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High Performance Marketing:
Walk, Donít Run Toward Real-Time Marketing

online columnist Steve Schultz     Column published in DMReview.com
September 16, 2004
 
  By Steve Schultz

DMReview.com welcomes Steve Schultz as an online columnist. He will share his expertise in combining IT technology with business process design experience and information-based decision-making methodologies in this High Performance Marketing column. Look for it on the second Friday of each month.

Every business trend gets started as the result of an individual company or group of companies successfully developing a solution to a core business issue. The "gotcha" in many of these trends is that at some point they stop being a trend that each subsequent company evaluates on its merits and start to be viewed as a core business function, a price of admission if you will.

As direct marketing professionals, we are not immune to this phenomenon. Recently, one trend that appears to be vying for status as a core business function is real-time marketing. The "right offer, right time, right marketing channel" mantra of the 1990s has met the Internet and created a "best of both worlds" solution labeled real-time marketing. However, before conferring core business status on real-time marketing, we need to make sure we understand the answers to two key questions.

  1. What are the marketing functions that are expected to occur in real time?
  2. What value will be derived from creating a real-time marketing environment?

What is Real-Time Marketing?

Direct marketing encompasses many discrete activities from data capture to offer development and targeting to measurement and analysis. Therefore, each company must determine which discrete marketing activities are expected to be performed in real time. Experience suggests that when companies describe real-time marketing, they are focused on one or more of the following:

  • Real-Time Data Capture: Obtaining information about a prospect or a customer as the information is being generated and transforming and storing that information in a format and location that is accessible to other marketing activities. Unlike traditional data warehouse/data mart information capture, real-time data capture tends to focus on a very narrow set of data.
  • Real-Time Insight Development: Creating actionable knowledge that leverages the most recent real-time data. Knowledge development can vary from rescoring an individual based on a real-time data element change to creating new data mining algorithms based on how the latest real-time data element change affects the overall pattern identification results.
  • Real-Time Interaction Enablement: Creating the means to leverage available knowledge for an individual or bulk inbound or outbound prospect or customer marketing or sales exchange. The sophistication applied can range from simply identifying one or multiple appropriate "available" interactions to providing the means to apply "if x, then y" rules to developing optimization routines for the number and type of interactions.

Of the three, real-time interaction enablement is the most frequently identified requirement for prospective real-time marketing systems. The least often identified requirement for prospective systems is real-time data mining. Determining which is most important to your business often depends upon the frequency and nature of prospect and customer interactions. The more frequent and the more diverse the channel options, the more important interaction enablement becomes. When interactions are less frequent, the importance of each is magnified resulting in increased focus on real-time data capture to ensure that all available information can be used during the contact event.

Create Scenarios to Determine How Much Real-Time Marketing Investment is Appropriate

The traditional approach to business case development compares only the "do nothing" and "comprehensive program implementation" scenarios. However, this approach can often lead right to a common pitfall for real-time marketing - assuming that real-time marketing is the only solution to business opportunities. In many cases, these opportunities can also be realized by increasing the frequency with which existing batch processes are performed. Therefore, a multiple scenario approach is recommended when determining how much real-time marketing investment is appropriate.

Typically, these scenarios are based on gradients of investment required from do nothing to comprehensive program implementation. For real-time marketing investment business cases, scenarios should be created around the data scope and marketing function periodicity. Data scope scenarios can be created based on the answers to the following questions. Typically, data scope scenarios are created for data groups based on source system.

  1. What data can change and by how much?
  2. What data are predictive of a key prospect or customer behavior?
  3. What data are essential for effective communication?
  4. What data are required to support a consistent cross-channel experience?

Marketing function periodicity scenarios can be created based on the answers to the following questions. The periodicity questions typically lead to the development of scenarios where a series of time increments are examined such as real time, daily, weekly and monthly.

  1. How frequently does data or value of the data change?
  2. How quickly do predictive models lose their effectiveness?
  3. How quickly are decisions about campaign effectiveness made?

Overall, multiple data scope and marketing function periodicity scenarios should be created to accompany the do nothing and comprehensive program implementation options. Once created, the costs and benefits associated with each scenario are quantified and compared to identify the appropriate real-time marketing investments required to provide superior ROI.

While it seems inevitable that we may all end up in a real-time marketing world, we should exercise caution about the amount and timing of our investments in the still embryonic, leading-edge real-time marketing paradigm. I cannot imagine a worse outcome for our profession's credibility than to repeat the failure of large scale Internet and CRM investment advocates who never delivered their "if you build it, they will come" promised results.

...............................................................................

For more information on related topics visit the following related portals...
Database Marketing and Real-Time Enterprise.

Steve Schultz is a leading customer relationship management (CRM) practitioner who combines an understanding of information technology with extensive business process design experience and information-based decision-making methodologies. As executive VP of Client Services for Quaero (www.quaero.com), he helps clients identify, justify, implement and leverage leading edge analytical CRM environments to create or/and improve their database marketing capabilities. Schultz has worked with companies in the financial services, telecommunications, retail, publishing and hospitality industries. Contact him at schultzs@quaero.com.

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