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Unica Corporation

WHAT IS A CUSTOMER DECISION ENGINE?The Customer Decision Engine (CDE) is a framework that integrates both front and backoffice systems in order to coordinate targeted customer communications across sales, service,marketing, field service, logistics and other customer-facing departments within anorganization.Using common business rules, information from other systems such as billing and fulfillment,and cross-channel customer intelligence, the CDE enables an organization to providethe most relevant message, service, or information to a customer as part of every interaction.As organizations strive to deliver an optimal experience to customers across channels theyneed a way to centrally coordinate both front and back office activities. The CDE enablesthis by coordinating customer communications and fulfillment, ultimately allowing anorganization to deliver on its brand promise, while recognizing customer individuality andprofitability.

WHAT IS A CUSTOMER DECISION ENGINE?

The Customer Decision Engine (CDE) is a framework that integrates both front and back office systems in order to coordinate targeted customer communications across sales, service, marketing, field service, logistics and other customer-facing departments within an organization.

Using common business rules, information from other systems such as billing and fulfillment, and cross-channel customer intelligence, the CDE enables an organization to provide the most relevant message, service, or information to a customer as part of every interaction.

As organizations strive to deliver an optimal experience to customers across channels they need a way to centrally coordinate both front and back office activities. The CDE enables this by coordinating customer communications and fulfillment, ultimately allowing an organization to deliver on its brand promise, while recognizing customer individuality and profitability.

BUSINESS TRENDS DRIVING THE NEED FOR A CDE

Today there is a strong focus on providing a targeted, relevant brand experience with every customer interaction. It’s a form of differentiation and a competitive advantage. It drives repeat purchases, customer satisfaction and loyalty. The unique customer experience a company delivers becomes its core value proposition and every facet of the business must be remade to align with the promised experience. What, how and when a company communicates with each customer becomes part of this experience.

Specific business trends driving the need for a differentiated customer experience, and the CDE to support the experience are:

1. Growing customer expectations

Today’s customers have high expectations. They expect an organization to treat them consistently across channels—including the web, call center, store, direct mail, and so on—and to know about their interactions via each of these channels. They want an organization to understand their needs, interests, preferences and buying habits so that each interaction they have is tailored to them.

Since a customer’s experience with a business impacts their future likelihood to buy again or refer a friend, the CDE is needed to present a common face to customers, to ensure communications are coordinated and relevant, ultimately delivering on your brand promise.

2. Increasing complexity of marketing

In order to effectively acquire, retain and grow customer relationships organizations must manage a challenging set of constraints, restrictions and customer preferences to deliver effective, revenue-generating communications as well as fulfill offers in a timely manner. The complexity of the process by which organizations communicate with customers has increased exponentially along three dimensions:

Technology and channel proliferation. On the upside, today’s technology is faster and more powerful than ever making it possible for organizations to have more customer information at their fingertips, to rapidly analyze that data, and to develop and create data-driven communication strategies. In addition, marketers have more media choices than ever before through which than can leverage their data and analysis. Ten years ago, the internet and email were in their infancy. There are significantly more magazines and TV channels than 10 years ago. Traditional mass media channels are becoming more and more addressable, such as TV that can be focused on geo-demographics or profiles. This presents a double-edged sword to marketers, allowing them to pinpoint communications like never before while at the same time magnifying the complexity of the task and demanding new analytical skills.

Business and regulatory. New regulations and legislation in Asia, Europe and North America such as privacy legislation, do not call (DNC) lists, Basel II, Sarbanes-Oxley (SOX), Health Insurance Portability and Accountability Act (HIPAA), and the Gramm-Leach-Bliley Act (GLBA) are challenging marketers like never before to manage complexity and implement well-defined and documented processes. Missteps can result in significant fines, damaged customer-relations and tarnished brands. Marketers often must tailor communications not only to each customer but also to comply with varying regulations and the requirements of channel partners.

