Next Best Action: Why you need it

Next Best Action: Why you need it

Mark Davies,

Moving from traditional marketing to one-to-one customer engagement

Organizations like yours know that personalization is critical. Effective customer engagement can (and does) transform business outcomes, driving customer loyalty to new levels while also unlocking a greater share of wallet.

What many organizations don’t fully understand, is that to achieve true one-to-one customer engagement, you need more than the right technology, you also need the right company culture and organizational structure.

In the next few months I’m going to take you through those organizational changes – highlighting how you can transform your business, and how you can put AI and analytics at the core to revolutionize how you engage with customers in ways that are both meaningful to them and improve your bottom line.

But first we need to level set on how one-to-one customer engagement works, and how a next-best-action approach delivers incredible business benefits.

A next-best-action approach allows you to personalize engagements for every customer

A personalized, next-best-action engagement approach begins with the customer, rather than your products/services. It combines real-time contextual information with historical data, then uses advanced analytics and AI-based decisioning to evaluate all the possible actions for each customer, then selects the perfect one – a message or offer that is relevant within the context of that moment and only engages when the customer has a specific need and is ready to listen.

It’s real one-to-one engagement, and it allows you to determine the next best action for every customer individually – instead of from a segment of people that only look like that customer. 

Talk to your customers when and where it makes sense for them; not when and where it’s easiest for you

Consumers today are more connected than ever. They use the internet to research products and services on company websites, read reviews from crowd-sourced sites, ask questions on chatbots, interact with IVRs, look for deals via self-service sites, and talk to agents on the phone or in stores to get more info. If you’re an organization trying to figure out how to market to or service a modern consumer, it’s complicated.

Up until now, marketers would select an offer to push, define the audience with segments, create a message for that audience group, schedule outreach in outbound channels, then manually run the campaign based on the start and end dates, with success determined by a response to the offer. 

However, this traditional campaign approach results in a couple of problems. 

First, because it is centered on what the marketer/organization wants to push, not what the customer needs, companies inundate their customers with irrelevant messages. They train them to think of marketing messages as spam, appearing in their inbox or a web-page at random times, rather than when they’re useful or meaningful.

Second, because campaigns are inherently siloed between business units, product lines, and channels, organizations make it difficult to respond to the offer. For instance, a customer may get an email with an offer that they can’t find in the digital self-service channel, or that an in-store employee can’t see in the system.

Is it any surprise the average marketing campaign response rate is less than 1%? 

In a one-to-one engagement, you’re constantly calculating the next best action

So how do you do it? It’s all about the math. Every engagement is rooted in statistics – a calculation based on the customer’s propensity to accept an offer, the value of the offer to the organization, and any levers applied to that offer, adjustable based your current business context (P*V*L). AI-based decisioning constantly analyzes actions and sentiment across inbound and outbound channels, and automatically activates or deactivates the right offer or message based on the highest risk-weighted value – for that customer, in that moment. Rather than a campaign response rate metric, a personalized, next-best-action engagement can be measured by key performance indicators such as revenue, profit, and customer lifetime value. 

And it’s always on, constantly analyzing the customer’s context and learning from every interaction. That way every time a customer contacts you, or any time an event occurs that indicates a customer needs something, you’ll know the next-best-action to take and be able to communicate it to the them, right then, through the channel that works best in that scenario.

It’s a more customer-centric way of engaging

This is a major shift in thinking. Organizations need to move from a “one-to-many” to a “many-to-one” approach – meaning a shift away from the mindset of selling one product to as many people as possible. Instead, start with all the possible actions you could take with one customer, including actions that are beyond just selling. Then, use AI-based decisioning to select the right action for each customer in the moment. 

To incorporate a next-best-action approach requires organizations to become customer-centric. Think about all interactions as part of an ongoing conversation with each customer. Evaluate each interaction against top-level organizational objectives. Most importantly, maximize the long-term value that you can generate from your customer base.

It’s worth the change: A next best action approach dramatically improves results

Organizations most successful at one-to-one, next-best-action engagement are using a combination of data, predictive analytics, and experimentation to most effectively determine next best actions for optimizing outcomes. By analyzing both the customer’s history and contextual information in that moment, a one-to-one next-best-action approach can help you: 

  • Engage proactively – delight your customer with insight-based messaging before they even reach out to you
  • Optimize customer lifetime value – ensure that offers are good for the customer and good for your organization’s goals
  • Adjust in real time – react to the ever changing needs of the customer

Every day, Fortune 1,000 organizations around the globe are proving the benefits of next-best-action-guided customer engagement. Real results from across industries include: 

  • 3 to 6x higher response rates
  • 10% to 50% reduction in churn
  • 20% to 35% reduction in retention discounts
  • 2 to 3x increase in agent-sales opportunities
  • 10 to 40 point increase in Net Promoter Score
  • 3 to 5x higher return on investment

In upcoming blogs we’ll dive deeper into the changes that need to take place across people, processes, and technology for an organization to experience the incredible business benefits of a next best action engagement approach.

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Tags

  • Topic: Decision Management
  • Challenge: 1-to-1 Marketing
  • Product Area: Marketing

About the Author

In his position as Pega’s Senior Director for Business Excellence, Mark Davies helps leading global organizations apply AI in innovate ways to engage more effectively with customers, increase revenue, and drive operational transformation.