Event-Based Marketing Helps Banks Pinpoint and Benefit From Changes in Customer Behavior


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Of the four tenets of direct marketing—target, offer, creative and timing—getting the timing right—communicating with customers when they are actively “in the market” for a product or service—is a marketer’s biggest challenge.

Financial services marketers, dissatisfied with direct marketing response rates that are often lower than 1 percent, have looked for ways to improve the timing on their campaigns. Some strategies have been very effective, such as offering IRAs during income tax season or making student loan offers to a family whose children are college age. What is less obvious is predicting when a customer might be most interested in a home equity loan or an investment account or, even more ominously, understanding when a valued customer is ready to attrite.

Event-based marketing (EBM) has emerged as a new paradigm to turn traditional segment-centric direct marketing on its head. The impact is dramatic: EBM programs are typically two to 12 times more effective than traditional direct marketing programs. By monitoring customers’ daily transactional activity (including online and call center activity) and immediately reacting to any significant changes in their disbursement, deposit or purchase behaviors, bank marketers are now able to micro-target their marketing communications to reach the audiences with immediate needs or demonstrated attrition risks.

When engaged in a dialogue, customers will invariably explain the underlying reason for the change in activity.

Rather than building targeting models to determine the population that best “fits” a particular offer, EBM identifies which customers are exhibiting behaviors that suggest an unmet need or attrition risk. For example, a customer who has historically issued between eight and 12 checks per month who writes more than 16 checks in the first two weeks of the current month is exhibiting a significant change in behavior.

If that behavior change, or “trigger,” does not correlate with a commensurate drop in debit card use or a reduction in bill payment activity, then it is reasonably likely that there is a life-event taking place. The possible reasons for the increase in check activity can not always be inferred. One customer may be renovating his home and is writing checks to contractors and suppliers. Another may be starting a new business venture and is issuing checks to attorneys or suppliers. It could be fraud. Only by immediately engaging with the customer will the banker be able to ascertain the underlying cause— and be able to satisfy any unmet need.

But what about privacy issues? Don’t customers find this invasive? Certainly, if an outbound telemarketing representative contacted the customer and began with, “I see you have written a lot of checks this month. Do you need a home equity loan?” it would, and should, be seen as highly invasive. If the outreach is, instead, made by a local branch employee and takes the form of a simple inquiry (such as, “I was reviewing our branch accounts this morning and noticed that there are an unusually high number of checks being written on your account. Is everything OK?”), the customer response will be quite different. Rather than feeling violated, such customers appreciate the proactive outreach and concern for their financial safety.

Underlying cause

Moreover, when engaged in a dialogue, customers will invariably explain the underlying reason for the change in activity. Often this explanation will uncover a potentially unmet need the banker may offer a solution for. Consider, for example, if the increased number of checks were written for college application fees. The banker might inquire about the family’s tuition strategy. And even when the cause of behavior change is innocuous (“I went shopping and forgot my credit card, so I had to write checks”), or the offer is not accepted, the interaction has nonetheless differentiated both the bank and banker. When companies are running an event-based marketing program, it is not uncommon for them to hear their customers say, “Thanks for the call. I’ve never received a call like this from my banker before.” Quite simply, customers appreciate the oversight and attentiveness.

EBM programs can be deployed through channels other than the branch. An online banking customer who has visited a high-yield savings account rate page on each of the customer’s last three sessions may be good candidate for an email campaign or a prompted offer. An active rewards points redeemer who has recently exhibited a reduction in credit card purchases might be a good candidate for a “double-points” stimulation.

EBM programs generate impressive returns. It is typical for a firm to fully recover the cost of its EBM program in three to six months and to enjoy multifold increases in the success rates in its outbound calling programs; cross-sell and retention success rates of 10 percent to 20 percent are fairly typical—and sustainable. It is not uncommon for a midsize regional bank to generate new incremental profits exceeding $150 million over a five-year period.

The impact is immediate: Within the first week of a recent EBM deployment at a large regional bank, the bank identified more than 3,000 trigger events that had a better than 40 percent success rate (such as application taken and account opened) as well as 5,000 “on-boarding” triggers for new customers, of which 1,500 resulted in incremental business. Each successful sale represents approximately $325 in annual revenue to the firm.

A critical success factor is immediacy: The shelf-life of an EBM trigger is approximately three days, and success rates fall sharply during that period. State engines can simultaneously monitor hundreds of customer-specific behaviors across long time periods (13 months is typical) while reviewing only daily transactions, thus allowing the detection processing to occur in very small time windows between the completion of overnight DDA batch processing and the start of the business day.

Data-warehouse-based efforts, while logically capable of detecting simple behavior changes, typically cannot sift through the enormous amount of historical transaction data in the available time windows. As a result, warehouse-based programs are usually run on a weekly or monthly basis—and suffer a severe drop-off in effectiveness as a result.

EBM programs allow for the rapid and accurate detection of customer behavioral changes relevant to a bank’s business objectives and specific to their customers’ needs. Whether using the solution to generate email messages directly to its customers or to provide “reasons-to-call” for its bankers and service staff, a bank can with a well-crafted EBM program can drive a greater volume of high-quality sales leads, intercede early on to prevent attrition and establish an ongoing proactive dialogue with its customers.

