Several years ago, signing up for an American Express Card was an express route to DM deluge. No sooner had you signed on the dotted line than you would be inundated with communication from every corner of the company – from life insurance to flight insurance, baggage insurance, credit card protection… Not surprisingly, the credit card giant found that its reading on the brand health barometer was slipping. People were fed up.

The company has since migrated to trigger-based marketing, where until the customer demonstrates that they have an actual use for a product, it won’t be offered to them. For example, until you use your American Express card to book a flight, you won’t be offered flight insurance.

It’s a shift that is starting to take place all around the globe. Smart organisations are recognising that, as the length of time consumers spend filtering out irrelevant marketing messages gets longer, their tolerance fuse inevitably gets shorter. So while marketers have traditionally focused on getting the right message to the right person, it is becoming increasingly important to get that message out at the right time. But for the marketing message to be appropriately timed, you must understand the customer’s situation, and be able to translate this understanding into the appropriate response.

That’s where trigger-based (or ‘event-based’) marketing comes into the picture. Trigger-based marketing works on the premise that you communicate with your customers at a time when they have indicated a propensity to purchase. Trigger-based marketing analyses customer behaviour to identify changes – or ‘triggers’ – that may indicate the need for a new product or service.

At the most basic level, triggers can include things such as the expiry of a fixed rate term on a mortgage – a key ‘moment of truth’ in the mortgage product life cycle; or a change of address, which may, for example, prompt an insurance company to offer a new home and contents policy.

At the more sophisticated end of the scale, triggers may be based on any number of observations indicating a shift in customer behaviour. For example, a significant decrease in regular salary deposits combined with the payment of a baby bonus would indicate the birth of a child. Or the deposit of an unusually large sum of money into an account may be used as a trigger to contact the customer and offer investment advice. Similarly, in the telecommunications sector, if a mobile customer is consistently exceeding their monthly calling cap, this might trigger an up-sell offer to a plan with a higher cap. In the retail sector, a relevant offer may be made where it is noticed that a high-value customer is shopping less frequently.

Basically any interaction – or significant lack of interaction – that a customer has with a company can be used as a trigger to tailor communications to them in a more relevant way.

Implementing a trigger-based marketing program requires a shift in mindset from traditional database marketing. It’s a matter of changing the focus from a ‘push’ approach to a ‘pull’ approach. “Most marketing is company-driven,” states Alan Rosenspan, president of Alan Rosenspan and Associates, a US-based direct marketing consultancy. “The company decides that they want to hold a sale, start an advertising campaign or create a special promotion. Trigger-based marketing is marketing to a customer when they need you – not when you need them.”

Aligning your communications with the needs of the customer is not just more palatable to them; it’s also beneficial to your bottom line, resulting in higher campaign response rates and a better return on investment. “Improvements in response of 200 to 300 percent could quite realistically be expected,” asserts Grant Stewart, managing director of direct marketing strategy firm Vectis. “Trigger-based marketing not only pulls better response and better conversion rates, it also minimises waste, which means both lower cost to serve and lower cost to acquire.”

State of play Down Under
“In Australia, large organisations, particularly in the financial services industry, have pioneered the development of trigger-based marketing programs,” says Des Viranna, solutions manager – customer intelligence practice for software solutions provider SAS. “Organisations who were early implementers of a trigger-based marketing strategy typically used simple customer-, product life cycle- and transactional-based triggers. These are triggers that are identified through a standard rules-based interrogation of the data. These are important triggers and can provide quick wins in proving the value of a trigger-based marketing strategy. However, organisations are now moving towards the capability to predict customers’ behaviour through the incorporation of strong analytical techniques in a way that ‘hits the target’ more accurately than rules-based techniques can.

“Many Australian organisations are proficient at database marketing. The next horizon for these marketers is to take trigger-based marketing from a largely reactive application to being far more proactive and predictive and leveraging inbound interactions for recommendations based on in-conversation information,” adds Viranna.

According to Regan Yan, MD of analytics firm Digital Alchemy, trigger-based marketing is not a new idea in Australia. “Trigger-based marketing as a concept has been around for many years, but marketers have typically lacked the infrastructure to execute campaigns within the very short time horizons required for trigger-based marketing. We are now seeing an increasing willingness to invest in this infrastructure.”

