Last Updated: November 24, 2020
Businesses don’t sell products to statistics, they sell products to people. When discussing strategies to turn first-time buyers into a repeat customers, the conversation doesn’t just end with numbers, but rather takes into account their individual preferences and needs. With strong, proven strategies in customer relations, like next-best-action marketing, the individual customer becomes a priority and profits rise, often as much as 20 percent per customer for every 5 percent increase in brand loyalty.
In a next-best-action marketing plan, each customer ceases to be part of a larger demographic, like middle-aged men with corporate jobs or women in their 20s with college educations. Instead, each customer becomes what marketing professionals call “a segment of one” — a marketing demographic populated by a single, unique individual. (See also B2P Marketing)
What is next-best-action marketing?
Next-best-action (NBA) is a marketing strategy designed to gather information about individual customers and then use that information to encourage a sale, retain the customer’s business for future transactions, and determine the cost-to-benefit ratio of serving that customer. As the name implies, it is the attempt to consistently identify what the next best step in the sales process for each customer should be.
Customer Data Acquisition Tools
There are many ways to gather data about individual customers. These are just a few options.
- Practiced lines of questioning
- Opt-in surveys
- Records of previous transactions
- Customer support email contact pages
Next-best-action marketing requires professionals to gather information about customers using a variety of methods. While this might take the form of simple interaction between employees and customers, customer data can also be gathered with various “inbound” and “opt-in” methods.
Inbound business includes any time a customer approaches a company as the first step, such as when a customer calls a hotel asking about room rates. Opt-in business occurs when customers are given the opportunity to volunteer to receive information about the company or its products. (See also Permission Marketing)
When consumers approach a business on their own volition, that business typically gathers demographic information about consumers, allowing them to better customize their marketing efforts.
Who uses next-best-action marketing?
Any business that engages with individual customers can use next-best-action strategies in their marketing plans. Because the strategy requires gathering, sorting, and implementing customer data, next-best-action marketing must be consistent across the entire company, from those working in information technology (IT), to the marketing department, sales department, and management.
Businesses that sell goods use next-best-action marketing tactics to determine how they can build brand loyalty in individual customers during a sales conversation. NBA marketing can also determine if the resources dedicated to pursuing a sale to an individual customer are worth less than the sale will generate for the company. Car dealerships use NBA strategies often, speaking to customers to find out if they are interested in buying a car, learning what kinds of features customers want in their cars, and determining how much money individual customers are willing to spend on a car.
NBA Saves Ventura Corp. Seven Figures
In 2011, the Ventura sporting goods company in the United Kingdom used improved next-best-action strategies in the way their sales staff spoke to customers.
They analyzed sales calls to identify ineffective phrasing, time-wasting speech, and causes of repeat calls to optimize the time spent on each call. They reduced call times by an average of 42 seconds and the improved cross-selling of different products, saving Venture over one million pounds sterling that year.
NBA marketing tactics also work well in service provider settings, such as a day spa where the employees talk to individual patrons to find out what treatments might interest them and what services they can afford. An employee can guide a customer who comes to the spa for a tension-relieving massage to consider other relaxation-focused services like acupuncture.
Nonprofit organizations use next-best-action practices to increase donation rates, donation amounts, and volunteer efforts from potential stakeholders. A grassroots campaigner for a new leash law for dog owners, for instance, could use a social media platform to learn about who is interested in the campaign and leverage the information provided by those people to solicit donations on a case-by-case basis.
Making a next-best-action marketing plan
Next-best-action strategies are not product-centric tactics. Products are best marketed with discreet campaigns with beginning and end dates, so customers are not bored with the campaign and ignore it. NBA is more of an ongoing philosophy that works best when implemented across an entire company, and is subject to improvement. Businesses should never stop learning about their customers or using what they know to increase the profitability of their products.
The first step in creating a next-best-action strategy is to gather data about how the company currently engages with its customers. It is vital to analyze conversations between customers and sales reps to understand what works and what doesn’t, and to compile existing demographic data about the company’s customers. This will allow the company to create usable metrics for the NBA plan. (See also One-to-One Marketing)
Cost Per Call in Sales
The time and labor a company spends trying to close sales can break the bottom line. Improving call efficiency and rate of sale closure can save companies millions every year. Here’s how the costs for every telephone sales call breaks down.
