Contact optimization technology is quickly capturing the imagination of marketers, according to a recent survey from Forrester Research. The problem is that it's not for everyone.
"Vendors have obfuscated the term," said Suresh Vittal, senior analyst with the Cambridge, Mass.-based research firm. "Optimization is a buzzword."
Contact optimization combines customer, geographic, product and predictive data and, using sophisticated mathematical models, helps marketers determine the optimal message to deliver to each customer. In a recent survey by Forrester, contact optimization technology was the No. 2 item on marketers' wish list of enterprise technology, including consumer goods, automotive and pharmaceutical vendors. According to Vittal, however, the technology is suitable only for high-volume direct marketing organizations such as catalogers or financial service firms sending out millions of pieces of direct mail.
In a mature area like direct marketing, organizations are looking for efficiencies and optimization addresses that theme, Vittal said. Another driver is the amount of marketing material going out these days.
"Everybody wants to manage their customer fatigue issue," he added. "Contact optimization sounds like the answer. In many cases, all they need is a contact strategy -- just a solution that will let them build business rules. It's using a hammer to swat a fly, really." @26730
The technology does make sense for direct marketers by helping them switch to a customer-centric approach to communications rather than a product-centric one. Contact optimization helps match the best message to each customer rather than the best customer to each message, according to a recent Forrester report authored by Vittal. For example, one credit card company with 35 million customers and 4,500 possible products and services, plus multiple communication channels and business rules about contact frequency and budget constraints, has some difficult decisions to make about extending offers. The company was able to shorten the offer and selection and delivery process significantly and increased campaign profitability by more than 25%, according to the report.
Organizations considering contact optimization technology should evaluate vendors on five factors: flexibility, the ability to evaluate multiple scenarios, algorithmic prowess, support for the predictive model scores, and the cost of ownership. Firms should also begin with a pilot program, the report suggests, in order to determine whether the technology is a proper fit.
Vendors currently offering some contact optimization can be separated into three categories, according to the report: marketing specialists such as Unica, Aprimo and Oracle (with its Siebel product), which provide campaign management modules that facilitate targeting customers for a campaign as part of their suites; analytical software vendors such as SAS, SPSS and Austin Logistics, which have sophisticated analytical tools but lack the marketing domain expertise many customers are asking for; and analytic service providers such as Fair Isaac and Experian, which are a good fit for companies looking to supplement their services relationships.
Branding marketers who are looking, say, for a way to do mixed media modeling for forecasting, really don't have the same options, Vittal said.
"The scenario planning message is very powerful, but there aren't applications that do that," he said.
Brand marketers should push the enterprise marketing management firms to offer these tools, he suggests.
"My vision is this: Eventually marketing applications will include campaign management and inbound marketing or will include contact optimization," Vittal said. "We won't be channel specific. All of this will be in one application."