A brand is the sum of its interactions

Customer relationships and customer experience always boil down to a sum of their interactions. A forty-second visit to a cash machine; an online loan application; a complaint call; a billing query; a branch visit; a direct mail offer… these apparently insignificant events actually add up to the greatest single asset of any B2C company: its brand. Your slick television advertising tells the world what you want to be. Your interactions tell the world what you are

As consumer brands wake up to this fact, the interaction has started to move up the agenda for marketers, sales directors and customer service teams. Soon, it will arrive where it really belongs: smack in the middle of the boardroom table. And as the interaction becomes recognised as the heart of the B2C brand (especially the service brand), new metrics will emerge to improve our ability to measure and manage our interaction quality.

These metrics will include a range of indicators - everything from ‘first time resolution’ and ‘customer satisfaction’ measures to cross-sell levels and campaign response rates. But they’ll all feed up to the mother metric: Return on Interaction. Return on Interaction is simply the upside of a given interaction, however you choose to measure it, minus the cost of the interaction (including the cost of any offer or discount redeemed).

An example: Campaign Optimisation

One form of customer contact, outbound marketing campaigns, have the most to gain from an approach that looks at Return on Interaction. Today’s outbound marketing campaigns - direct mailings, email shots and telemarketing – typically experience response rates of 1-2%. Even when basic analytics and targeting of specific customer segments are added, response rates almost never climb above 10%.

Clearly, improving the return on these interactions would have a major impact on revenues and would dramatically improve marketing campaign effectiveness. One obstacle to this improvement is the belief that marketing furthers the company’s goals while service furthers the customer’s. In fact, effective marketing is a service to customers. Shining a service light on the marketing effort results in significant differences:

• Inbound interactions become more important than outbound – as they present real opportunities to better serve the customer with added products.
• Rigorous predictive analytics becomes essential – as coarse segmentation moves towards one-to-one personalisation.
• Real-time insight replaces static models – so offers can reflect the precise context of each interaction.

Turning marketing campaigns around in this way has been shown to multiply response rates by as much as forty times without changing the offer itself.

By mid 2006 more than 85% of consumer orientated firms plan to target marketing messages in one or more inbound interaction channels. But more than half of firms that do this today only use basic rules to determine the message the customer receives. Firms that use inbound channels to push poorly chosen pitches will have limited success. Worse, these firms risk decreased customer satisfaction and sub-optimal long term value.

- Forrester

Cost versus Customer Experience

Today’s most progressive and most successful brands realise that the best interactions are not only the ones customers notice and appreciate, they’re also the ones that are the most efficient and effective. The ones that sell more and cost less. These companies have discovered that consistently delivering optimised interactions lets them do some very important things:

• Drive more value from existing customers by keeping them longer and selling them more things at higher margins. One bank doubled its cross-sales using intelligent prompts that guided branch and contact centre staff to the right offer for each customer at the right moment
• Turn inbound enquiries into revenue and loyalty – reducing the dependence on notoriously inefficient outbound campaigns. Online retailers such as Tesco.com and Dell have turned the outbound paradigm on its head, turning customer-initiated contacts into sales dialogues.
• Unleash word-of-mouth power – by turning customers into brand evangelists. One of the reason’s that Apple’s customer base is more like a fan base is its breakthrough in in-store interactions, including free tutorials and ‘Genius Bar’ in-person tech support.

For almost every B2C company, these interaction dynamics are becoming the new drivers of success:

• Six out of seven points in the ‘Expedia Promise’ to customers involve interaction and customer experience issues. The seventh is about price.
• British Airways is pioneering better interactions with online check-in and selfservice executive club account management.
• The Automobile Association uses text messaging to let people know their van is on the way.
• British Telecom uses text messaging and the Internet to keep customers up-to-date on progress regarding a line fault, and proactively forward all calls to your preferred mobile.
• Orange has moved some of its tech support to the handset, including service provisioning tutorials that please customers while lightening the helpdesk burden.
• Amazon has raised cross-selling and personalisation to a high art, generating massive revenues through recommendations.

All of these are examples of better interactions driving brand leadership.

What makes an optimised interaction?

From the consumer’s point of view, a great interaction is one that demonstrates these characteristics:

• Empathy – ‘They’re open, friendly, easy to deal with.
• Recognition – ‘They know who I am and have a sense of my relationship with them at this moment.’
• Understanding – ‘They know how they can best help me right now.’
• Anticipation – ‘They make relevant suggestions without my having to ask.’
• Efficiency – ‘They do what they promise, quickly and with no hassle.’

