Once a transition triggers a dialogue, that dialogue often moves the customer to another transition, at which point a new dialogue with a different goal kicks in. for example, a major regional grocery chain identified a tipping point: people who ordered from its website more than four times were very likely to become regular customers. The company's technology staff programmed its dialogue-marketing system to respond to new customers via e-mail, using steep store-financed discounts to push them aggressively through those first four purchases. After purchase number four, the system automatically begins generating less expensive treatments, for example, offering only trade promotions financed by consumer goods manufacturers.

Other transitions represent not an opportunity but rather a threat – usually, that a customer will defect. For example we will take a airline industry, which is offering to a high end customer. Now the company is practicing dialogue marketing, the system detects the customer's failure to book a flight for several months and sends a message to a service representative asking him to call and try to rectify the problem. If the customer complains of poor service, the representative logs the details into the system, triggering the creation of written apology signed by an executive and including an incentive to return – automatic upgrades or frequent – fliers miles, for example. If the accounts remain inactive, then the next month the system sends another note with a reminder about the incentive. If yet another month passes, he gets a call from a senior customer-service manager. When he finally buys a ticket, the system launches a dialogue for a special treatment of saved customers.

As this example illustrates, dialogue marketing considers not just when to communicate but also how to communicate: dialogues play out across multiple channels depending on the content of the message and the urgency of the situation. Some customer actions will trigger the system to respond immediately, with a personalized e-mail, a personalized piece of direct mail, or an alert to a salesperson to make a call. Other responses will lay the ground work for future interactions. The system might store a personalized message at the point of sale to be delivered when the customer next visits, or send the message to a call center representative to be used when the customer phones or might place customer-specific content on a web site in preparation for a virtual visit.

Customer value is another major consideration in channel choice. Before launching its resource-intensive retention dialogue, the airline's system would establish that the customer in question is top tier, based on their previous and predicted purchasing. If the customer qualified as only medium value, the system might mail them a message, either electronically or by placing their contact information on a direct mail list together with personalized content for the message. A low-value customer might receive an e-mail or nothing at all if he is not profitable or not online. This portfolio of approaches is another way in which dialogue marketing improves on most one-to-one initiatives.

A Dialogue for every Season

Customer relationships are rich in transitions and events. At different times, companies will need to talk people into a commitment or out of a defection, over a conceptual hurdle or through a complex process. Working with their technology departments, marketers can design repositories or houses of dialogues that manage every category of customer interaction. Once the software engine is rolled out, marketers can gradually phase in those dialogues, monitoring their effectiveness and optimizing them until they achieve their desired ROI.

Every company's house should eventually contains four types of dialogue that scale upward in sophistication and ambition.

1. Foundation Dialogue

As their name suggests, foundation dialogues manage the fundamentals of the customer life cycle: the marketing version of Shakespeare's seven ages of man. These dialogues require only basic data, such as a customer's name and contact information. They do not demand significant process changes or cross functional coordination. Examples include:

I. Acquisitions- Acquisition dialogues aim to bring in new customers. They start out in batch fashion with a targeted audience and grow more specialized as prospects respond.

II. Service Follow-ups- Follow-ups might begin with a thanks-for-your-recent-purchase message, a notification that an item is ready for pick-up, or a simple satisfaction check. They then unfurl into additional offers of help.

III. Win-Backs- Win-backs dialogue launch in response to defections: when a customer asks to terminate her cell-phone-service plan or cancels a magazine subscription, for example.

2. Level I dialogues

Each of these product or event centric dialogues is named for the type message that starts the

exchange. More sophisticated than foundation dialogues, they leverage customer purchase data that may include such information as price or deal sensitivity. Integration with inventory and other systems requires greater IT participation. Examples include:

I. Event Notification: Notification dialogues draw on geographic data and purchase histories to invite select customers to marketing events.

II. Repurchase Reminders: Repurchase reminders are gentle nudges to purchase of consumable products such as laser printer cartridges, paper, sneakers, drill bits, oil, and light bulbs – that it is time to buy again. Dialogues marketing systems can be programmed to correlate an individual customer's purchase of such a product with the known life span of that product.

III. Inventory and Price Alerts: Inventory alerts announce new arrivals and promotional items of presumed interest. For example, a shipment of Celtic folk CDs to a music retailer would automatically trigger messages to customers whose purchasing histories are Rife Clanned and the Chieftains. Loyal customers can receive advance notice of price changes, having first crack at a markdown or sale.

IV. Overstock Outreaches:  These dialogues launch when overstocked items are about to be marked down. Before prices are slashed, the system seeks customers who have bought such items before and might do so again, perhaps because they are approaching the next level of a loyalty program or because the last such item they purchased is due to expire.

3. Level II Dialogue

These dialogues draw on individual customer's purchasing patterns or on predictive modeling to influence the progression of the relationship with that customer. They require a sophisticated understanding of a customer's history with the company and considerable cross-functional coordination as everyone from corporate buyers to executives gets involved. Examples include.

I. Defection Interventions: Defection dialogues are triggered when the system detects early warnings signs, such as a decline in purchasing frequency. They rely on predicting modeling and so are distinct from win-back dialogues, which launch after a customer has already been lost.

II. Life Cycle Progressions: These dialogues move customers through states of increasing loyalty. For example, when a customer approaches the highest tier of the company's loyalty program, life cycle dialogues automatically contact them with a message such as, "you are only one to visit away from our total diamond reward level"

III. Category RFM Transitions: These dialogues allow category managers, merchandise managers, buyers, and product managers to respond to changes in customer's individual RFM scores within their categories.

IV. Brand RFM Transitions: These dialogues allow brand managers to respond to changes in customers' individual RFM scores within their brands.

4. Level III Dialogues

Level III adds a physical element to dialogues. These on-site interactions-although just feasible now-will likely be common in the future, when customers carry RFID cards into stores or key their identities into smart shopping carts. As they shop, customers will receive personalized messages on their cell phones or PDAs, or on screens scattered around the store. Those messages will draw on the same data other dialogue-marketing applications use. So a book buyer passing the cooking section might receive an alert that only $20 separates him from the store's Chef's Club and its 25% discount.

That final, futuristic category of dialogue is especially appealing because it reaches even beyond "when" to answer the question of "where"- drilling down to the very aisle a customer is passing. For now, through, marketers must focus in timing as they seek to bind customers more closely.

CONCLUSION

The technology to conduct dialogue marketing exists today, and will only get better. Marketing organizations will need to collaborate with their IT departments to develop or install these systems, but once they are in place the demands on IT will decline significantly as dialogues fire off automatically, without any need for additional database queries. Ultimately, such systems will prove far less expensive than trying to field a service staff large enough to handle the many complex circumstances and evolving states that customer relationships present.

Turning a traditional marketing strategy into a dialogue marketing program is a straight forward matter. Begin by identifying the communications you make with customers in a batch fashion, and then ask yourself what events could trigger those communications to make them more timely. Add a question or call to action to each message, and prepare a different treatment or response for each possible answer. Finally, create a series a increasingly urgent calls to action that kick in if the question or call to action goes unanswered.

Companies that blast frequent, irrelevant messages dilute their brand equity. What customers want is great service and a consequently excellent experience across all channels. For those reasons, we believe that many elements of dialogue marketing will be ubiquitous in five years. Companies that adopt the dialogue model early can rise above today's unwelcome din and become not just the voice that customers hear but also the one they listen for.