As multiple communication channels converge – call center, direct mail, e-mail, Web, wireless – customers have become empowered in their buying decisions. As a result, companies are being forced to implement this growing number of channels to keep pace with rising customer expectations.
In a June 2000 study, Forrester Research, Cambridge, MA, reported that companies offer an average of 3 1/2 channels today and will offer at least four by 2002, to strengthen their customer relationships and provide better service. The reality, though, is that technology infrastructures have not kept pace with these rising expectations.
With technology infrastructures being pieced together, nonscalable, hard-coded business rules in place and real-time access to valuable multichannel customer information lagging, companies are seeking alternatives to existing customer relationship management applications in achieving true personalization.
Currently, one-to-one relationship optimization – whereby you can create and sustain consistent personalization strategies – cannot be fully realized. Most organizations, even those with leading-edge marketing automation and CRM applications, have fragmented customer views. Companies, for example, build hard-coded business rules across divisions and organizationally foster distinct data silos that do not allow a full view of customer relationships to predict true lifetime values.
Traditional batch processing versus real-time aggregation of customer historic and predictive behavior also does not allow for a multichannel, current understanding of customers. And most CRM products often have addressed only one channel. If a customer places an order on the Web, then calls the company’s call center, there is the expectation that the telephone representative will know of the Internet order just placed.
According to Forrester, only 23 percent of telephone agents can view Web site activity. And while current middleware enables core applications to speak to one another, it does not aggregate the information from the distinct applications to be of use for real-time decision-making. This lack of tactical synergy across the organization can erode customer loyalty and can undermine efforts to create effective personalization strategies with customers.
A new generation of software expected from leading analytical CRM and marketing automation companies will be “context servers.” The context server will provide extraordinarily fast, real-time access to information from multiple touch points and will allow organizations to engage in proactive personalization strategies versus the knee-jerk or reactive strategies now employed.
Unlike in the existing process where new business rules need to be engineered into pre-existing rules, the context server removes the burden of having to change core code and centralizes the information from the various data silos within the organization. And because the context server does not rely on batch processing, it is optimized for making real-time decisions. The context server not only will rely on an open architecture and RAM-based caching technology, but also yield a strong analytical, predictive capability, far beyond collaborative filtering that we see at sites such as Amazon.com.
Ultimately, the more effective the organization is at predicting behaviors and proactively providing offers, incentives and information in the appropriate context and at the right time, the higher the loyalty and more effective the dialogue with customers.
An October 2000 report by Forrester suggested that context servers will provide a new strategy for “customer conversations that includes proactive communications to anticipate wants and needs, informed applications to tailor interactions on the fly, and continuous dialogues to sustain context across time and touch points.”
Because of marketing’s dynamic, interactive nature, companies will have to adopt new customer relationship strategies to maintain their existing customer base. The old way of developing hard-coded business rules in such a dynamic world is not scalable as newer and more channels come to the fore. Customer understanding will become even more important to a company’s core business strategy. Providing a centralized, predictive customer intelligence function within an organization allows for consistent personalization. This customer understanding will span multiple business functions as well as multiple communication channels.
An August 2000 report by Gareth Herschel of The Gartner Group, Stamford, CT, supports the model of tightly integrated marketing and service functions to ensure they both follow synchronized and coherent marketing strategies for offering customers what they want and when and how they want it.
To create this meaningful dialogue, companies need a platform for serving context-sensitive analytical content that drives personalization. The context server will aggregate personal data (contact information, preferences), along with historical data (service level, transactions and RFM of past purchases) and with predictive information (potential value and cross-sell/upsell affinities).
The context server combines a customer’s real-time context – e.g., segment and current interest – with specific analytical content – e.g., service level that should be offered or recommended content to be shown on the Web site – that will drive current dialogue with that customer. While existing technology lacks the flexibility, access and aggregation of historic and predictive behavior for real-time decision-making and cross-channel view required to execute consistent personalization strategies, the context server will alleviate these burdens. Few companies will offer a total CRM package that includes analytical and operational applications, including the context server piece.
Most likely, we will see strategic partnering in this area and bundling of solutions so customers are afforded best-of-breed technologies for the various applications of their CRM strategies. By creating a business model that promotes ease of doing business, this offers value for the customer and company. The more robust the dialogue, the more loyal the customer.
The context server may be the software that will allow companies to achieve that holy grail of one-to-one relationship optimization through centralized customer knowledge bases, affording not only a touch-point-neutral application but also the ability to execute real-time communications.
The context server will provide the speed organizations need to become sophisticated in anticipating customer needs and wants. It also will allow organizations to alter their marketing efforts to optimize expected revenue metrics per customer. The speed, integration, flexibility and cross-channel nature of this software will enable companies to deliver consistent personalization and branding, and build competitive advantage. n
• Jennifer L. Sullivan is manager of database marketing at Unica Corp., Lincoln, MA. Her e-mail address is [email protected]