They'll Call You

Don't call us. We'll call you.”

That's what 50 million U.S. households told the telemarketing industry when they signed up for the Federal Trade Commission's National Do Not Call Registry. In effect since October 2003, the DNC list puts phone numbers off-limits to outbound telemarketers.

To its credit, the industry has complied with DNC rules. More than 33,000 telemarketing organizations have accessed the registry, each downloading an average of 45 area codes out of a possible 317. While compliance hasn't been a major issue, the question of how marketers can replace revenue lost from outbound telemarketing channels remains.

Though unpopular with consumers, cold calls are effective. The Direct Marketing Association estimates that in 2001 alone, consumers purchased $296 billion worth of goods and services via outbound telephone solicitations. With the outbound market curtailed by the DNC list, where will the new sales opportunities come from?

The answer is the inbound market. Rather than smiling and dialing more to a shrinking audience, many forward-thinking companies are shifting their marketing focus to customers who call or contact them. Whether the customer approaches through a call center, Web site or interactive voice-response system, the inbound channel represents a golden opportunity to build and capitalize on an existing relationship.

Unlike outbound calling, inbound interactions necessarily occur by the customer's permission. Customers who have initiated the call are more apt to give a company their time and attention. Rather than being interrupted with an outbound call, the customer controls when the interaction occurs. The result is uncluttered communication with customers, which leads to more effective marketing.

The real-time nature of the inbound interaction also creates opportunities. It's a chance to address customers on a personal level, to extend the relationship and learn more about what drives them and what their pain points are. Companies that can make the most of this intelligence are in a strong position to survive in a post-DNC marketing landscape.

Businesses can take advantage of inbound marketing even when customers are unhappy. A cell-phone customer who's complaining about dropped calls is not looking to be up-sold. In fact, he might be tempted to switch carriers if that were the only response. But a personal apology coupled with a retention offer actually can increase customer loyalty over the long term and keep current customers in the short term.

The lesson? While many companies unwisely treat inbound interactions — particularly complaints or threats of service termination — as a nuisance, the savvier marketing operation sees them as a prime opportunity not just to defend a relationship, but to develop and deepen it.

Keep It Personal

Most outbound calls are perceived by recipients as a one-time hit from a stranger blindly dialing from a list of telephone numbers. The call often comes at an inconvenient time, from a company the customers have never heard of, pitching a product they have no interest in. This scattershot approach can deliver sales, of course, but it also can tarnish a company's reputation.

By contrast, inbound marketing is about building existing relationships. The goal is to find products for customers rather than customers for products. Doing so will result in increased sales at considerably less cost because it's five to seven times more expensive to acquire a new customer than to cultivate an existing one. Hence, marketers with successful inbound strategies have become more strategic about how they manage customer-driven interactions.

To make inbound marketing work, a company must know something about its customers, acknowledge their current needs and understand their history with the company. The more personalized the interaction the better the relationship, and the broader the opportunity for further sales and/or retention. That means building an inbound marketing program around individual customer profiles. After all, individuals make purchases. Marketers can achieve significant gains using customer profile data, including tenure, product usage, billing data, credit status, contextual data and demographic data. The more sophisticated the customer intelligence — and the more it is used properly — the better an organization can manage and strengthen its customer relationships.

Inbound Marketing Challenges

Unfortunately, most inbound marketing today falls far short of its potential. Many marketing organizations continue to rely on inefficient approaches to managing inbound customer interactions.

Some methods are downright primitive. Consider the arcane but still popular “offers-of-the-week” sheet — a fixed list of marketing offers delivered by call center-based customer service agents. The problem with such promotions is that often represent what the seller wants to sell, not what the buyer needs. In short, they're so generic as to be nearly useless. Instead, intelligence about customers must come from the agent's training and experience to decide, caller by caller, which offers to make. That's fine if all agents have the experience and necessary tools. It can be disastrous if they don't.

But automation alone is no cure. Rules-based customer interaction systems, for example, simply can't account for the thousands of possible customer scenarios likely to be encountered. They result in inflexible, time-consuming, error-prone systems and ineffective marketing programs. And note the following:

• Rules are hard to get right. Rules-based systems place the burden on marketers to account for and manage all customer dealings that might arise. But it's impossible to create and maintain a set of rules to cover every customer segment, campaign, offer and interaction.

• Rules are difficult to maintain and measure. Inbound marketing schemes based on rules-based methodologies ultimately require more time and attention to build and maintain. As the number of rules grows, the ability to test their impact becomes more important. And, since rules lack sophisticated analytics, they provide no insight about customer behavior and the attributes that drive certain behavior, such as why customers react favorably to certain messages but not others.

Some companies take a more sophisticated approach by using analytics to decide which marketing offer or message to present. But most analytic solutions rely on off-line batch or periodic data feeds, and don't take the real-time or near-term context of the customer interaction into account.

The biggest weakness with off-line analytics is that they predict the best-suited messages for each customer during the next interaction. This analysis is less effective than a real-time approach since it takes place prior to the interaction and cannot take information about the interaction itself into account. Plus, off-line analytics requires manual analysis of results and periodic re-deployment of new models, both of which call for more resources and lead to lost opportunities.

Best Practices

The better approach is real-time analytics. Here, behavioral and historical profile information during the call itself determines how best to manage individual interactions. As a result, the system uncovers patterns that otherwise would go unnoticed and takes immediate action based on those insights. Real-time analytical tools can help determine which campaigns, offers and messages have the best statistical chance of success with a particular customer at the moment of contact.

Real-time predictive analytics decide what messages are most appropriate for the customer. They suggest personalized recommendations, offers and messages based on predictive models running in the background. They also allow companies to experiment and test new ideas on a subset of their customers, and then rapidly apply new insights across the rest of their customer base.

The gains can be substantial. Marketers that convert to real-time, individual customer profiles commonly experience double-digit gains in offer acceptance compared with untargeted customer approaches. The real-time context is vital here, providing 40% to 50% of analytics' predictive power. The aim is for the system itself to assess the context of the current interaction. Is it a purchase, a billing question, a complaint, a request for service termination? Armed with this real-time context, the inbound marketing system can then take other recent interactions and historical data into account to generate relevant, personalized recommendations with much higher precision than non-real-time systems.

Customer profiles, purchasing histories, complaints and resolution: The goal is to harness this data in the service of a smarter and more personal calling experience. It's important to remember how the do-not-call list came about in the first place — because of consumer annoyance, and ultimately consumer revolt. Inbound calls should result in neither, because after all, the customer has reached out to call you. Your job, and that of your call center operation, is really quite simple: Use the existing relationship and historic patterns and interactions to drive up-selling, cross-selling and improved customer retention. And remember, happy customers are loyal customers.

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Jon Miller is vice president for product marketing at Epiphany Inc., San Mateo, CA.