But not every organisation has the luxury of being able to invest in the systems required to successfully implement a trigger-based marketing strategy. So just who is it suitable for?

“Trigger-based marketing is highly effective within companies that transact with customers on a very frequent basis,” says Robin Russell-Cook GM Australia and New Zealand, Unica. “This typically includes banks, telecommunications and retail. Other industries with less frequent behaviour also benefit, but typically do not have the behavioural information inherent in the high volume transaction data.”

Jim Novo, author of Drilling Down: Turning Customer Data into Profits with a Spreadsheet, adds: “If the business is such that there is a low likelihood for a customer to ever make a repeat purchase, then it’s not going to work in that business, because the timing of additional communications is irrelevant to the customer. Trigger-based marketing is at the core first and foremost about creating messages that are more relevant.”

Putting it into practice
While each company will have a unique set of circumstances and objectives that will define the appropriate approach to implementing a trigger-based marketing program, the process can be broadly split into four stages:

Stage 1. Identify relevant triggers
The first step is to understand which events affect the customer relationship. These events primarily fall into two categories:

• Customer-specific events – these events affect specific customers and change their requirements or expectations. Examples include the birth of a child, moving to a new house or a change in employment status.
• Relationship events – these events arise from the relationship the business already has with its customer or prospect. Examples would be the opening of a new account, a transition in account ownership or dropping a product or service.
• To identify relevant triggers, you need to determine the steps that people take in the process of buying your product, says Alan Rosenspan. “Do they require a demo? Once they do buy it, what are the steps to using it? Are there any obstacles they may face? When will they ‘run out’ of your product, or when will they require an upgrade?

“The other important factor is this: one of the key triggers in a customer’s life cycle is when they actually buy your product for the first time,” adds Rosenspan. “They are in both a ‘buying’ mode and a ‘honeymoon’ mode. And they are therefore very susceptible to TBM at this time.”

Keys to success at Stage 1:

• involve all key stakeholders within the organisation to build a list of potentially relevant triggers, and
• prioritise the list according to the most important triggers so that the response plan is manageable.

Stage 2. Monitor triggers
Once the key triggers have been identified, they must be redefined in terms of the available data. In some cases this may require setting up processes to capture additional data. Ultimately, the approach you use to monitor data will depend on the IT infrastructure of your organisation and the types of triggers identified.

“In the simplest world, you can trigger messages using ‘dumb’ processes,” explains Novo. “An example of this would be ‘trigger an email to customer with details of the customer’s order when they complete the transaction’. At higher levels of sophistication, you are tracking customers and looking for behaviour that appears outside the normal behaviour. A customer database containing all transactions with a simple query tool is enough to get started with this approach. The next step up is to use predictive models that help you define the ‘divergence’ in ways that are actually predictive of the customer behaviour.”

Keys to success at Stage 2:

• understand how to use the available data to detect relevant events, and
• calibrate triggers so that they are sensitive enough to detect significant events, but not so sensitive that they generate too many false positives.

Stage 3. Respond
This is the stage where the identified triggers are actioned; in other words, where the response is actually communicated to the customer. Depending on the nature of the trigger, the response may be automated, for example through direct mail or email, or it may require a human channel for follow-up investigation.

While much time and effort is invested in identifying and monitoring relevant triggers, the response stage is often where the system falls down. This is largely due to inadequate integration of operational systems. “By far the biggest challenge is organisational, because the source of the behaviour is not always within the marketer’s direct control to address,” says Novo. “For example, let’s say a campaign based on a customer not making a purchase results in a chunk of similar service complaints. The customer is not purchasing due to bad service. How is this addressed? Can marketing sit down with service and resolve these complaints? Often a cross-functional team approach is the best way to manage the response to behaviourally-based campaigns of this type.”

One of the key pitfalls of this stage is not having the right resources and processes in place to respond appropriately to triggers, says Unica’s Russell-Cook. “Traditional DM is focused on making an offer to the customer – these processes can be tightly scripted and delivered through many channels. In contrast, with trigger-based marketing there is typically no offer associated with a trigger – just the fact that the customer exhibited behaviour that may be indicative of a pending product or services decision. Hence, these processes cannot be tightly scripted and require higher skilled resources capable of engaging the customer in conversation, completing a needs analysis and then recommending the right products.

