The new technology applies advanced mathematical formulas to data on a customer -- information already on file as well as new facts gathered when the person calls -- to quickly create offers to keep that person in the fold. The goal is to be able to make such offers in real time, while the individual is still online or on the phone, rather than after losing that initial contact.
One company taking advantage of such targeting technology is iSky, formerly known as Sky Alland, which manages call and customer-care centers for Fortune 1,000 clients. The company added optimization software from Market Switch to its centers last fall, and data analysis that used to take hours of work offline can now occur while a person is connected to its Web site.
`DON'T HAVE TIME TO LEAVE'
"It enables us, whether online or on the phone, to make a better offer on a truly real-time basis," said iSky CEO Rich Hebert. "If a customer is calling and wants to cancel a credit card, we don't have the time to leave, develop an offer online and call back the next day with an offer to convince them to stay. With this we can do the offer on the line."
Three clients, including one of the top three credit card banks, representing millions of consumers are currently using the Market Switch product through iSky's AnyMedia Communication Centers, Mr. Hebert said.
Optimization technology can be especially useful to telecommunications and financial services companies that are marketing a variety of co-branded products in increasingly competitive markets, said Paul Krieg, a software analyst at investment bank Legg Mason.
Companies aren't only interested in retaining customers but determining which marketing offer will give them the greatest return on investment.
"There are enough different products and a high value placed on each customer that there are a lot of reasons to market directly to customers," Mr. Krieg said. "If you can get me on a credit card with 19% interest, you're not going to sell me one for 12%."
But the task of collecting data has become more difficult as the number of products being offered consumers has increased and companies have begun focusing more on customer service.
"Companies used to write their own software when there was less customer focus and fewer products, but now marketing software is finally starting to become a separate industry," Mr. Krieg said.
The passage of the Financial Services Modernization Act has put pressure on companies not already creating customer service programs, said Suzanne Porter-Kuchay, director of marketing at Dulles, Va.-based Market Switch.
As financial services companies bundle their products and offer consumers one-stop shopping, Mr. Hebert believes more businesses will rely on optimization technology to wade through the detailed data needed to make offers that will keep customers.
"The more services you provide, the less likely the customer is to go elsewhere," he said.
"The mathematical computation problem increases" with companies' increasing demand on their data, Mr. Krieg said. "It's not a linear progression; it gets squared each time you add a product."
Unlike personalization programs that use demographic profiles to suggest products, optimization technology like Market Switch's employs advanced algorithms to calculate offers using huge amounts of information including databases, business rules, sales objectives and real-time customer feedback, Mr. Hebert said.
BETTER INSURANCE OFFERS
HealthExtras, a company selling catastrophic disability insurance and excess medical insurance coverage, is using Market Switch to make better insurance package offers to consumers and gather a demographic profile of its target customer.
This month, the company rolled out its new Web site (healthextras. com), which includes an advisory section that creates packages based on consumers' answers to a five-question survey.
Optimization technology "will give us the ability to analyze the data we get through the call centers and the Web traffic," said Marshall Coleman, senior VP-marketing for HealthExtras.
Ms. Porter-Kuchay said 4-year-old Market Switch has initially targeted financial services and telecommunications companies because of the significant data analysis needed to understand each consumer.
"When someone comes to a company through the call center or the Web site, [Market Switch] can score the customer in real time and present to the call center agent the best solution to be given," she said.