The Pros and Cons of Rules-Based Analysis: Rules-Based Targeting Increases Sales

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Cross-sell and upsell opportunities are easily mastered by a skilled sales staff.

An experienced salesperson can take one look at a customer and identify potential tastes. "This shirt will bring out the color in your eyes." "I see you're looking for a handkerchief. With a tie like that, I'll bet you'd like to see our top-of-the-line silk handkerchiefs." Even the corner grocer realizes it makes good business sense to know his customers and shape the sales approach accordingly.

By evaluating a customer's demographics, clothing and mannerisms, an effective salesperson can draw a clear picture as to buying potential. A combination of the customer's interest in merchandise and body language will alert the sales staff to general preferences.

How can this be achieved online without simply treating a customer generically by looking at broad customer data such as demographic profiles? Companies must develop intelligent marketing systems that dynamically interact and respond to individual customer needs, just as your best salesperson would treat a customer.

With a rules-based technology, the abilities of the most skilled sales staff can be embodied in an online system. Such a system must be able to formally express and apply business rules, meaning the policies and practices that drive online promotions and other relationship-selling strategies, and put them in the hands of the marketer.

For example, Justine Homebuyer wants to apply online for a home loan from our bank. Part of the policies and practices that drive any bank is to avoid lending money to people with bad credit. So we have a rule of business that states: If the classification of the customer equals "poor credit," the status of the loan equals "rejected."

Most business rules would be more complex, and we probably would use many business rules to decide. For example, what constitutes "poor credit?" Is it determined the same way for all departments or regions? Furthermore, rejecting a loan will probably require an additional set of rules for managing that process and communicating with the customer.

Let's continue the above loan transaction. Rules have determined that she falls into our definition of a poor credit risk. But we have rules that look at her overall value to the bank and show that if a guarantor were present, we could offer the loan (a profit item product for us).

Furthering our total relationship approach, our business rules cause an automatic e-mail to be generated, telling her what steps she could take (securing a guarantor) to help the application. When Justine calls the customer support center, rules produce scripted prompts for the call center agent, informing him of the applicable bank policy for Justine's case and the specific information she must provide. Justine now feels she is getting the right information to take care of her needs without having to re-explain the situation or come back repeatedly.

Later that day, Justine visits an ATM and rules indicate her loan has been approved, but she has not yet been notified. The display screen informs her of the approved transaction and gives a contact point for picking up her check. With a total relationship rules-based system, customer convenience is enhanced and CRM is easier.

This type of customer relationship example can be applied equally to an outbound marketing campaign to stimulate sales on a product. Suppose a company has an overstock of baseball gloves. Marketers set rules in the system saying that young males who have shown an interest in sporting goods should be offered a discount on baseball gloves.

These rules can be fired by a Web site visit, causing a banner click-through advertisement to be displayed. The same rules could generate display of a targeted advertisement when the person uses a remote kiosk. And the rules also can trigger a direct mail piece with the glove prominently displayed on the cover. Constant reinforcement of the message across multiple touch points solidifies the concept in the customer's mind and increases the chances for our desired outcome --purchase of the glove.

Once marketers use true rules-based targeted marketing, the possibilities are endless. But for it to work effectively, the ability to define and refine the marketing campaigns must lie with the policymakers. Changing business rules should be as easy as rewording a sentence, so that the concept of the policy decision is synonymous with its implementation.

To achieve this goal, systems must use centralized repositories of rules that can be examined, changed or augmented by marketers or business managers in remote locations, working without the delays and overheads of system definitions and information technology shop backlogs.

Once marketers use technologies that enable a total relationship view of the customer across the enterprise, one-shot transient actions of the past seem archaic. Customers reap the benefits of being served by a company's best "virtual" employees, and companies reap the benefits of bottom-line growth.

•Bill Seawick is vice president of marketing at Blaze Software Inc., San Jose, CA, a provider of rules-based e-business software. Reach him at

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