Successful brands have come to realise that these characteristics are not the enemy of interaction success – they’re the very things that lead to loyalty and revenue. The optimised interaction is a win-win proposition.

The challenge is to deliver the five characteristics consistently in billions of opportunities across every channel – in person, on the web, through the contact centre and at self-service points.

Interaction constraints

Traditional interaction management environments actually inhibit the ability to optimise interactions. The front end systems are often different for every channel; the analytics are divorced from, and lag behind the interaction; campaign management is standalone rather than integrated.

These legacy silos are only starting to join up, often using middleware to create bespoke integrations between applications or channels. These hard-wired links can prove as limiting as the silos they’re trying to breach. Today, most interaction environments are based on a spaghetti of application links that cross different channels. This infrastructure inhibits a customer-centric view of the business, depresses return on interaction and stifles insight before it can be turned into action.

The five drivers of the optimised interaction

Delivering optimised interactions for millions of customers, a wide range of products, in different markets across many channels is not a trivial task. It can only be achieved by mastering five interaction Optimization drivers:

Quality of Insight

Knowing each customer’s history, preferences and interactions and being able to accurately predict their behaviour and propensities based on that knowledge.

Benchmarks:

• Can you pull together customer insight from interactions across all channels (contact centre, internet, branch)?
• Do you have all the information about your customer, personal details, preferences, products held with competitors, significant events?
• Are your customer segments dynamic and based on predictive analytics or static data mining?
• Are you able to apply models for propensity to churn, campaign uplift and customer retention?
• Do your analytics lag behind current customer behaviour or do they reflect upto-the-minute decisions?

Success Measures

To measure your ‘Quality of Insight’ maturity level, your organisation must know everything about the customer 100% of the time across all channels, products – missing information means a lost opportunity to serve or to sell. Information must be up to date reflecting the latest customer behaviour.

Availability of Insight

Getting the relevant customer insight to the point of interaction in time to do something about it.

Benchmarks:

• Can you deliver a ‘single view of the customer?’ A 360 degree view, not just name, address, and transactions but all interactions from all channels and competitive insight?
• Can you deliver analytic insights to the interaction in real-time?
• Can you generate the best possible and most relevant offer during the interaction?
• Can you deliver this insight to all channels or just a few?
• Is your insight static or living – changing dynamically by revaluating the customers needs?

Success Measures

To measure your ‘Availability of Insight’ maturity level, this information must be accessible across all channels not just one – for example the contact centre must know that a customer has just made a complaint on their last branch visit. The information must be timely and close to real-time rather than manually pulled together from different sources. Analytical and customer behaviour data needs to be real-time and available across all channels to dynamically respond to changes in customer information.

Application of Strategy

Being able to combine timely insight with business rules to generate the best treatment strategies at the moment of interaction.

Benchmarks:

• Can your interactions be guided by business rules and best-practice policies?
• Can you apply strategic and engagement rules to every interaction across all channels? Or through just one channel?
• Can your interaction platform combine analytic outputs with business rules to generate live recommendations?
• Can the business adapt the business rules and rules flow or is it embedded and hard-coded in to the channel application?
• Can you respond rapidly to competitive pressures and campaigns from other organisations and new product launches?

Success Measures

To measure your ability to ‘Apply Strategy’ effectively your organisation must be able to respond to maximize cross and up-sell opportunity, deliver campaigns rapidly in response to competitive pressure and bring new products to market fast. There should be the ability to change and apply new rules quickly, within minutes and days as opposed to weeks and months.

Fulfilment Efficiency

Being able to deliver on promises efficiently and drive the processes that lead up to and follow on from the interaction (e.g. processing a credit card application quickly and accurately).

Benchmarks:

• Do your interactions automatically invoke efficient business process followthrough or is there a lot of manual intervention?
• How do your response and Fulfilment times compare with competitors?
• How quickly can you change or introduce new processes?
• Can you integrate different departments and third parties into seamless Fulfilment processes?
• Do you often have to pass the customer to another team or group to follow up the lead to convert to a sale?
• Does this lead to ineffective lead management resulting in sales leakage due to inefficient timely follow up at the point when the customer is interested… Interest lasts only as long as the moment of interaction…

Success Measures

To measure your ‘Fulfilment Efficiency’ maturity level, your organisation should be able to quantify customer retention, referrals, sales conversion rates, customer complaints, end-to-end process cycle times. There should be clear auditability and traceability of all customer interactions and Fulfilment processes and the ability to introduce and automate business processes and change them rapidly.

