Making next best activity (NBA) programmes a success at delivering measurable improvements in ROI
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Julian Berry has been involved in a significant number of NBA projects within the UK financial services industry. During his tenure as Managing Director of Berry Consulting (1990–2001) he also played a key role in the development of the pioneering financial segmentation system FRuiTs and the customer decisioning software Contact Planner, the latter winning a Gold in the Royal Mail/DMA awards. Prior to founding Berry Consulting he was Head of Direct Marketing for TSB and Head of Marketing Services at Centre-file. He is currently developing with colleagues a next generation customer decision engine aimed at allowing the user to understand the financial impact through time of alternative communications strategies.
Abstract This paper is the one anticipated in the author’s previous paper ‘What stops most large customer relationship managers optimising their customer communications programmes’, published in Journal of Database Marketing, Volume 10, Number 2. It deals with the tools and processes, as well as the obstacles involved, in implementing a next best activity (NBA) programme, and provides insights into how to deliver a successful outcome.
Julian Berry The Customer Partnership, 212 Piccadilly, London W1J 9HG, UK. Tel: ⫹44 (0) 208 878 9350; e-mail: julian.berry@ thecustomerpartnership.com
INTRODUCTION The logical position that a better overall result is obtained from communicating to a database of customers by offering each individual the treatment that is predicted to deliver their best return on investment (ROI), as contrasted to finding the customers most likely to respond to each product offer, is now widely accepted within the industry. The number of cases of successful implementation of this approach is small however, and this paper is intended to address the practical issues surrounding operationalising the concept of next best activity (NBA). (Definitions of this and other terms used in this paper are shown in Table 1.) The reason why NBA is a more desirable objective than best practice campaign management is that it assumes that, ultimately, the scarce resource for
䉷 Henry Stewart Publications 1741-2447 (2003)
Vol. 11, 1, 53–59
any company is the number of customers with high propensities to buy product at any moment in time. By concentrating on offering each individual the one treatment, from a range of possible treatments, that will give the best ROI, the optimal result is achieved. The calculation of ROI usually takes the following form: ((Propensity ⫻ Value) ⫺ Cost)/Cost This calculation has to be made for each combination of customer (or account) and proposition. This has significant implications in terms of insight tools and data marts. The operationalisation of NBA also requires a number of new processes and software to be introduced. In this paper it is assumed that the starting position is one of a company
Database Marketing & Customer Strategy Management
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Berry
Table 1: Definitions of terms as used in this paper Cost
Marketing acquisition cost
NBA
The activity undertaken by a mar
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