“For example, if the customer deposits $100,000 dollars into their savings account, all we know is that they have deposited the funds – we don’t know what or what products or offers are appropriate,” adds Russell-Cook. “The customer may have received a bonus, a redundancy, retirement payout, inheritance, sold an investment or the family home. The challenge for the bank manager in this case is to engage the customer in conversation to determine what has changed and what products and/or services are appropriate.”

Another critical consideration at the response stage – which can be particularly problematic where human intervention is required – is timeliness. “The very nature of triggers requires that they are detected and actioned within a very short period of time,” says Russell-Cook. “To continue the example above, if a customer deposits $100,000 it can be virtually guaranteed that those funds will be moved from the account within seven days. Also, it is highly likely that the customer will have made the commitment to move those funds within two or three days. Hence, timing is critical if the bank in this case is going to influence that decision.”

Having been involved in the implementation of a successful trigger-based marketing program, Wayne Derwin, direct marketing manager for IMB Banking and Financial Services, advises marketers to be flexible in the way they respond to triggers. “If direct mail is not performing well, a shift to email or outbound telephone can improve the results. Hence companies thinking of moving to this approach need to concentrate on getting the triggers right then implementing them within a highly flexible DM response environment.”

Keys to success at Stage 3:

• ensure that you have the resources and process in place to respond to triggers in a timely manner
• implement a system to prioritise responses to the most urgent triggers
• have systems in place to track whether the response took place
• make sure you capture information about the customer’s reaction to the triggered response, and
• maintain some flexibility in the method of exploiting triggers.

Stage 4. Test and refine your strategy
As with any marketing strategy, testing and refinement are essential for best results. The more intelligence you can garner through your trigger-based marketing program, the more effective it will become. “Analytics should be integrated into every part of the process, incorporating strategy and planning, operational execution and measurement of success,” advises SAS’ Des Viranna.

Continual assessment of the strategy is particularly important with trigger-based marketing as it is a constant and ongoing strategy. “If there is a problem, you’re going to see it week after week, and if you’re serious about customer engagement and satisfaction, you will find a way to hunt down these problems and resolve them for the customer,” adds Novo.

Another advantage of continual assessment is that it will help you prove the value of the strategy to key stakeholders within your organisation. “You’ll need some friends around you to support this approach as it involves organisational change as well as supporting technology,” warns Sally Carey, director of Datamine, New Zealand. “One of the biggest challenges of all is taking a longer-term view on return for the organisation and moving from a product focused company to a customer focused one.”

Viranna agrees: “Implementation of a trigger-based marketing strategy requires a cultural shift from product-centric marketing to customer-centric marketing. This has impact on the volume and types of communications that are delivered, the products that are offered, customer contact policies, the channels used and so on. It therefore affects many different parts of the business and will need support from many stakeholders.”

Getting internal buy-in across the company comes back to testing, says Vectis’ Grant Stewart. “Trigger-based marketing needs to be clearly shown as an approach that can deliver greater efficiency to the business. Creating a water-tight business case for it starts with a series of small trials, which clearly show the anticipated uplift in performance. Without a tangible business case being made, the approach remains a theoretical opportunity.”

Keys to success at Stage 4:

• establish a continuous feedback loop and constantly review the strategy’s effectiveness, and
• ensure that key stakeholders are aware of successes.

Laying the groundwork
Although the potential returns from trigger-based marketing are high, so too can be the outlay. If, however, you deem it a worthwhile exercise for your company, then it’s worth doing properly from the outset. “Trigger-based marketing is one of those things that you should either do properly or not do it at all,” says Stewart. “One of the main pitfalls is organisations that go into it without a sound infrastructure to support the best of marketing intentions. Putting the right infrastructure in place – a marketing database, a marketing campaign management engine, a marketing fulfilment process – means being able to actually do what you theoretically hope to. Marketers are busy enough as it is and there really isn’t a place for trigger-based marketing as a side project.”