A Definition of Next Best Offer
Companies are learning that tapping into customer analytics and knowing customers at the individual level is the best way to drive revenue, build loyalty, and increase customer retention rates. Predictive analytics quickly is moving to the front of the marketing technology solutions short list because it has advanced in recent years to be more accurate and leads to higher customer value. Next best offer (also known as next best action) is a form of predictive analytics that helps marketers and their organizations better judge customer spending habits and guide marketing efforts toward connecting with customers to close a deal.
Benefits of Next Best Offer
For years, marketers and organizations have been seeking a solution for getting to know their customers. They segmented customers and developed customer personas, but neither of those actions yielded the best results for enterprises that had far too many customers to get an accurate individual picture of each.
Today, customer experience operating systems have become far more sophisticated because they incorporate data from multiple sources and learn more about each customer with every interaction. Overall, these leading customer experience solutions are customer centric and learn from customer behavior to truly make the next best offer. Marketers who employ the next best action marketing strategy use customer insights to encourage a sale, retain customers, and determine the value of each customer. By knowing the next best step in the sales process for each customer, companies are exceeding customer expectations, winning at personalization, and delivering the best customer experience possible.
Next Best Offer Best Practices
Next best offer is most successful when companies utilize real-time marketing tools. Companies need to know the most up-to-date customer behaviors, needs, and trends in order to put the « best » in next best offer. As data and analytics expert Frank Bria explains, the next best off is the one “that adds the most value to the customer – as measured by an increase in their overall expected customer lifetime value.” Bria also explains that true next best offer solutions must include individual response modeling, individual profitability modeling, and constraint-based optimization because customer lifetime value covers both profitability and probability.
Customer intelligence expert Neil Hayward also explains that making the mistake of using next best offer to sell extra products simply to benefit a company is not going to benefit the company in the long term. Rather, companies need to take a customer-centric approach to next best offer and base the action on what is best for the customer. Hayward reminds marketers that next best offer requires insight and intelligence into the customer’s needs and the context of the situation before making a complementary cross- or up-sell offer. Hayward shares five next best action best practices for marketers who want to get the greatest return on investment:
- Start thinking of next best action instead of next best offer
- Utilize shopping baskets to determine the inter-relationship between product purchases and to help determine recommendations based on the people like you strategy
- Look for compelling events that indicate customer need
- Synchronize inbound and outbound marketing
- Reserve product-push efforts as a last resort
Transforming customer data into individual customer insight helps companies take a next best action that is suitable for a segment of one. Gaining a complete understanding of each customer and then taking a customer-centric approach to next best action is the best way to take the right action at just the right time.
Next Best Offer Information
For more information about next best offer, visit our blog. For your convenience, we have linked to four of our most recent next best offer posts below: