems involve business rules about who to contact and when as well as definitions of product or action eligibility while predictions of propensity to accept and of likely future profitability are at the heart of effective choices. The marketing department typically drives much of this but customer service and support must be involved also if the system is to truly focus on next best action.
Some businesses rely on coupons and on getting coupons (whether paper or electronic) into the hands of customers who will use them in a way that boosts a company’s bottom line. Decision Management Systems are used to determine which customers are eligible for which coupons and increasingly to focus coupon spend analytically where it is likely to have the most impact.
Marketing in some organizations is moving beyond segments and standard offers—who gets which offer—to a focus on personalization. These organizations are personalizing their interactions with customers and prospects using everything they know about a prospective customer. Moving beyond just using names and locations, these Decision Management Systems are making a micro decision about each prospect, generating messages and contact strategies specific to that prospect. Not “which customers get this offer” but “what should we say to this customer right now.”
Change or prevent behavior
Some Decision Management Systems send communications designed to change behavior on the part of prospects or customers. These are not necessarily focused on offers or products but send specific information designed to provoke a short term or long term change in behavior. For instance Decision Management Systems have been built to target someone to increase the likelihood they will make a bequest, to increase their loyalty, to reduce the likelihood they will churn and more. These systems use predictive analytics, to identify those most likely to make a bequest for instance, and then use the factors that drive this model to see what content or communication might influence others to do likewise. These systems can also be very real-time and responsive, responding rapidly to competitors and identifying those customers who will be impacted by a change and targeting them with content most likely to counteract that competitor’s behavior and so sustain loyalty.
Read more in our Decision Management Systems Platform Technologies Report.