In a world of increasing personalised experiences, it’s more important than ever to tailor your communications to each individual customer. This could be achieved by only speaking to a customer using the channels they engage with you, using relevant products and categories based on their needs. Alternatively, you could offer promotions on their regular purchases or sector-specific new product ranges.
When done correctly, this type of marketing benefits both the customer (by getting exactly what they want) and you, through increased revenue and loyalty. But how should these personalised experiences be harnessed?
Introducing Next Best Offer
Next Best Offer (or NBO) analyses customer data and forms predictive models that decide what your customer should be offered next, depending on their score within a journey. In its most simple form, this may include specific messaging and could be as complex as offering a specific product or set of products. At its core, Next Best Offer is about offering the right thing, at the right time, to the right target.
How Does Next Best Offer Work?
Before implementing a Next Best Offer strategy, it’s vital to first apply segmentation to your data. Data can be segmented in a variety of ways, including product ownership, preferred or most responsive comms channel. The key thing to remember is that, for segmentation to work effectively, it always needs a meaningful audience to apply it to. Segmentation that isn’t strictly relevant to your customers isn’t likely to be useful in the long-term, therefore relevant segmentation is king. Once you’ve established your segmentation, it can then be sliced by lifecycle, channel behaviour, product mix and categories to provide a laser-focused look at your customers.
Fundamentally though, Next Best Offer is based on score. This is normally calculated by combining values for both propensity and popularity. The purpose of creating a simple score is to make it as useful as possible. After all, NBO involves analysing a lot of data, so having it summarised into a score creates means it can be understood and utilised by a wider poor of stakeholders.
Propensity can be calculated as a measure of product combinations. But using propensity only can produce suggestions for less common products, potentially limiting its effectiveness. It’s also important to remember that there may be contextual reasons for the purchase of product combinations, such as a time-sensitive or seasonal events.
Therefore, it’s important to factor in product popularity too. Popularity needs little explanation and is a sensible way to add an additional layer of context to your NBO score.
There are instances where it’s sensible to exclude certain products, services, or offerings from your NBO strategy. For example, a customer may have previously purchased a washing machine, however they’re unlikely to want another one (at least for a few years).
Next Best Offer performance should be continually measured and offer variations should be A/B tested to find the best combinations. In addition, it might be useful to gather feedback from your customers to optimise the approach over time. In our experience, continual optimisation is key to providing the most relevant offers.
Why Use Next Best Offer?
Now we’ve established how Next Best Offer works, let’s explore the benefits of implementing this strategy.
- Boosted Conversion Rates – Personalised offers matching customer interests make it more likely they’ll react positively. This will drive up your conversion metrics.
- Happier Customers – People feel special when you take the time to really understand them and send tailored deals. This makes for a standout customer experience.
- Learn More About Customers – Check out how they interact with different offers so you can refine things in future. The more you learn about your customers, the more effective your offers will be.
- Increased Customer Lifetime Value – Incentivise repeat purchases instead of always marketing to new people. This makes your existing customers more valuable in the long-term.
- Personalised Content – With Next Best Offer, you can craft specific offers adapted to individual interests and history. This level of customisation creates a strong impression that you care.
Get Started with Next Best Offer and Apteco
Collecting customer data is only the first step. The real challenge is knowing how to act on those insights to drive growth. Understanding historical behaviour will only get you so far – you also need to anticipate what’s next for each individual and deliver the right message (or offer) at the right time. But why stop at just an offer? Next Best Offer can be extended to ‘Next Best Anything’, such as promotions, discounts, products, communication channels/types, and media types. NBO could even be used to test different messaging and creative assets.
To achieve all this, you need the right tools. This is where predictive analytics solutions like Apteco can make a difference. Apteco builds intelligent models using your data to forecast future outcomes, such as which customers are at risk, who is poised to make repeat purchases, and more. This enables you to create highly personalised customer journeys based on how each person is likely to move along them.
Rather than decisions based on guesses, predictive analytics offers data-backed guidance to identify the likelihood of potential results. You’re then equipped to develop marketing strategies to maximise key moments that accelerate growth. In short, predictive analytics turns customer data into fuel for your strategic fire. Whatever Next Best Offer strategy you decide to use, with Apteco, you’ll have the power boost your marketing efforts to continually anticipate and deliver in the moments that matter for your customers.