Why Should You Care About Next Best Action?

What's the next best action? This is the trillion-dollar question that anyone concerned with crafting a great customer experience should always be asking. What action should I introduce at this stage of the customer’s journey to provide the ideal experience? 

Next best action (NBA) is a modern, customer-centric approach to marketing and customer experience. Whereas the traditional product-centric approach focuses on features and capabilities, NBA focuses on the customer. It balances the best outcome for the customer with the best outcome for the marketing organisation.

From the business perspective, NBA can be set up to optimise for metrics like Lifetime Value (LTV), Customer Acquisition Cost (CAC), Net Dollar Retained (NDR), and other key business KPIs while at the same time ensuring that the customer experience (CX) remains uncompromised.

What the NBA might be depends on many things: the context of the business, what is happening in the life of the customer, what is happening in the world around them, their demographic statistics, and their location. Some of these factors are highly time dependent, making real time an important capability of an NBA system. 

We all know the importance of customer experience. Just one simple, unnecessary step in a customer journey can change the customer’s  impression of the journey from seamless to annoying. 

Studies reinforce the importance of CX, with 89% of companies expecting to compete primarily on customer experience. 

NBA is about delivering optimised customer journeys, and in order to optimise you first need to instrument and measure. 

In today’s ever advancing digital world, instrumenting a website to generate event data packets is as simple as adding a line of javascript. 

Advertising giants Google and Facebook make it easy to deploy tracking tags and pixels, and many businesses are already capturing huge amounts of granular event data. 

The data can yield insights such as the products customers may be interested in, or how far away they are likely to be from a sale. 

These customer interactions, generated 24-7, form an event stream that can be captured and organised to facilitate the training of an NBA system.

One way to analyse an event stream is to identify high value customer journeys and then determine the most common key events. 

NBA analysis considers the value of an event conditional on what has occurred previously.

Consider two customer journeys on a website: one customer finishes their session on a company information page, while the other ends their session on a product details page.

Both customers’ sessions end without resulting in an immediate transaction. 

But we can infer that the customer viewing products is closer to a purchase than the one that ended on the company information page, and the NBA decisioning engine can deliver each customer a different experience in our next interaction with them. The decisioning engine is the brain of the NBA system that parses all the incoming contextual information and determines which action to take next.

Bain & Company’s often-cited research on how to achieve customer-led growth highlights how difficult NBA is: It shows 80% of companies believe they have a superior proposition but only 8% of companies have customers that agree. 

So why is NBA so difficult? Often it falls down at the ‘action’ stage. 

Delivering a personalised experience in real time is a difficult task requiring coordination between various systems that are often completely separate or only connected with simple integrations.

The benefits of a real-time, personalised customer experience approach such as NBA are enormous. Projections from McKinsey Global Institute estimate that personalisation is worth between $1.7-$3 trillion dollars to industry. 

In terms of business metrics, the first needle to be moved will probably be conversion rate as the NBA decisioning engine serves up more relevant content, and customers’ needs are better served. 

Reduced churn and increased customer lifetime value are other likely outcomes of an NBA system.

By analysing historical customer journeys we can learn how to best engage with customers. 

Applying analytics to this history allows us to learn the optimal customer journey, the most important touch points and, crucially, the next best action we should take.

To get the most benefit from this knowledge, businesses themselves must take action, changing their website and marketing in real time in order to best meet the customer’s needs.

The potential upside of real time personalisation is enormous — but so is the cost of not taking action in a world that is continually being disrupted by brands that understand and can deliver real time experiences.