Market dynamics. According to Entrepreneur Magazine, individuals receive more that 8,000 communications a day. In 1985, it was estimated that the average consumer was exposed to 650 marketing messages daily. This growing number of marketing messages is driving consumers to take steps to control how marketers interact with them. Consumers are conditioned to tune communications out. They are taking control over when and how they are marketed to. They are learning to use filters, email and ad blockers to stop the barrage. As a result, leveraging inbound channels to provide targeted communications when a customer reaches out to an organization is more important than ever as customer controls and marketing clutter grow. At the same time, market-savvy leaders in nearly every industry are setting the pace for the individuality and timeliness of customer communications . These companies are effectively using customer data, deftly managing privacy policies and opt-outs, adjusting their communications in real time, and delivering integrated customer experiences across channels. And many of these companies are going so far as to align the cost of customer treatments with the customer’s value to ensure maximum profitability. They are setting the bar for all of their competitors.

3. Maintaining brand loyalty and market share

With increased competition in the marketplace, many organizations are now focused on retaining customers by strengthening relationships and boosting loyalty. To do this, companies need to differentiate their product and service offerings such that customers begin to rely on your organizations expertise, services and products, so much so that they will not even consider going with a competitor. Marketers seek to create “barriers to exit.” As a result, additional focus is being placed on providing a targeted, high-quality brand experience every time a customer interacts with an organization. One significant challenge in delivering on this promise is an organization’s ability to coordinate activities between customer- facing and fulfillment parts of the organization.

Providing targeted customer treatments across channels and weaving these messages into customer dialogs—coordinating across all interaction points—is one way the CDE enables organizations to develop and sustain these long-term, profitable customer relationships that boost loyalty and market share. The goal is to create and use knowledge of the customer in a way that one’s competitors cannot replicate.

All in all, today’s competitive marketing environment is forcing organizations to take a customer- centric approach to meet customer expectations, manage communication complexity and sustain brand and customer loyalty. This need for customer-centric marketing is driving the need for a CDE to ensure organizations deliver the right experience at every touch point—all of which result in repeat purchases, incremental revenue, and enhanced customer profitability.

WHAT IS MARKETING’S ROLE IN THE CDE?

Marketing must drive and manage the CDE. As the steward of the brand and customer knowledge, marketing is able to find the proper balance between business goals and constraints as well as customer focus in order to ensure an organization’s profitability and long-term success. It coordinates all communications and optimizes to deliver the best customer strategy and dialog for each individual, resulting in maximum profitability and the fulfillment of brand promise.

Leveraging deep customer knowledge from across touch points, marketing is able to combine customer insight with innovative programs and processes to deliver targeted, relevant communications in a timely fashion across the organization—and across a customer’s life cycle. This centralized customer view enables marketing to act as the “brain” and memory of an organization driving a consistent brand experience across channels for a customer. The end result is increased revenue, customer satisfaction, loyalty and share of wallet.

WHAT ARE THE TECHNOLOGY COMPONENTS OF A CDE – TODAY AND IN THE FUTURE?

The technology components that round out the CDE enable an organization to syndicate customer insight, offers, recommendations and execution triggers to the rest of the organization and appropriate systems. These technology components create the CDE platform that is required to coordinate and execute all customer communication strategies.

Information from both front and back office systems feed into the CDE, however it is Enterprise Marketing Management (EMM)—marketing technology that enables more effective, efficient and accountable marketing—that addresses a wide range of business requirements that enable the CDE to coordinate and execute customer-centric communication strategies.

Customer analytics is one category of functionality within a CDE. It includes capabilities such as data mining and predictive modeling, which provide a richer, deeper understanding of customers across all interaction touch points. It gives organizations the ability to monitor and track segment behavior and trends over time thereby enabling better targeting and increasing the likelihood of response to specific customer activities. Customer analytics also enable the CDE to balance costs, potential value, and customer needs to determine the optimal communication strategy.

Often customer analytics is the first step an organization takes in building a CDE. One challenge organizations may face is consolidating analytic operations that occur in different pockets of the organization into one central location that enables comprehensive customer analysis—across channels, lines of business and products.