Performance Feedback

The ability to analyse interactions and processes and feed the analysis back to continuously improve interaction effectiveness.

Benchmarks:

• Do you feed back interaction performance metrics to the interaction design process?
• Can you follow sales leads all the way through to the sale?
• Are your feedback mechanisms built in to each engagement?

Success Measures

To measure your ‘Performance Feedback’ maturity level, your organisation should be able to provide management with the key metrics relating to optimised Interactions – number of leads generated, leads converted, ROI on each marketing campaign, offers made, offers refused, etc.

Most B2C companies are still at the earliest stages of maturity along these five dimensions. They may be able to generate a ‘single view of the customer’ but they can’t deliver it to the point of interaction. Or they can use analytics to create fairly coarse customer segments without being able to accurately predict the behaviour of these segments.

The winners will be the companies that progress fastest along these five dimensions, exceeding customer expectations rather than simply playing catch-up.

The real-time imperative for inbound interactions

The five drivers are hard enough to coordinate for outbound interactions, like marketing campaigns. But they’re even harder to apply to inbound interactions, the millions of incoming calls, emails and web hits that far outnumber outbound contacts. The traditional approach to customer interactions – built with isolated analytics, campaign management and interaction silos - struggles under the pressure of inbound contacts:

Inbound interactions are unpredictable – you don’t know who will contact you, why they’re getting in touch, when they’ll call, how often they’ll call, what channel they’ll use and what mood they’ll be in.

Inbound interactions are real-time – you don’t have the luxury of launching a new data mining query every time the phone rings or the website gets a click.

Inbound interactions are highly charged – the customer sets the agenda and the agenda is urgent.

Under these conditions, traditional CRM systems – and even the newer interaction management front-ends – start to struggle.

Explore, Engage, Evolve: a process view

Interaction Optimization is an iterative process that can be summarised in three Es:

Explore – analyse historical data (customer profiles and past transactions) to discover the hidden drivers of behaviour. Then add business rules (e.g. ‘don’t offer credit to under 18s’) to create predictive models that guide interactions.

Engage – Deploy the models to the point of interaction, across all channels by generating ‘prompts’ for call centre agents, web pages, ATM screens, etc.

Evolve – analyse the transactions deployed and make changes to improve results.

Today, these three steps exist as silos, with each passing its information ‘over the wall’ to the next. Interaction Optimization calls for uniting these three steps into an integrated, real-time process. In this view, the three Es cycle occurs in real-time during the actual interaction.

This real-time element delivers interactions that appear to ‘sense’ the customer’s needs, moods and expectations – even in self-service environments such as the web or ATM. It all adds up to living interactions as opposed to static exchanges.

A process-centric approach to Interaction Optimization

Interaction Optimization calls for a new way of combining the building blocks of CRM with the new generation of process management and analytics tools into a real-time interaction infrastructure. Such an infrastructure brings to bear everything you know about each customer – including interactions made only seconds ago and insights gained during the interaction itself – to take the best possible action at every opportunity.

• Quality of Insight is delivered by predictive analytics capable of generating real-time results.
• Availability of Insight is made possible by a run-time engine that delivers the new insight to the point of interaction.
• Application of Strategy is achieved by building models from business rules and analytics that generate prompts to guide each interaction, outbound or inbound.
• Fulfilment Efficiency is handled by an interaction platform that lets users design and deploy efficient, effective interaction processes and manage follow-up workflows.
• Performance Feedback is built in through a feedback loop that automatically delivers new interaction results to the analytics engine.

These pieces of the puzzle must be joined through a service-oriented architecture that packages new results into services for use by downstream systems, applications and modules.

IO in action

Here are three examples of Interaction Optimization in real world scenarios:

A bank customer calls to get their account balance.

• The customer’s up-to-the-minute interaction history is automatically called up and fed into the model designed for his customer segment.
• The model scores five different potential offers for context relevance, overall value and propensity to accept.
• The agent is presented with a prompt for the best possible action with the highest return: increase overdraft facility to X and waive the charge
• After answering the customer’s question, the agent makes the relevant, timely offer.
• The customer’s response triggers the appropriate Fulfilment process – a quick, easy overdraft extension.
• The result is fed back to the analytics system.

An insurance customer whose contract is about to expire visits the website to download a free guide.

