Product based marketing is about finding people for your product. The product approach lacks the key element of Timing. [...]]]> As discussed in the previous post, I believe Banks are Service based rather than Product sales organisations. The problem is that historically Banks have set up their marketing based on selling Products rather than providing Services.

Product based marketing is about finding people for your product. The product approach lacks the key element of Timing. Using statistics, I can safely say that 87.1% of my target group will buy a new car sometime in the next 3 years. The problem is When! This is like stabbing in the dark and hoping for success. A bit like the children’s game Battleships.

Service based marketing is about determining customer’s needs and addressing them. The latest mantra in the Service industry is called Sense & Respond. Whilst essentially correct, I would like to break this down a little more.

The ‘Sense’ portion needs to be able to answer several questions before I can formulate and give a reasonable ‘Response’. These questions are; Who, What, Where, When and Why.

Of these, in Service based marketing, the Who, Where and When are usually answered in by the interaction itself, ie. The Customer, in the Channel, Now.

Ok that was easy. And in most modern ‘real-time’ marketing systems, this is enough. Thus, a service request typically states something like ‘Customer A is in the channel now. What do I offer him?”

These systems, using the previously stored and calculated Customer info, will then suggest an offer based on either

a) the pre-calculated next best offer.
b) a simple rule based on what they are doing, eg. looking at mortgage > offer mortgage.

This is wrong!

If you haven’t correctly answered the questions ‘Why are they doing this?’ and ‘What is the need (if any)?’ If you don’t know Why and What, then you are simply exchanging outbound Product push marketing for inbound Product push. The difference is that with outbound, Customers can set up filters or opt-out, but with inbound approaches, they feel that they are being targeted whenever they contact the bank. And guess what. Just as your customers ignored, binned or opted out of your outbound approaches, they will do the same to these even to the extent of finding another Bank.

Answering the Why and the What are they keys to highly effective marketing. If you know What a person wants and Why, then the chance of being able to fulfil this need is immensely higher than if you play Battleship marketing. Let me quantify that for you. Doing product push, statistically targeted, battleship marketing will generate sales of 1%-3%. Marketing to an understood need results in sales of 18%-54%.

This is stunningly obvious. So why isn’t everyone doing this? The answers may be something like:

• My bank’s marketing is Product focussed.
• My bonus is based on Product sales.
• It’s what my supplier told me.
• Isn’t this what everyone does?

Let’s have a quick review. Kotler’s 4P marketing is Product focussed. It lacks in its ability to know the ‘When’ but it certainly knows the What and the Why. Over the years this approach has been advocated and developed by every single CRM and statistical modelling company and regardless of whom you bought it from, you achieved the same business results.

With the advent of internet based technologies and channels, it has become possible to correctly recognise the Who, When and Where and this is where the above suppliers have all headed. Now you can buy ‘real-time advisors’ from most major CRM players.

The problem is that none of them have really made the correct effort to understand either Sense and Respond, Service based marketing or provide a proper understanding and analysis of the Why and What. Instead they have all added their Product Push back-end thinking to their offerings.

So depending upon which approach I take, on the one hand I can tell you What to sell and Why but not When or on the other I can tell you When to sell but not What or Why. In reality the complete customer-focussed marketing approach is one that answers all the questions; Who, What, When, Where and Why.

I could be wrong, and only time will tell, but my guess is that those early adopters of the real-time product advisor philosophy will find the same results as they had previously, only as this is inbound and much more intrusive, I would bet that it will result in a lot more customers opting out or even leaving the bank altogether.

With Event Driven Marketing the attempt was to address the limitations of Kotler and determine the correct Timing: Who, When and Where but also to focus on answering the What and Why. To my mind, a properly implemented EDM system is still the most efficient and effective marketing approach available in the market today.

The term the 4P’s of marketing was coined by Philip Kotler in 1967 in his seminal book Marketing Management. In it he proposes that a complete marketing mix consists of 4 P’s; Product, Price, Promotion and Place (channel).

Given that Kotler is considered such a [...]]]> To 4P or not to 4P that is the question.

