Optimization rule example

You need to understand how to apply these rules to actual optimization problems. Many business problems require several rules that work together to achieve the wanted behavior.

Maximizing customer value

Problem: To propose the best offers to your customers while:

  • Keeping within the budget
  • Keeping within the limitations of your call center and email server capacities
  • Without breaking any internal offer rules

You know that you get the highest response when someone calls the customer personally. However, a phone call is the most expensive way to deliver an offer. The call center can make a maximum of 5,000 calls a week and the email servers can send 5 million outbound emails a day. Direct mail gets a better response than email, but the mailing is more than 10 times as expensive as an email offer. You quantified these return rates in a score field you created by multiplying response rate by profitability. The cost of these offers is contained in the CostPerOffer attribute.

You also must abide by the wants of your customers. Your customers can choose to opt-out of any or all of your contact channels.

You have multiple offers, but some offers cannot be sent in combination. For example, you do not want to send an offer for free online banking to the same person you send an offer for free checking. In addition, you do not want to send a worse offer for the same product or service after a better offer. Finally, you do not want to overload customers with the same offer.

These problems can be solved by a single Contact Optimization session. The following rules show one possible solution.

Ensure that you are not violating the wants of your customers by creating Exclude/Include rules that enforce opt-out (or opt-in) choices.

  • Create Customer In rules for each channel to enforce customer selections for opt-out programs.

    This Contact Optimization session should Exclude customers in the segment Direct Mail Opt-Out List for offers from channel DirectMail concerning offer/offer list Any Offer.

    This Contact Optimization session should Exclude customers in the segment eMail Opt-Out List for offers from channel email concerning offer/offer list Any Offer.

    This Contact Optimization session should Exclude customers in the segment Call Opt-Out List for offers from channel CallCenter concerning offer/offer list Any Offer.

    This Contact Optimization session should Exclude customers in the segment Global Opt-Out List for offers from channel Any Channel concerning offer/offer list Any Offer.

Define your limitations. You have a limit on the amount of money you can spend, the number of calls you make, and the number of emails you send. Use the following capacity rules:

  • Create a Min/Max # Offers Capacity rule limiting the number of telemarketing offers per week.

    The number of offers from channel CallCenter over the time period 7 days concerning offer/offer list Any Offer should be between minimum 0 and maximum 5,000.

  • Create a Min/Max # Offers Capacity rule limiting the number of emails sent per day.

    The number of offers from channel email over the time period 1 days concerning offer/offer list Any Offer should be between minimum 0 and maximum 5,000,000.

  • Create a Custom Capacity rule to ensure that the campaigns are within budget.

    The Sum of the CostPerOffer should be <= the value 1,500,000 for transactions from the offer/offer list Any Offer from channel Any Channel.

Define your offer guidelines. You can use the For Each Customer rules to ensure correct sequencing.

  • Create a Never A with B rule ensuring free online banking and free checking offers are not sent to the same person.

    For each customer in segment All Segments, that receives an offer from channel All Channels concerning offer/offer list FreeOnlineBanking cannot receive an offer from channel All Channels within the time period 90 days concerning offer/offer list FreeChecking.

  • Create a Never A Followed by B rule ensuring that no one receives a worse credit card offer (Gold APR) after a better credit card offer (Platinum APR).

    For each customer in segment All Segments, that first receives an offer from channel All Channels concerning offer/offer list Platinum Cards cannot later receive an offer from channel All Channels within the time period 90 days concerning offer/offer list Gold Cards.

Ensure that you are not creating contact fatigue. You can use For Each Customer rules to enforce your requirements.

  • Create Min/Max # Offers For Each Customer rules limiting the number of contacts you send to a customer per channel. By creating two rules for each channel, you can ensure that contacts within the time period are spaced appropriately. If you only had one rule limiting the number of contacts to two per time period, the contacts can happen on the same day.

    For each customer in segment Any Customer, the number of offers from the channel email over the time period 7 days concerning offer/offer list Any Offer should be between minimum 0 and maximum 2.

    For each customer in segment Any Customer, the number of offers from the channel email over the time period 3 days concerning offer/offer list Any Offer should be between minimum 0 and maximum 1.

    For each customer in segment Any Customer, the number of offers from the channel CallCenter over the time period 14 days concerning offer/offer list Any Offer should be between minimum 0 and maximum 2.

    For each customer in segment Any Customer, the number of offers from the channel CallCenter over the time period 7 days concerning offer/offer list Any Offer should be between minimum 0 and maximum 1.

  • Create a Max # Duplicate Offers rule to ensure that each customer is given a different offer when contacted over a time period.

    For each customer in segment Any Customer, the number of duplicate offers from the channel Any Channel over the time period 30 days concerning offer/offer list Any Offer should not exceed 1.

Optimizing a set of offers

Another way to use Contact Optimization is to optimize the generation of a personalized set of coupons.

Problem: You want to send a personalized selection of coupons to your customers. However, you must stay within budget constraints and not violate any internal rules or agreements with your suppliers.

As in the previous example, you need to work within a budget. You need to ensure that a coupon booklet mailed to a customer contains enough coupons to be worth mailing. At the same time, must ensure that every customer receives the selection of coupons only once. You also have restrictions that are based on agreements with your suppliers with contractual minimums and maximums. In addition, certain suppliers do not want their offers given with offers from competitors.

Ensure that you are not violating the wants of your customers by creating Exclude/Include rules that enforce opt-out (or opt-in) choices.

  • Create Customer In rules for each channel to enforce customer's selections for opt-out programs.

    This Contact Optimization session should Exclude customers in the segment Direct Mail Opt-Out List for offers from channel DirectMail concerning offer/offer list Any Offer.

Define your limitations. You have a limit on the amount of money you can spend, and you also need to include any supplier limitations. These limitation issues can be solved with capacity rules:

  • Create Min/Max # Offers Capacity rules for any offers for which you have a limited number to give out. Only one rule example is shown here, where an actual situation contains dozens.

    Total number of offers from channel Any Channel over the time period 30 days concerning offer/offer list CompanyC should be between minimum 1000 and maximum 5000.

  • Create a Custom Capacity rule to ensure that the entire campaign is within budget.

    The Sum of the CostPerOffer should be <= the value 3,000,000 for transactions from the offer/offer list Any Offer from channel Any Channel.

Define your offer guidelines. You can use the For Each Customer rules to ensure that no internal guidelines are broken. Only one rule example for each type of rule is shown here, where an actual situation contains dozens.

  • Create Never A with B rules to ensure that conflicting offers are not sent to the same person.

    For each customer in segment All Segments, that receives an offer from channel All Channels concerning offer version Brand = CompanyA cannot receive an offer from channel All Channels within the time period 30 days concerning offer version Brand = CompanyB.

  • Create Max # Duplicate Offers rules to ensure that each customer receives only one of each type of product.

    For each customer in segment Any Customer, the number of duplicate offers from the channel Any Channel over the time period 30 days concerning offer version ProductType = ProductA should not exceed 1.

Ensure that you are not sending out more than one selection of coupons and that each set of coupons is worth sending. You can use a combination of For Each Customer rules to enforce your requirements.

  • Create Min/Max # Offers For Each Customer rules ensuring defining the number of coupons that can be sent to each customer.

    For each customer in segment Any Customer, the number of offers from the channel DirectMail over the time period 30 days concerning offer/offer list Any Offer should be between minimum 6 and maximum 12.

  • Create a Max # Packages rule to ensure that each customer receives only one set of coupons.

    For each customer in segment Any Customer over the time period 30 days the number of packages from the channel Any Channel should not exceed 1.