Interaction management solutions, a second category of functionality within the CDE, focus on acquiring, retaining and growing customer value. These solutions include campaign management with the ability to manage inbound and outbound customer contacts across channels and interaction modes (i.e., selling and service). Interaction management software is used to manage the new marketing realities of complexity and regulation while enabling delivery of personalized batch, transactional, event-triggered and real-time communications through automated, streamlined processes. Specific functionality within interaction management that is applicable to the CDE is the following:

1. A robust rules engine is key to the CDE as it enables arbitration among competing offers, programs, and recommendations. Few next-generation campaign management applications provide this robust rule capability. The rules within the engine should be configurable using a point-and-click interface, not coded through a programming language, such that based on market conditions and feedback they can be easily modified.

2. A central marketing repository is required to define, store, and manage offers and strategic segments from one location within the CDE thereby ensuring all communications are using approved offers and common segmentation definitions. Offers can be used across campaigns and successful offers can be easily identified and reused at any point in time, regardless of channel. The central management of offers is a key step in closed-loop response tracking and analysis. Without this it is difficult for organizations to report on offer performance, regardless of the contact channel or time.

Central management of strategic segments allows organizations to simplify creation of customer communication strategies, enforce consistent usage, and ensure an organization is using the most up-to-date segment definitions, across all touch points. Central customer contact and response history is also critical to the CDE. It enables organizations to enforce contact rules and minimize customer fatigue across all communications—marketing, sales and service.

3. Optimization is required as part of the CDE in order to determine the optimal interaction strategy for each customer over time, and the best use of limited corporate assets such as call center staff and budgets. Optimization should be able to look across selected marketing campaigns, offers, and touch points. At the same time optimization should respect customer privacy, limit contact fatigue, prevent conflicting offers, meet channel or inventory capacity limitations, and maximize marketing ROI and profitability.

With optimization, organizations are able to effectively target customers, through a customer-centric approach, with timely, relevant offers based on customer value, business objectives and operational constraints thereby increasing response likelihood, generating positive ROI, and boosting customer loyalty, while at the same time meeting corporate goals and objectives. Optimization allows an organization to make the best decision at each point of contact.

4. Event detection capabilities are also needed to ensure that organizations can detect and respond to significant customer actions, events and information at the right time with the best possible response, message or offer. With the CDE, organizations can ensure that any communication delivered does not conflict or cannibalize other communications the customer has received or may receive in the near future. And most importantly, eventdetection and execution capabilities identify and respond to critical events that signal opportunities to advance a relationship with a targeted cross-sell or to save a relationship that is in danger of ending. Event-triggered communications can play a critical role in creating barriers to exit and in delighting the customer.

5. Real-time execution functionality is also critical to the CDE. By leveraging customer analytics and real-time learning algorithms, an organization is able to deliver the best interaction to a customer based on the context of the current interaction via real-time channels such as a call center or web site. This is especially important in sales and service interactions where a customer’s current disposition may alter your communication strategy and approach. With real-time functionality, organizations have the flexibility to quickly adjust their communication strategy while ensuring the maximum profit to the organization.

6. Lead management is necessary for managing the distribution, enrichment, and maturation of leads across an organization, especially for considered purchases. The CDE is able to coordinate and distribute lead flows to ensure each opportunity is followed up on in a timely fashion with the most effective communication, through the best channel in order to boost bottom-line ROI.

In addition to the customer analytics and interaction management functionality discussed above, the underlying architecture for a CDE must be open and flexible. All technologies within the CDE must adhere to an open standards architecture so that data in disparate systems, data sources and applications can be utilized to obtain a complete customer view. According to Gartner, “40 percent to 75 percent of the information required to fully meet customer and enterprise needs is not resident in a single system or interface”. Therefore, in order to achieve the flexibility required to access information needed to drive the customer experience across the organization, all technologies must have the capability to read from and write to multiple customer systems and data sources. This will not only allow organizations to meet today’s needs but provide capabilities and support to grow communication strategies—more channels, segments, offers and products—over time.

WHAT IS THE RELATIONSHIP BETWEEN A CDE, ENTERPRISE MARKETING MANAGEMENT (EMM) AND CUSTOMER RELATIONSHIP MANAGEMENT (CRM)?

As the CDE powers the coordination of customer communications throughout an organization, it relies on EMM applications and CRM business strategies to be effective.

