Beyond the Mass Mailing

by Olaf Acker olaf.acker@booz.com Florian Gröne florian.groene@booz.com Klaus Hölbling klaus.hoelbling@booz.com Beyond the Mass Mailing Next-Generation Campaign Management in an Era of Saturated Markets Booz & Company is a leading global management consulting firm, helping the world’s top businesses, governments, and organizations. Our founder, Edwin Booz, defined the profession when he established the first management consulting firm in 1914. Today, with more than 3,300 people in 57 offices around the world, we bring foresight and knowledge, deep functional expertise, and a practical approach to building capabilities and delivering real impact. We work closely with our clients to create and deliver essential advantage. For our management magazine strategy+business, visit www.strategy-business.com. Visit www.booz.com to learn more about Booz & Company. CONTACT INFORMATION Vienna Frankfurt Berlin Klaus Hölbling Olaf Acker Florian Gröne Vice President Principal Associate +43-1-518-22-907 +49-69-97167-453 +49-30-88705-844 klaus.hoelbling@booz.com olaf.acker@booz.com florian.groene@booz.com Originally published as: Beyond the Mass Mailing—Next-Generation Campaign Management in an Era of Saturated Markets, by Klaus Hölbling, Olaf Acker, Florian Gröne, Booz Allen Hamilton, 2008. BEyOnd ThE In an average city on an average day, the average citizen runs into Consumer-centric processes and practices, such as more MAss MAIlINg some 5,000 marketing messages. sophisticated behavior The volume is astonishing—and analysis and tighter customer Next-Generation daunting. With each and every segmentation, present an consumer taking in five messages opportunity to redefine direct Campaign Management per minute—from traditional marketing and make sure it in an Era of Saturated marketing channels as well as becomes an integral part of Markets from the Internet, iPods, and a new data-driven marketing mobile phones—it has never experience. been more difficult for direct marketers to keep in touch with Realizing that goal will mandate their existing loyal customers. changes that extend far beyond Simply put, today’s customers databases and technology. are harder to get, retain, and win Indeed, it will call for a full- back. And the task is not getting fledged transformation exercise any easier: Markets are regularly that will touch management becoming more competitive, practice, operational skills, and growth curves are flattening, and business processes, and will it has never been more important reach into the core of corporate for businesses to find new ways to IT system landscapes. Therefore, make the best use of their existing it is nothing less than the customer portfolio for further next generation of campaign growth. But in the middle of this management (see Exhibit 1, critical challenge, the skills and page 2). science of direct marketing seem to be trapped in the 20th century. Knowledge—the ability to understand consumers and address their particular needs and interests—really is power. And, at long last, practices that capitalize on such knowledge, including loyalty management, customer retention, churn management, cross-selling, and up-selling, are getting as much attention as traditional customer-acquisition programs. Booz & Company 1 Exhibit 1 Campaigning Capability Levels Current-Generation Campaigning Next-Generation Campaigning Mass-Customized Campaigning • Customer segmentation • Customer behavior analysis and • Individual customer behavior • Batch allocation of (potentially) micro-segmentation detection (“segment of 1”) relevant offers, messages • Dynamic, rule-based matching of • Dynamic, rule-based configuration of • Channel-specific outbound relevant offers, messages custom offers, messages fit to campaigns to target groups • Channel-agnostic, personalized individual need – Direct mail campaigns – Outbound calls – Classic outbound – E-mail campaigns – Triggered outbound – Inbound Source: Booz & Company Current-generation campaigns Current-Generation must begin moving toward two- (CGC) consist of mass- Campaigns: The Way We way solutions that do not just marketing initiatives to distinct Were address but actually engage the audience segments. This With the advent of newly consumer. “push” marketing is basic in empowered consumers who comparison with the “pull” expect tailored messages Next-Generation Campaigns: dynamics of next-generation that address their particular A Dialogue with the campaigns (nGC), in which concerns, classic advertising and Consumer marketing messages and direct-marketing instruments nGC management offers an offers are constantly refined, are becoming overly expensive unprecedented opportunity: depending on the consumer and imprecise in their targeting the chance to build a direct- touch point, to create the most capabilities. These consumers marketing capability that drives effective dialogue with the perceive mass-market superior customer lifetime value target audience. Ultimately—a advertising as being irrelevant, by responding to individual prospect for direct marketers intrusive, and, in many cases, customer needs in a dynamic way. who master nGC—mass- annoying. customized campaigns There is no question that nGC is (MCC) will spontaneously CGC relies on targeting a major shift in not just methods incorporate information customer segments with but also mind-set. It moves direct supplied by consumers during outbound broadcast campaigns, marketing from a push approach, communication not only for mostly through a single channel in which companies speak to their message or offer matching, but such as direct mail or outbound audience, to a pull approach, also for product and service calls. Such broad-stroke which encourages companies configuration through on-the- approaches may build awareness to speak with consumers. nGC spot packaging according to and generate new business from steps beyond CGC’s broad-stroke individual customer needs. a minuscule portion of the target audience targeting, allowing it segment, but they do not offer to match offers and messages MCC can be regarded as a relevance to a customer who has to individuals with capabilities vision that marks the end learned to expect much more such as rule-bound interactions, point of a long journey. As from marketers. in which customer service most real-world businesses are agents’ responses are based on still working hard to come to It does not matter how many events triggered by customer terms with CGC, nGC should people receive an advertising interactions. be considered the first leg of message. What counts is a journey that will lead to whether they are paying This one-to-one capability all higher relevance, true customer attention and responding.