'Just in time' customer communication. (Customer Analysis).

Banks and other financial services institutions typically think of two types of customer communication: planned (that is, marketer initiated), and reactive (that is, in response to a customer-initiated contact). Now, in an effort to further solidify and expand customer relationships, they're beginning to add a third: proactive (that is, in response to changes in customer behavior).

Planned and reactive communication

The first two hardly require an explanation. Banks regularly plan campaigns to promote a product or service, or to reach a segment of customers because of their value or propensity to purchase products/services--or their propensity to defect. Banks choose customers for these promotions using database queries or modeling algorithms that segregate and/or rank customers in terms of likelihood of response. A significant aspect of this approach, and one that distinguishes it from reactive and proactive communication, is that the process is calendar-driven. Marketing decides when to launch the campaign, ranks or segments the customer base at that point in time, and then fires off a communication on the planned date.

Reactive communications occur when the customer initiates a contact. At that moment, the bank seeks to understand what promotion, if any, is appropriate for the customer, and then immediately delivers that promotion. Technologies that support this approach include collaborative filtering and/or offer-segment mapping, both of which essentially seek to identify offers that other similar customers have responded to, and to make the same offer to the customer at the time he or she has initiated contact.

When customer behavior changes

The emerging third approach is proactive marketing. In this case, it is neither the calendar nor the customer's contact that triggers communication, but rather a change in the ongoing behavior pattern of the customer.

Proactive marketing requires a slight shift in thinking--and an infrastructure that allows for an ongoing flow of data (so it can be interpreted over time) as well as an ability to act in a timely manner. The mental shift centers on thinking about the ebbs and flows of relationships. The basic idea is that customers will almost always be more willing to discuss your products and service alternatives at the point in time when it's important to them. The trick, then, is to know when it is important to them. This knowledge can be discerned by understanding how each customer typically interacts and when, given changes in that pattern of behavior, a discussion should take place.

New technologies evaluate customer behavior

And just as there are technologies that efficiently support planned and reactive campaigns, so too there are technologies that support proactive marketing. These technologies focus on evaluation of behavior over time. They seek to understand each customer's normal interaction pattern, to identify when that pattern is simply evolving to a "new normalcy," and to discern when the change in behavior suggests it's the right time to engage the customer in an effort to improve and/or expand the relationship. This evaluation of behavior over time must include assessments of activity as well as inactivity, both of which are vitally important for understanding when a proactive marketing communication should be launched.

The net result of the proactive approach is communication that is delivered at the time it is most pertinent to the customer. This approach adds to and enhances a bank's ability to communicate effectively with its customers and, when taken in conjunction with planned and reactive marketing efforts, provides the opportunity to engage in a series of dialogues that will improve relationships--and increase bottom-line profits.

Jeffrey Caplan is vice president of sales and marketing of Verbind Inc., Lexington, Mass. Verbind is a supplier of real-time e-marketing solutions.