Next Best Action Marketing
Next best action marketing is a customer-centric marketing approach that personalizes messaging to generate the desired response for each customer.
Introduction to Next Best Action Marketing
Next best action marketing (NBAM) is a customer-centric approach to marketing in which the goal is to address each customer with the marketing treatment most likely to generate the desired result. NBAM differs from other marketing approaches in two key respects: (1) it is customer-oriented instead of being product-oriented, and (2) it aims to approach each customer within the context of their unique behaviors, needs and preferences instead of by assuming all customers (or large subsets of a customer base) will respond similarly.
The Advantages of Next Best Action Marketing
Marketing efforts are always a numbers game: how many customers will respond to a particular marketing action, how much impact will the marketing action have on those customers who do respond and what ROI will result. Whatever the goal of a marketing action – convert free users to become paying customers, increase customer spend, bring back customers from churn, etc. – marketers constantly seek to utilize the marketing actions which will have the greatest impact on their KPIs.
A Next Best Action Marketing approach will almost always deliver more successful marketing campaigns, with immediate improvements in sales and retention – and the resulting uplift in revenues. Often, customer satisfaction and loyalty increase as well. Meanwhile, targeting only the most relevant customers with each action can yield lower marketing costs.
So if NBAM is so wonderful, why haven’t marketers been using it in every business for many years? The answer is that achieving effective NBAM requires a very high standard of technical expertise by marketers and marketing analysts, something not readily available to any marketing team. Until now.
The Challenges of Next Best Action Marketing
Successful next best action marketing requires access to accurate predictive analytics in order to determine the most likely outcome of running any marketing action on a particular customer or segment of customers: marketing and retention teams need to understand, in advance, how all of the various marketing actions at their disposal will impact a specific customer and thus decide on the marketing action which will most likely deliver the best result.
In order to achieve accurate predictions of which marketing actions will be most successful for each customer, a number of factors must be calculated and considered:
- Dynamic and ongoing segmentation of customers into small groups (micro-segments) who will likely behave similarly in response to marketing actions
- Behavior modeling to predict how each micro-segment of customers will respond to each available marketing action
- Customer lifetime value forecasting to predict the long-term impact of marketing actions on customers (not just the immediate-term results) at every point in the customer lifecycle
- A self-learning, closed-loop action optimization methodology which can test, track and optimize how marketing actions affect micro-segments of customers
Given the complexity of performing these calculations, even when all the required source data is readily available, it is not surprising that so few marketing and retention teams attempt to use Next Best Action Marketing to reduce the guesswork involved in their efforts – and dramatically improve their performance.
Clearly, an automated solution which combines all of these capabilities into a single application usable by nontechnical users is the only way that NBAM will become mainstream.
The Easy Way to Implement Next Best Action Marketing
Implementing successful Next Best Action Marketing requires an efficient and integrated set of multi-disciplinary technologies, incorporating a wide range of scientific and mathematical algorithms. Even for someone knowledgeable in all the required disciplines, performing and frequently updating such an analysis manually (e.g., using Excel or standard BI tools) is practically impossible.
Optimove is a Web-based (SaaS) software product dedicated specifically to the mission of predicting which marketing action will be most effective for each micro-segment of customers. The product’s ground-breaking technology is the first to integrate all the necessary auto-segmentation, statistical and predictive models required to accurately calculate and predict customer behavior and customer lifetime value, along with the application framework to select target groups, interface with campaign management systems and measure marketing action results.
Start Using Next Best Action Marketing Today!
Contact us today – or request a Web demo – to learn how you can use Optimove to easily maximize the effectiveness of your marketing actions in order to convert more customers, increase the spend of existing customers and reduce customer churn.
Last updated July 2016