Marketing Campaign Optimization
But so much for definitions and theories, what are some practical examples?
Let’s look at a marketing campaign optimization problem.
Any manufacturer has a limited campaign budget and wants the optimal return on their investments. But how do you do that?
Using OR techniques, a marketing professional can plan, prioritize and optimize customer contacts to maximize economic outcomes by making the most of each individual customer contact while considering business variables, such as resource and budget constraints, contact policies, the likelihood that customers will respond and more.
Effective consumer targeting leads to higher response rates, improved channel effectiveness and reduced spending. It also means fewer deleted emails and unwanted
direct mail solicitations. Segmentation and rules-based approaches to prioritizing marketing offers can’t come close to delivering the same results as an OR math-based approach.
Optimization delivers a quantitative prediction about the impact of making
changes to constraints, such as budget or contact policy, so you can make decisions based on facts, rather than relying on instinct. You can easily create and modify what-if scenarios to see what revenue gains are possible if the campaign budget is increased by some percentage – or to see what impact a higher contact frequency will have on customer lifetime value.
Optimize across complex contact policies to avoid oversaturating customers and violating corporate governance requirements. Eliminate uncoordinated and conflicting communications, and incorporate relevant relationship factors – such as customer risk, advertising exposure and householding – into the optimization to ensure that valuable customers receive the best possible set of communications across every channel.