Dan Smith
Dan manages Practices Communications at Epsilon, and was previously the CMO at both Outsell Corp & ClickSquared. Prior to joining ClickSquared, Dan was the VP of channel development at Unica where he managed Unica's MSP partnerships throughout the Americas. Before its acquisition by Unica, Dan was the CMO at MarketSoft.


  1. Dan,

    I agree totally that EBM allows outbound communications and offers to be made at the right time, with higher conversion rates due to the enhanced relevance of the communication. Banks and retailers are in a great position to do EBM because of the currency of their transactional data. EBM approximates real-time marketing when the communcation or offer takes account of current customer behaviour. Buy pasta at your local supermarket and have a look at the back of your till receipt. Is there an offer for pasta sauce?

    There’s also a second category of events that enables companies to communicate in a timely and relevant manner. These are contextual, rather than customer, events. Contextual conditions such as a birthday, registration of a child’s birth, change of address, and religious festivals also provide opportunities for marketers to run context-specific campaigns.

    Francis Buttle

  2. Dan

    Great article. EBM is an important addition to the modern marketer’s armoury.

    My own experience as the Interim Head of CRM for an Automotive Bank recently was that a good EBM campaign can yield up to a 35% response rate. Yes, that’s right, up to 35%! That’s a 15 times higher response rate than traditional direct marketing campaigns and 7 times higher response rate than highly-targeted campaigns.

    But that in no way reduces the need for excellent targeting (including the use of propensity models) in EBM or the importance of other marketing factors. A general rule of thumb I use is that success in direct marketing follows a rough 40-30-20-10 rule.

    • The first 40% of success comes from identifying the right customer. Identifying an event in a customer’s life obviously doesn’t mean that they are in the market for whatever you have to offer.
    • 30% of success comes from identifying the right timing. This is where identifying an actionable event is particularly useful.
    • 20% of success comes from having the right offer. This is where many marketers come unstuck, as either they don’t have anything the customer really wants, or it comes packaged with too many onerous conditions.
    • The last 10% of success comes from having the right creative. We are talking Effies here, not Lions.

    As Francis pointed out, there is so much more to marketing than just spotting events. Customer buying behaviour is driven by a whole host of factors; some long-term like their lifestage, some medium-term like their employment and some short-term like being on holiday for a two week summer vacation.

    Marketers need to develop a customer-centric view of marketing if they are to be successful. They will need to understand what is happening in the life of the customer, identify the right products that match the customers needs, and faciliate the customer in selecting the right product, in buying it and in using it over a period of time. These products may not even necessarily be ones sold by the marketer themself. The marketer can still make money by providing the platform for other marketers to transact with customers. Just look at mobile telcos, credit card companies and Amazon. Or for customers to transact with each other. Just look at eBay, P2P bank Zopa and P2P electricity supply in Germany

    All this requires a new customer-centric approach to Enterprise Marketing Management and Marketing Resource Management, not the current company-centric one that pretty much all marketing vendors offer today. Marketing is changing whether marketers like it or not. The customer is becoming more powerful with every passing day. Customer-centric marketing offers a competitive advantage for the few marketers who can do it. The $64,000 question is whether marketers can keep pace with the changes happening in front of their eyes. And whether marketing vendors like Unica can keep pace with the marketers.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

    Further Reading:

    Are Marketing Vendors Really Customer Centric

  3. Francis,

    I agree that EBM absolutely fits into the real-time marketing paradigm – allowing the real-time event/behavior needs to be evaluated within the context of long-term behaviors. In reality, the majority of the back-of-the till coupons you use in your example are based upon a simple Boolean “if A, do B” model. In your example, if they buy pasta, print a coupon for pasta sauce. Or if a customer buys Brand A pasta sauce, print them a discount coupon for (competing) Brand B sauce.

    What is still quite rare is for the retailer (or sponsoring manufacturer) to use past behavior to determine the proper treatment for that customer. If the customer has no history of ever using a back-of-the till coupon (or buying pasta sauce), then it is extremely unlikely that they’ll do so now.

    What if instead, we actively tracked the pasta buying habit of that consumer? If the customer has a demonstrated behavior of buying 5-6 lbs of pasta every two weeks, and has not purchased pasta in the last 18 days, we may instead be better off emailing a coupon (or a double points offer if they are not demonstrated coupon users) to bring them into the store. Or, using your in-store example, print a coupon for the repeatedly-purchased item (pasta) that they didn’t buy, i.e., react to the behavior that didn’t occur.

    In all of our implementations, we treat behavioral change primarily as a timing indicator. Contextual life-stage, demographic, profitability and other data is always used in conjunction with behavioral change detection as a way to improve business results. Knowing your customer’s 40th birthday is approaching can be an extremely important fact to understand when the customer shows a first-time interest in life insurance on your website.

    If you have access to the appropriate transaction data, life-events such as a birth or re-location can often be anticipated with EBM. The birth of a child is often preceded by repeated purchase at baby-oriented retailers or the cessation/reduction of payroll for the mother. Re-location is often preceded by a change in payroll originator, large check disbursements, or high travel expenses. In certain industries, the receipt of a birth registration or change-of-address letter is often a de facto confirmation that a sales opportunity has been missed.

    Dan Smith, Unica Corp.


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