An article in Harvard Business School Working Knowledge excerpts Kirthi Kalyanam and Monte Zweben’s “The Perfect Message at the Perfect Moment,” originally published in November 2005 in the Harvard Business Review, Vol. 83, No. 11. The authors discuss “dialogue marketing,” a computer-based model that allows businesses to communicate interactively with customers at the exact moments when these customers are dealing with the company, especially during crucial transition stages.
Kirthi Kalyanam is a J. C. Penney Research Professor and director of Internet retailing at the Retail Management Institute of the Santa Clara University in California. Monte Zweben is the founder, chairman, and CEO of Blue Martini Software in San Mateo, California.
According to the article, customers are likely to ignore business pitches unless the right message is delivered through the right vehicle at the right time. The excerpt discusses how dialogue marketing can be maximized during critical transition stages in a customer’s life and in his or her relationship with the business.
Possible triggers for launching customer dialogues, according to the authors, are the following:
1. The customer makes a purchase in a new product category for the first time.
2. The customer is identified as a frequent buyer of a certain product.
3. The customer qualifies as a VIP by reaching a target number of purchases of a certain product in a year.
4. The customer qualifies for a loyalty program.
5. The customer files a change of address, indicating that he or she is moving to a new location.
6. The customer makes a purchase that shows a major life change, such as infant paraphernalia or house renovation projects.
7. The customer is AWOL, indicating the possibility of defection to a competitor.
Kalyanam and Zweben point out that dialogue marketing analyzes when and how to communicate with customers, using various channels depending on the content and urgency of the message. The system can be programmed so that certain customer actions will trigger certain responses. This may be an immediate personalized email, an immediate personalized direct mail, or an immediate personal call from a salesperson. The response may also be a personalized message to be delivered on the customer’s next visit, a message to be delivered by the call center representative when the customer phones, or a customer-personalized content on the company Web site for the customer’s next virtual visit.
The value of certain customers to the company also determines the response triggered in dialogue marketing. While a top tier customer might merit an immediate personal call from a company representative, a medium value customer might just be sent a personalized email while a low value customer who is not profitable to the company might receive stock email.
The authors present the case of a major regional grocery chain as an example. The company found that people who have ordered from its Web site for more than four times were most likely to become regular customers. Based on this data, the company’s dialogue marketing system targeted new customers via email, offering huge store-subsidized discounts to entice them to make those important first four purchases. After the fourth purchase, the customer is then offered other promotions subsidized by consumer goods manufacturers.
Another example considers high-value customers on the verge of moving to the competition. For instance, when an airline fails to receive bookings from a high-flyer for several months, the dialogue marketing system alerts a service representative to call the client to determine the problem and try to fix it. If the customer complains of something, this is reported by the representative, triggering a written apology signed by an executive to be sent to the customer along with an incentive such as an automatic upgrade or frequent flier miles. If the client still does not purchase a ticket in the next month, the dialogue marketing system sends a reminder of the incentive. If another month passes without a purchase, the system alerts a senior customer service manager to call the customer. As soon as the customer finally buys a ticket, he or she is considered a “saved” customer and the system launches a dialogue for special treatment.
According to Kalyanam and Zweben, the companies that make the most of dialogue marketing are those that gather a lot of data and use that information in all permutations.
This looks like a very effective way to maximize information for communication.