A new way to increase customer loyalty, value

In today's competitive, customer-focused world, businesses can no longer afford to operate at their own pace. They must act according to their customers' schedules.

"For companies with high customer interaction, the only way to achieve this is by gaining customer insight," says Jens Echtermeyer, Customer Intelligence Solutions programme manager for SAS Institute, leaders in business intelligence.

"By looking at all relevant customer transactions, businesses are alerted to real-time opportunities for delivering effective communications that improve customer revenue, growth and retention."

Customer communications take place across different channels and are either outbound, for example mailing campaigns, or inbound, for example customers making a banking transaction or calling to complain about service.

Most large companies already use CRM solutions to drive outbound communications.

"However, by using sophisticated business intelligence solutions to analyse all relevant customer transactions, companies can identify marketing opportunities in real-time and execute at the right time," says Echtermeyer.

Tracking and analysing customer transactions enable companies to take action based on customer behaviours. They can operate at the right tempo for individual customers, communicating at the right moment through the right channel. In addition, companies then know whether to use inbound communications as cross-sell or upsell opportunities, and how to respond to events in a customer's life.

"Tracking individual customer behaviour also enables the company to respond to customer inactivity before it leads to attrition," says Echtermeyer. "In SA, it costs a major financial institution a significant amount to obtain a new customer. Winning a customer back costs between five and 10 times more."

According to independent research organisation, Gartner, businesses using event-driven interactions "experience a success rate of around 20% versus a 3% success rate typical for traditional campaign driven interactions".

(Source: Gareth Herschel, Research Director, Gartner, June 2003.)

SAS Interaction Management tracks customer behaviour across multiple sources, recognises opportunities and helps companies engage individual customers in real-time. It enables users to view each customer's behaviour over time and act on significant changes immediately - when intervention is likely to have the most impact.

The solution maintains a profile of every customer, and receives live transactions from any touch-point, immediately applying transactions to update the customer profile. It can generate sophisticated "event triggers" based on changes in the customer profile or other events.

"Marketing therefore occurs at the moment a customer's behaviour changes, and not after the fact when it's too late," says Echtermeyer.

"For example, a bank may identify an unexpected inactivity, such as a missed deposit or decline in services used. This significant behaviour sequence may indicate that the customer is on a path to close his account.

"Depending on the business rules set up by the bank, SAS Interaction Management would send alerts to the relevant people who would have processes in place to address that situation, and retain the customer."

SAS Interaction Management was launched during the second half of last year, and one leading SA bank is currently implementing the solution.

In the US, customers are already reaping benefits. One customer, a Fortune 500 bank, was trying to fight attrition. It had an existing business-rule-based triggering system in place, and used its outbound call centre for marketing.

After implementing SAS Interaction Management, it achieved a 30% increase of saved households over its previous business rule trigger system and a 35% increase of saved balances.

"In addition, the behaviour-based alerts were twice as accurate at identifying households that would close accounts within 12 months, and the solution generates a larger list of 'at risk' households with higher overall accuracy," says Echtermeyer.