What is CRM? “CRM is a business strategy” not a software solution. In the past, CRM has been thought of as a software application but this belief is waning as there is no single “CRM” application that addresses the complete management of customer relationships operationally and analytically. Traditional “CRM” tools have been focused on automating sales and call center operations and lacked deep customer understanding and differentiated treatment capabilities based on customer needs, preferences and value.

What is enterprise marketing management (EMM)? EMM is enterprise software that enables more effective, efficient and accountable marketing, in the broadest sense. EMM drives powerful, precise, high-performance customer communications throughout an organization across marketing, sales and service. With EMM, marketers who are charged with strategically acquiring and nurturing customers, develop, distribute, and manage customer insights with the CDE decision platform. “As the role of marketing shifts toward enabling the customer-centric enterprise, enterprise marketing management (EMM) will become increasingly important for firms that want to become marketing leaders.” [Gartner Group, Redefine Marketing Processes to Drive Customer Centricity, July 2004].

In organizations around the world, marketing, as the steward of the brand and customer knowledge, is being asked to drive the customer experience across an organization. EMM is mission-critical to developing and syndicating intelligence about customers across the organization and ensuring the most effective interaction at each customer touch point. Therefore, EMM solutions need to include a CDE, and support CRM strategies. In addition, EMM is critical to streamlining, automating and organizing marketing operations in order to free up marketers’ time to focus on strategic customer initiatives and to provide the customer insights needed for rapid decision-making. Thus, EMM and the CDE are critical to building a customer-centric organization and delivering on the organization’s brand promise.

EARLY SUCCESS WITH THE CDE

Leading organizations are beginning to successfully use a CDE to drive customer-centric interactions. Below are two success stories—one from a leading financial services firm and the other a North American hospitality company.

A full-service financial services firm offering consumers investing, banking and lending solutions is successfully using a CDE to coordinate communications across marketing and sales.

EMM is acting as the "marketing brain" coordinating all customer communications regardless of channel, product or customer life stage to ensure consistent, relevant communications are delivered via the CDE. To date this centralized communication approach via the CDE has reduced costs per contact, increased deposits (assets under management) and better integrated the customer experience through sales channels. A next stage for this company is to further extend the CDE to improve service interactions.

The second example is a resort real estate company and ski resort operator. This company determined that becoming a customer-centric organization would help its ongoing growth prospects. To do this it developed a new central marketing organization tasked with obtaining a 360-degree customer view for better targeting, and communication strategies to get, keep and grow customers across all its resorts and golf courses. By putting improved processes in place, centralizing data, and leveraging its EMM investment, this company is successfully accelerating the transition from a product to a customer-centric organization thereby improving the quality of each customer interaction and ultimately increasing bottom- line revenue.

SUMMARY

In advancing the next stage of customer-centricity, companies should consider EMM with a CDE to coordinate customer communications across sales, service, marketing, field service, and other customer-facing departments. Marketing should be the steward of the CDE, and drive the customer experience throughout the organization to ensure a company delivers on its brand promise, achieves customer-centric best practices and engages in optimal customer communications at every point.

Technology built on an open, standards-based architecture is required for the CDE. Today, organizations are just beginning to implement various CDE capabilities as the foundation of the next stage of their customer-centric strategy; however, those that have are already seeing significant results including cost savings, loyalty increases and revenue growth.

ABOUT UNICA

Unica Corporation (Nasdaq:UNCA) is a leading global provider of EMM software designed to help businesses increase their revenues and improve the efficiency and measurability of their marketing operations. Unica focuses exclusively on the needs of marketing organizations and its Affinium software addresses the principal functions of EMM including marketing and customer analytics, event-detection, demand generation and marketing resource management. Approximately 300 companies in a wide range of industries use Affinium to manage the complexities and processes of marketing and to facilitate the operations of a customer-centric business. Unica's customers include ABN AMRO, Capital One, Choice Hotels, Comcast, Lands' End, Nordstrom, Reader's Digest, Scotiabank, and Vodafone. Unica has offices across the United States, including its corporate headquarters in Waltham, Massachusetts, as well offices in the United Kingdom, France, Germany, Singapore and India. For more information, call 781.839.8000 or visit www.unica.com.