7 factors for choosing a marketing optimization solution

Interest in marketing optimization has exploded in recent years because of a convergence of budget pressures, customer saturation and innovative technologies. Marketing optimization has the potential to save a company as much as 15 percent of the marketing budget by reducing redundant communications and improving the timing of communications. Here are a few things to keep in mind when considering which solution is right for your organization.

Contact strategy optimization.

It is very important that a potential solution optimize across time periods with respect to establishing a contact policy. For example, there should be no more than two contacts per month. Taken one step further, this policy might require at least one contact each quarter but no more than three and only two credit card offers in that period. The solution should have the ability to apply distinct offers to customer segments with varying numbers of contacts. Establishing a contact policy and then optimizing that strategy has proved to be a valuable technique.

Budget and capacity constraints. Equally important is the ability to set budgets both for campaigns and communications. The optimization should be able to determine the best way to allocate those dollars. Another factor is channel constraints, such as limiting outbound telemarketing to 1,500 hours of calling each month. In addition, minimums associated with direct mail often need to be met to execute a campaign. For example, a manager for a strategic product line might demand that at least a certain number of customers are targeted with his or her product.

Integration. The solution chosen should integrate well with the existing marketing ecosystem. Of particular relevance are the scoring environment, the campaign management system and business intelligence infrastructure. Done properly, optimization should leverage existing predictive models that have been created to help the targeting process. Business intelligence is important because optimization can have a major impact on an organization. Before the predicted results of the optimization are executed, stakeholders should be made aware of them. Publishing results to a common business intelligence layer can promote the necessary collaboration on this issue.

Analytics. Not all optimization algorithms are created equal. Selecting one method of solving a problem over another could result in leaving a significant amount of money on the table. Large-scale, true optimization is rare and requires a considerable amount of research and development. Be sure to ask the tough questions. Also, optimization shouldn’t be a black box. Although the entire algorithm shouldn’t be exposed, the appropriate controls should be available to an advanced user.

What-if or sensitivity analysis. Sensitivity analysis can tell the marketer such things as “If I increased my budget by $20,000 for the spring campaign, I could increase the total profitability by $40,000.” Or “What happens when I reduce the capacity for direct mail and shift to e-mail?” Knowing the cost of constraints on your business can help you make better strategic decisions.

Flexibility. Any optimization starts with an objective. Is the objective to maximize profit or minimize cost while maintaining a revenue goal? What about circulation? Maybe the objective should be a blend. An optimization solution should have the flexibility to adapt to changing business goals and accommodate unique scenarios.

Simulation and comparison. The chosen solution should have the ability to compare and contrast competing scenarios. Because many interested parties are involved, the first optimization may not have all of the intended results that are necessary. The ability to look at counts for competing scenarios, modify the scenario and rerun has proved to be a valuable approach for organizations that have implemented optimization.

Marketing optimization could be the most important technology that you embrace. It can have a profound impact on an organization by helping communications align with organizational goals and will have a strong positive effect on the bottom line when done correctly.

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