The term the 4P’s of marketing was coined by Philip Kotler in 1967 in his seminal book Marketing Management. In it he proposes that a complete marketing mix consists of 4 P’s; Product, Price, Promotion and Place (channel).

Given that Kotler is considered such a seer it is understandable why banks have restructured their organisations and adopted this approach to marketing since the 70’s.

This methodology leads to a straightforward product push marketing process of: produce the Product > decide on the Price > determine your target market > create the promotional campaign > and deploy through the chosen channels. This process is in place in the vast majority of Banks today, over 45 years after it was set out.

Given that it is a tried and tested approach, why is it that the results from such a methodology are only 1%-3% sales? Well I think there are two main problems.

The first is Timing. The means used to determine a target market are typically statistical analysis tools, such as SAS, which will tell you something like 87.2% of the target group will buy a new car in the next three years. It can be amazingly accurate and at the same time absolutely useless. I need to know who wants to buy a car today!

The second problem is that the 4P approach was set up to help product companies, and I don’t believe that Banks are product companies. They are Service companies (albeit who happen to have a few products).

Each product that a bank sells will be used many times by their customers. For example the sale of a credit card can result in usage 100, 200, or even more times a year. Each of these is the customer making use of the service provided by the credit card. That’s hundreds of opportunities for service based on a single sale.

Those banks who who have implemented it have found that both of these issues are addressed by Event Driven Marketing; telling me who to contact Today and providing perfect opportunities for customer service. It isn’t a coincidence that banks that deploy an EDM approach have average sales of 12%-54% and customer satisfaction indices around 10%-15% more than their competitors.

Here are a few questions for you;

• Do your marketing and retail sales groups still have KPIs set for product sales targets?
• Does your staff get bonuses for selling products?
• Does your bank have the position of Product Manager?
• Lloyds/TSB put aside £6.7bn to compensate customers for mis-selling.

or

• Do you have KPIs for increasing customer satisfaction and NPS?
• Does your bank have the position of Customer Satisfaction or Customer Experience manager?
• Whereas HSBC scraps the sales and bonus link.

Ok, the final bit of info for you comes from internal research done by ING on why customers leave a bank.

• Find more value in other competitor 9%
• Dissatisfied customer because the service given is bad  82%
• Other (move away, death, etc.) 9%

Hmmm that’s 9% for a different product compared to 82% for poor service.

In summary, I believe that for Banking, Kotler is Krap, and that the more that a bank focusses their marketing on trying to sell products the more it is missing the point – and handing a big opportunity to their competitors. They need to change their marketing strategy away from a 4P product approach toward one that is more in line with marketing for a Service company.

Such as what I hear you say. More of that in part 2 of this blog next week.

(with excuses to Shakespear),

To 4P or not to 4P,

Whether ‘tis nobler in the mind to provide the sales pitch and forgo customer service

Or to take arms against a sea of product push campaigns and by opting out, end them.

It soon became clear that whilst their definitions of EDM were quite similar, they were actually talking about quite different things. This was to do with their implementations. One camp was in the [...]]]> I was at a conference recently where three of the presentations that generated the most interest most were about Event Driven Marketing.

It soon became clear that whilst their definitions of EDM were quite similar, they were actually talking about quite different things. This was to do with their implementations. One camp was in the batch processing of Events and the others were firmly in the ‘real-time’ processing and delivery of leads.

This reminded me of several discussions I have had on this subject over the years, and so I thought I would try and jot down a few comments and my own ideas on this.

In summary, I believe that both approaches have distinct advantages, but you need to clearly understand the differences and implications of both approaches. In fact there is a definite advantage to having both systems working together as they each address the others’ weaknesses.

Remember, just because a Customer is in front of you in one of your channels, even if they score well, it doesn’t mean that they want to buy something, regardless of whether you can deliver an offer in 10 milliseconds or in 10 hours.

The key is speaking to them at the Right Time, ie. When something significant has happened and there is an implied need.

I suggest that you concentrate on getting the timing ‘Right’ rather than ‘Real’.

Finally, a link back to an excellent review of info on this topic at David Raab’s customer experience matrix blog.

