EDM is a logical extension of direct marketing and these other marketing
developments. Here are some basic working definitions:
Direct Marketing (DM) is a method of marketing and selling at a distance
(without an intermediary) based on making offers that appeal to the
needs and wants of prospects as identified by their past buying behavior
and then creating and maintaining valuable, lasting relationships with
prospects and customers. Direct marketing is increasingly being done by
the focused use of direct and interactive electronic media and less by
direct mail. In other words, direct marketing is no longer tied to any one
media, but instead viewed as a marketing discipline.
Event-Driven Marketing (EDM) expands the relationship with customers
by monitoring them (and their personal or commercial situation) on a
constant basis and responding immediately to relevant changes in their
circumstances. This includes monitoring both their transactional behavior
with you (as is done in direct marketing) as well as their life or business
circumstances beyond your immediate transactional relationship.
Without a doubt, you have noticed that there is a subtle difference between the two
descriptions above. Whereas we still refer to both the prospect and the customer
when it comes to direct marketing—meaning, in fact, your entire target
group or market segment—in event-driven marketing we are talking mainly about
your customers. It is actual customers who are at the heart of EDM.
Lifecycle stage becomes a major driver in customer relationships with EDM,
whereas in direct marketing it may be little more than a tool to identify prospects
if it is used at all. Understanding a customer’s behavior and lifecycle stage give real
insights into a customer’s change in desired benefits they seek and their perceptions
of their needs.
In light of the preceding, we have developed the following definition:
Event-driven marketing (EDM): a discipline within marketing, where
commercial and communication activities are based upon relevant and
identified changes in a customer’s individual needs.
Terms like marketing, direct marketing, and customer relationship management are
used by a lot of people, all of whom interpret them in their own way. But the above
definition of event-driven marketing clearly delineates its scope: as the marketing
discipline concerned with circumstances affecting your customer.
There are many different kinds of events. Some are obvious, like marriage, the
birth of a child, moving house, or acquiring a pet. For all of these events, a need for
new products or services arises from one moment to the next. But the expiration of
a supply contract, the depletion of a stock, or a failed attempt to use a bank card
are also events that can be exploited. These, too, are relevant and identified
changes in a customer’s individual needs.
An example of an event in EDM?
You are a marketer at a bank. Through the database you are notified that a
customer has failed to complete three card transactions during the past month
because he has reached his overdraft limit. What can you do? Why not help the
customer by offering him a flexible loan?
In this example, EDM seems straightforward, but good event-driven marketing
means having your communications and database marketing in very good
order. Speed of response and triggering the right action at the right moment are
the essence of EDM.
Event-Driven Marketing is in part a response to the overtargeting of direct
marketing. Direct marketing focuses primarily on RFM (recency, frequency, monetary
value) and profile characteristics and less so on market share, market penetration,
or share of customer. Narrowly focusing on a relationship based on past
transactions often ignores changes in customer needs. For example, college seniors
may appear to be excellent customers for a seller of textbooks. They have several
years of buying history, buy every year, and spend a substantial amount. However,
once they graduate, they will no longer need textbooks.What appeared to be best
customers will simply become lost customers.
Event-Driven Marketing avoids the marketing spiral of death that comes
from overtargeting a core group of buyers while ignoring changes in needs due to
circumstance. In our textbook example, new college freshman with no purchase
history are seen as excellent prospects and recently graduated seniors are no longer
seen as best customers by the marketer.
Granted, past behavior is generally the best indicator of future behavior. In the
shorter term, buyer behavior for items such as textbooks, diapers, or retirement
investments can be explained well with direct marketing techniques alone. But, as
is the case with our textbook example, certain abrupt changes in buyer behavior
simply cannot be explained by past behavior alone. Event-Driven Marketing provides
additional insights and opportunities that help marketers find customers and
serve their changing needs.
(excerpt from Chapter 1: A New Day in Marketing)
