Each year, Harvard Business Review publishes “The HBR List,” its annual survey of management ideas on the verge of becoming something much bigger. This year’s version of the list, found in the February issue article titled “Breakthrough Ideas for 2005,” features 20 items, including an emerging practice known as dialogue marketing.
In a nutshell, a dialogue marketing system specifies when to to interact with customers, what to say to them, and which communication channel is best for delivering the message. The article provides a more elaborate description, as follows:
“In [the context of dialogue marketing], a dialogue is a multistep conversation between company and customer that takes place over an extended period, involves multiple channels, and is triggered by customer transitions. Those transitions might include conducting a first transaction in a particular category (first purchase of a suit, first visit to a new property) or purchasing an item that suggests the customer is embarking on a large project (kitchen cabinets, a stroller). Transitions trigger a step in the dialogue, such as sending a personalized e-mail, alerting a salesperson to make a call, or queuing up a personalized direct mail piece…the system waits for a response from the customer, then acts accordingly. Lack of response sets in motion its own sequence of events.”
According to the article’s authors, Kirthi Kalyanam and Blue Martini’s Monte Zweben, dialogues are effective at preventing customer defections, and they illustrate the concept with this customer quote:
“My cell-phone use dropped after I switched jobs because I didn’t need all the minutes I used to have. I was thinking of canceling my contract, but the phone company contacted me almost immediately. Now I’m on a new plan that’s better suited to my needs.”
Enhancement of customer loyalty is another benefit derived from dialogues, as the authors explain in this example:
“A major regional grocer noticed [using analytics, I presume] that loyalty rose after customers visited its online store more than four times, so it designed a communication- and reward-heavy dialogue system to get them to that point. After the fourth visit, the system automatically reduces communications and incentives – and consequently the cost of marketing to that customer.”
Hmm…keeping customers, enhancing customer loyalty, and lowering marketing costs. That should be music to a CMO’s ears.
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