“Event Driven Marketing is a strategic part of Raiffeisen Bank’s Customer marketing strategy. After a detailed analysis of the market and an in-depth RFP process, [...]]]> eventricity Ltd announces the successful conclusion of an Event Driven Marketing Proof of Concept and sale of their Timeframe and Coffee application software at Raiffeisen Landesbank Lower Austria and Vienna.

“Event Driven Marketing is a strategic part of Raiffeisen Bank’s Customer marketing strategy. After a detailed analysis of the market and an in-depth RFP process, we found eventricity’s offer to be a clear winner for our needs,” said Dr. Josef Holböck, General Manager of Raiffeisen Analytics Ltd.

“We are proud to have been chosen by Raiffeisen for their EDM project. Our selection in preference to our competitors IBM/Unica, SAS and Teradata, is a strong endorsement of our software, expertise and approach,” said Mark Holtom, director of eventricity Ltd.

Raiffeisen Bank Project

In serving customers’ needs, timing and reactivity were seen as key issues and for this reason Raiffeisen Bank decided to implement Event Driven Marketing (EDM) in its customer contact approach. They selected eventricity as a company experienced in delivering EDM solutions into banking. Using eventricity’s Timeframe and Coffee, the Bank was able to implement their initial EDM solution in 3 months.

“Raiffeisen banking group is the biggest retail bank in Austria and is positioned as the ‘Advisor`s bank’. In today’s financial climate, the focus on retail banking plus the strengthening of our relationship with our customers and the most economical use of our resources is critical. We feel that Event Driven Marketing is a key technology supporting the Bank’s marketing direction and image,” said Dr. Hanreich, Director of Marketing for Raiffeisen Bank. “If an event happens it helps us be relevant and more timely in our communications to customers”.

“We wanted to offer personalised banking and we needed to be able to move and react more quickly. Not in months but in days or sometimes even in hours,” said Holböck. “We will now supply our sales force with leads on a daily basis for those customers who need to be contacted that day”. “Raiffeisen has been tremendously pleased with the performance and results of this collaboration,” said Hanreich. “We knew that eventricity had the industry knowledge, software and experience necessary for this project, but the results have surpassed our expectations.”

“We wanted to offer personalised banking and we needed to be able to move and react more quickly. Not in months but in days or sometimes even in hours,” said Holböck. “We will now supply our sales force with leads on a daily basis for those customers who need to be contacted that day. Now that the software is installed and running, our next steps are to implement more and different Events.”

eventricity Ltd announces the successful conclusion of an RFP process and the commencement of an Event Driven Marketing (EDM) Proof of Concept at Raiffeisen Bank Austria using their Timeframe and Coffee application software.

“Event Driven Marketing is a strategic part of Raiffeisen Bank’s Customer marketing strategy. After a detailed analysis [...]]]> Press Release 1st November 2011.

eventricity Ltd announces the successful conclusion of an RFP process and the commencement of an Event Driven Marketing (EDM) Proof of Concept at Raiffeisen Bank Austria using their Timeframe and Coffee application software.

“Event Driven Marketing is a strategic part of Raiffeisen Bank’s Customer marketing strategy. After a detailed analysis of the market and an in-depth RFP process, we found eventricity’s offer to be a clear winner for our needs,” said Dr. Josef Holböck, Head of Customer Analytics at Raiffeisen Bank.

“We are proud to have been chosen by the bank for their EDM Proof of Concept. Our selection in preference to our competitors IBM/Unica, SAS and Teradata, is a strong endorsement of our software, expertise and approach,” said Mark Holtom, director of eventricity Ltd.

Raiffeisen Bank Project

In serving customers’ needs, timing and reactivity were seen as key issues and for this reason Raiffeisen Bank have decided to implement Event Driven Marketing (EDM) in its customer contact approach. They selected eventricity as a company experienced in delivering EDM solutions into banking. Using eventricity’s Timeframe and Coffee, the Bank will be able to implement their initial EDM solution in 3 months.

“In today’s uncertain financial climate, the best and most economical use of our resources is critical and we feel that Event Driven Marketing is a key technology supporting the Bank’s marketing direction and image,” said Dr. Hanreich, Head of Marketing. “It helps us to clearly focus our communications to our customers, offering timely and relevant services”. “We wanted to offer personalised banking and we needed to be able to move and react more quickly. Not in months but in days or sometimes even in hours,” said Holböck. “We will now supply our sales force with leads on a daily basis for those customers who need to be contacted that day.”