If the average cost of making, selling, and shipping a product is $10.50, the average cost of phone-based sales calls before optimization with next-best-action strategies is $5.20. Nearly half of all sales costs are in call management. Reducing the time per call and number of calls per sale is a vital cost-saving measure.
For example, consider a dental practice. Dentists offer both goods and services, and have many opportunities to interact with individual customers. When developing an NBA plan, staff members should gather and organize patient data, such as each patient’s history with the practice, what kinds of products might interest them, and what their spending habits with the practice have been.
Once customer data is organized, the business should create methods to reliably gather new data. At the dental practice, the staff should have a consistent methodology for creating survey materials like forms filled out by the patient. They should also have a consistent style of one-on-one conversations with patients, and a clear understanding of the average time and resources it takes to propose the sale of a new product to a customer.
Throughout the process, the business should continue to gather and analyze the data it accrues and the effectiveness of each sales pitch. If certain methods are inefficient or unprofitable, they should be eliminated and replaced. The dental practice shouldn’t take the time to try to sell expensive teeth-whitening services to customers who express hesitation about spending money, but should always try to improve the new customer questionnaire.
Careers in next-best-action marketing
Next-best-action strategies are not limited to a company’s marketing department. A business that uses NBA marketing implements it throughout the company. An education in marketing, especially when combined with other skills, gives a professional a firm foundation for joining any organization that uses next-best-action principles.
What do they do?
NBA Marketing Salaries
- IT Associate
Top Earners: $69,000
Top Earners: $64,600
- Instructional Designer
Top Earners: $67,500
Because NBA marketing is so dependent on the collection and organization of data, it relies on skilled information technology professionals to compile and communicate customer information to other departments. A marketing-focused IT associate should have a proven background in database management, predictive modeling, and business communications.
Education and Skills
IT professionals should have a Bachelor of Science degree in math, computer science, statistics, marketing, or business. High computer literacy is a must and previous experience in data entry or technical support can be a great gateway to a career in marketing IT.
What do they do?
Next-best-action marketing is fundamentally customer-centric. All data and materials created by other departments in NBA programs are ultimately applied to customer service roles. A skilled salesperson knows the marketing plan backwards and forwards, while also being able to make important judgment calls in the middle of a conversation with a customer.
Education and Skills
Sales associates should have a bachelor’s degree in marketing, business, psychology, or public relations. Previous work in entry-level customer service like retail or call center operations provides excellent real-world experience going into a sales career.
What do they do?
A good next-best-action system is an ongoing philosophy within a business. This means that new hires need to be trained to use the carefully crafted strategy the company has developed. Instructional designers create materials and interact with new hires to bring them up to speed quickly and efficiently, as well as provide supplementary training for experienced staff as the marketing program evolves.
Education and Skills
Instructional designers should have a bachelor’s degree or even an advanced degree in marketing, business, communications, or education. It is helpful to have experience in human resources or corporate communications before pursuing a career in educational design.
How can a marketing school help you succeed?
Our Recommended Schools
Grand Canyon University (GCU)
GCU's Colangelo College of Business offers leading edge degrees that address the demands of contemporary business environments.
Southern New Hampshire University (SNHU)
Explore the bond between business and consumer behavior with a degree in marketing.
Customer-focused strategies like next-best-action are becoming more prevalent in successful businesses every year, and marketing education programs are evolving to reflect that. Most marketing programs begin by introducing students to the foundational principles of business, economics, and corporate communications. This includes classes in business administration, tutorials in database, design, and sales software, and marketing psychology.
Advanced coursework will take students from the fundamentals to real-world applications of that knowledge. Classes will consist of case studies examining actual marketing campaigns and hands-on simulations of business scenarios that train students to handle decision-making in a fast-paced environment.
Because next-best-action marketing involves every aspect of a given business, most coursework in a marketing program will apply to professionals hoping to implement NBA strategies in the future. A marketing education allows an aspiring professional to approach a new job with experience and expertise instead of learning by trial and error in the workplace.