• The customer’s high value, excellent payment history, contract expiry date and recent complaint (made two hours ago) triggers the ‘high priority retention’ model.
• The model is run in seconds, determining that the standard contract offers are more likely to trigger churn.
• The system pushes a web screen offering the best possible deal… but a two-minute offer expiration.
• Offer accepted, churn prevented, high-value customer delighted.

A mobile phone subscriber calls to query their bill.

• A real-time tariff recommendation model generates a better tariff for the customer’s usage pattern.
• The customer mentions anticipated travel to two countries on a regular basis.
• The model takes in this new data and the agent is able to recommend an even better tariff.
• Customer happy, churn avoided

The IO transformation

Interaction Optimization turns traditional, data-centric CRM into a real-time interaction infrastructure by:

Accelerating insight generation and its delivery to the point of interaction, replacing Insight Lag with real-time insight.

Closing gaps between analysts and business users, between insight and interaction, between promise and followthrough.

Integrating predictive analytics, campaign management, interaction platforms and process management tools.

Harnessing the power of inbound contacts to optimise your marketing spend and improve campaign response.

Responding to customer needs proactively rather than reactively by leveraging the insight you already have.

Because it’s service-oriented, this approach to Interaction Optimization can be deployed in any legacy CRM environment or implemented whole as an end-to-end solution.

The Portrait Customer Interaction Management Suite

For twenty years Portrait Software has been helping large B2C organisations optimise their interactions. Through our front-line experience with banks, insurance companies, credit card issuers, mobile operators, utilities and public sector organisations, we have developed a comprehensive software suite that today delivers on the promise of real-time Interaction Optimization.

The Portrait Customer Interaction Management Suite includes preintegrated, best-of-breed solutions across the interaction cycle:

Collaborative Customer Analytics – A Gartner ‘visionary’ solution that delivers powerful predictive analytics to the business user. Based on the award-winning Quadstone analytics (a recent Portrait Software acquisition), Collaborative Analytics presents a clear picture of how to segment your customer base and how each segment is likely to behave.

Portrait Interaction Manager – The platform for designing, deploying and driving customer interactions across all channels. Combining a graphical configuration suite with a run-time environment, Interaction Manager drives more profitable interactions in real time.

Portrait Interaction Optimizer – A ‘CRM turbo-charger’ that brings the power of real-time scoring to legacy CRM environments. Interaction Optimizer includes a rules flow server that combines real-time scores and contextual data from the interaction to generate specific recommended actions, delivered as a web service to any front end.

Portrait Foundation – The process-centric solution for designing and managing customer-critical processes and Fulfilment workflow. Foundation lets business users create the best possible customer-critical processes for complex, multi-stage processes that cut across different departments, systems and third-party partners.

Portrait Process Frameworks – Pre-packaged processes to drive many of the most important interactions and workflows, including Lead Management, Feedback Management, Complaints Management and Campaign Tracking. Process Frameworks are built in Portrait Foundation, so they’re ready to be integrated as web services or as links in any real-time interaction infrastructure.

The Bottom Line

In an age of product and service commoditisation, customer experience has become the primary source of differentiation for many B2C brands. At the same time, major B2C players have realised the massive opportunities represented by inbound interactions. As static, data-centric CRM gives way to dynamic, real-time interaction Optimization, the benefits are clear:

• More revenue from existing customers
• Greater loyalty and lower churn
• Turning inbound cost centres into crosssales profit drivers

It’s all made possible by delivering the power of predictive analytics and the strategic logic of business rules to the moment of interaction, in real-time. Then picking up that optimised interaction and following through efficiently and effectively. Anything less amounts to leaving money on the table and ceding market share to your competitors.

Portrait Insight: Getting it right first time

Portrait Insight is a proven methodology that uses Portrait Analytics tools and your customer data to build a business case for transformation. It starts with an assessment of your current customer interaction processes to determine your organisation's Interaction Optimisation maturity level against five benchmark drivers: Quality of Insight, Availability of Insight, Application of Strategy, Fulfilment Efficiency and Performance Feedback.

Against each of the drivers, Portrait Insight then identifies the key opportunities for progressing towards Interaction Optimization, including a business case and phased deployment roadmap. This process mitigates risk and maximises business benefit early in the project lifecycle.

Using Portrait Analytics we can reveal the true value hidden in your customer data, demonstrate measurable ROI and analyse the costs and benefits of the recommended deployment. Talk to us about running a short, powerful Insight Survey that proves the value of Interaction Optimization.