Event Driven Marketing

An Event Driven Marketing approach analyses the needs and actions of customers individually on a daily basis to determine when something significant has happened to them and that they require contact. This is termed Customer Pull instead of Product Push. Research and results have shown that the average response rates for Event Driven campaigns typically range from 20% to 50% compared to the 2%-5% achieved using traditional CRM methods

Timeframe and Coffee Timeframe is an application designed for implementing Event Driven Marketing. It is a pre-packaged application containing a data framework, a library of Events and all of the Business logic for the implementation of an Event Driven Marketing solution.

In its simplest form, Timeframe is an automated process which will take daily data feeds from a Bank, analyse them and produce a list of leads. These leads are Bank Customers to whom a significant Event has occurred within the last 12-24 hours. Coffee is a tool for filtering and optimising the Event leads generated by Timeframe before passing them to the Bank’s CRM Tool / Marketing Automation system for delivery to the Channels.

Timeframe and Coffee are designed to run in an automated fashion, and on a day to day basis require no user intervention. They are database and CRM tool agnostic. “Implementation of an EDM system has always been a bespoke effort requiring >$1m and 12 months to complete. With Timeframe, eventricity is able to deliver a working solution within a few weeks at a fraction of this price. This approach dramatically reduces the risk and payback time for the Bank,” said Mark Holtom, director of eventricity.

Background

The Raiffeisen Banking group is the largest bank group in Austria. Almost every second Austrian is a customer of the Raiffeisen bank. The Raiffeisen Banking Group provides the densest banking network in the country and is a universal retail bank offering a complete range of financial products and services.For further information see Raiffeisen bank

Eventricity Ltd is a UK based software developer and consultancy focussed on providing complete solutions for Event Driven Marketing. For further information see eventricity Ltd or please contact:
Mark Holtom,
eventricity Ltd
Tel: +44-7803-231-802
Email: info_at_eventricity.biz

Whilst Isaac was involved with mathematics and physics, Eric was busy defining and refining thoughts on marketing that were so far ahead of their time that [...]]]>
Not many people know this, but Isaac Newton had a smarter brother, Eric.

Whilst Isaac was involved with mathematics and physics, Eric was busy defining and refining thoughts on marketing that were so far ahead of their time that they would not become common practice until the 21^st century.

Like his brother, Eric also postulated three Laws but in his case for Marketing.

Newton’s first law states that every Customer will remain happy with a product/service and continue to use it unless compelled to change this behaviour by the action of an external force. This is normally taken as the definition of Product inertia.

In recent months one of Newton’s manuscripts came to light and annotated at the bottom of one of the pages was his initial work on his first law which he termed the ‘Window of Opportunity’. What we now call Event Driven Marketing.

In this simple fragment he states that Customers are generally in a situation of ‘status quo’, ie. Product Inertia, In this state they are not very receptive to offers (<4%) unless some situation happens to cause the customer to re-assess their needs. Today we call these situations ‘Events’.

He continues that when an Event happens, eg. marriage, redundancy, new job, the customer then reassess their need and usage of a product/service. At this time they become very receptive to other proposals. This is the Window of Opportunity, which can last from as little as one day up to a week or so. Amazingly modern research now finds that the response rate at this time can be 70%-80%

After this, the Customer then moves into a phase that he called the ‘search for alternatives’. Nowadays we tend to call this ‘Googling’. In doing so Customers assess several offerings and make comparisons. Contact during this phase is also worthwhile but the bank is now in competition with others and the response rates are typically 10%-15%.

Finally, the Customer will select a solution for their needs and return to the state of ‘Status Quo’ at which point their receptiveness to offers drops back down to 2%-4%.

It is remarkable to me that Newton managed to produce such profound insights into Marketing without the use of databases and analytics. Nevertheless, what he said is true; Customers are receptive to offers when they need them, and not at other times.

The trick for us Marketers is to find out when this is. It is a matter of timing not statistics.

The first phase (in the 90’s) can be termed the Data phase. You remember that. It [...]]]> I was in Paris last week, attending the EFMA CRM conference. One presentation that stuck in my mind was given by Graham Flowers of Finalta. His assertion is that we are now in the third phase of CRM systems.

The first phase (in the 90’s) can be termed the Data phase. You remember that. It was when we tried to gather all customer data from disparate sources into one place for analysis. You couldn’t move at conferences without people talking about ‘The Single View of the Customer’ or 360 degrees, etc.

Data Analysts and Modellers were King.

By the early noughties, we had moved into the Multi-channel phase. We had all the data necessary. Now we were trying to contact the Customer through every possible channel (internet, email, mobile, ATM, as well as the more traditional Call centre, Branch and mail). One governing factor of these new multi-channel systems was that of cost. It was soon discovered that the cost of using new channels was significantly less. Now it was easier to contact the Customer more frequently and at less cost.

Now systems like Siebel were King.

Of course, you never did this, but the lowering of costs and the increase in volumes of contacts lead to increasing levels of Customer resentment. At the same time, relationship managers were being told to ‘push the payment insurance, credit card, etc. as they were low on their targets’. Soon it was time for legislation to get involved and here we are in the third phase – Compliance and Regulation.

Until now, Marketing has only been lightly regulated, but with increases in spam, nuisance mails, overcontact, poor use of personal data and mis-selling, this time has passed. Customers now have control over if, when and how you can contact them. They have access to all of the data you have about them.  And if you told them something incorrect or sold something that wasn’t 100% in the customer’s interest, they can demand compensation for this years after the fact.

And how will this affect you? Well let’s ignore the recent UK mis-selling scandals and look at nuisance and overcontact. For example, one UK Bank that has implemented the EU marketing and privacy directives found that suddenly they could only contact 46% of their customer base. Not recognising this as a problem, they continued to generate an increased number of leads (from a reduced pool of customers). Within 12 months, the number of contactable customers had reduced to 26%! That is, three quarters of their customers had told the Bank to leave them alone.

Their marketing was killing their marketing.

So, in a compliance and regulatory world, we marketers are going to have to be better and smarter. This will mean a concentration on techniques like

• Events to find better quality leads,
• Optimisation systems to rank the best leads.
• Process management to ensure consistency in execution and what we tell a customer.

If we don’t do this our Customers will simply opt out. Pretty soon, we may not have anyone to talk to.

The problem is that the financial crisis has caused considerable damage to a Customer’s view of their Bank. [...]]]> CRM strategies evolve over time. This is particularly true in the current economic context. More than ever, customer profitability is key, which has led to many banks reviewing their CRM strategies to focus back on the numbers.

The problem is that the financial crisis has caused considerable damage to a Customer’s view of their Bank. The simple truth is they really don’t trust you anymore.

So those banks trying to build a strategy to focus on sales and customer profitability are going to have a hard time.

I believe institutions need to develop a new approach to regain and reassure customers. In aiming to do this, financial institutions have to develop an approach that places the customer back at the heart of their strategy. This strategy must achieve the optimum balance between the need to generate a good profit and satisfying customers’ needs.

A ‘win back trust’ strategy

Remember in a previous blog, where we discussed that there were only about 1.4 sales opportunities per customer in a 5 year period. If you remember, during this same year period, the research showed there are over 200 opportunities to provide service to these customers.

I was lucky enough to be involved in an EDM project with a Bank that decided its strategy was to use EDM to focus on providing Service rather than just looking for the Sales opportunities. The ratio they decided on was 2-3 service calls for each sales call.

After 6 months, in a review of the project, they found that nearly 40% of customers had bought a product by the 3^rd call, despite not having anything ‘sold’ to them. At the same time, their customer satisfaction ratings rose to be 10% higher than their nearest competitor.

Remember, each service call is an opportunity to communicate with your customer. Each communication is a chance to show them that you care. Each demonstration of your care is a step forward in trust.

When I want to my review financial affairs, who am I going to call – the guy from the bank who provides good service or the guy from the other bank who only ever contacted me to sell something?

So, if you’re thinking about EDM, remember, it isn’t just for Sales. It just might be the best way you can get back your customer’s trust.