successful implementation of customer lifecycle management and crosssell

24
Stories from the battlefield: How A Leading Bank transformed itself through customer management analytics

Upload: anand-nigam

Post on 15-Sep-2014

111 views

Category:

Documents


1 download

TRANSCRIPT

Page 1: Successful Implementation of Customer Lifecycle Management and Crosssell

Stories from the battlefield: How A Leading Bank transformed itself through customer management analytics

Page 2: Successful Implementation of Customer Lifecycle Management and Crosssell

2

Are we prepared for the

challenges of

customer era?

Customer needs are ever evolving …

How well placed are we in

predicting

Customer needs and

proactively managing

customer value?

Page 3: Successful Implementation of Customer Lifecycle Management and Crosssell

The dawn of the „Customer Era‟ has thrown up a few challenges

3

…Customers have more

information on their

fingertips, Data on

anything and everything is

easily available

…Customers are plugged-in

everywhere and seek instant

gratification

…Customers trust their

social networks and not

brands

… Customers face paradox

of choice (more choice –

more confusion), hampering

decision making

Da

wn

o

f th

e „C

us

tom

er

Era

How to provide information

on everything & at the

same time build any

emotional quotient with

customers?

How to adopt this reality

in day-to-day operations?

How to have more ‘instant’

& relevant conversations

with customers?

How to simplify products

and services that aid in

faster decision making?

Challenges faced by firmsCharacterized by…

… more „informed‟

…more „Connected‟

…„Always ON‟

…looking for „Simplicity‟

Customers are…

Page 4: Successful Implementation of Customer Lifecycle Management and Crosssell

Banking needs of customers

Transaction Needs

Credit Needs /

Borrowing

Security & Insurance Needs

Savings & Investment

Needs

Core

Needs

The Circle of

Financial Needs

Page 5: Successful Implementation of Customer Lifecycle Management and Crosssell

Banking needs of customers are very diverse … and keep evolving depending on their progress in lifestage, wealth, risk appetite, acceptance of technology …

• Securing life

• Securing health

• For future• For business• For purchase• For education• For retirement• For emergency• Travel / Holidays

• Personal need• Auto, Home• Marriage• Education• Travel / holiday

• Cash transactions• Overseas transactions• Local & international

Payments• Govt. payments• Online• Transfers

Transaction Needs

Credit Needs /

Borrowing

Security & Insurance Needs

Savings & Investment

Needs

• Securing property• Securing travel• Securing from

theft and fire.

Core

Needs

Evolved

Needs

Evolved

Needs

The Circle of

Financial Needs

• Business• Quick Cash

Page 6: Successful Implementation of Customer Lifecycle Management and Crosssell

Banking needs of customers are very diverse … and keep evolving depending on their progress in lifestage, wealth, risk appetite, acceptance of technology …

…and if we don‟t give attention to little details, we have lost their attention.

• Securing life

• Securing health

• For future• For business• For purchase• For education• For retirement• For emergency• Travel / Holidays

• Personal need• Auto, Home• Marriage• Education• Travel / holiday

• Cash transactions• Overseas transactions• Local & international

Payments• Govt. payments• Online• Transfers

Transaction Needs

Credit Needs /

Borrowing

Security & Insurance Needs

Savings & Investment

Needs

• Securing property• Securing travel• Securing from

theft and fire.

• Personal loan• Home loan• Auto loan• Business loan• Education loan• Overdraft• Cash advance

• Life insurance• Medical insurance• Property insurance• Car insurance• Travel insurance• Theft & fire

insurance

• Cash withdrawal• Credit cards• Cheque / drafts• Remittance• Internet banking• Standing orders• Phone banking• Mobile banking

• Bank account• Time deposits• Recurring deposits• Mutual funds• Stocks / shares• Bonds• Property investment

Core

NeedsProduct

Manifestations

Product

Manifestations

The Circle of

Financial Needs

• Business• Quick Cash

Evolved

Needs

Evolved

Needs

6

Page 7: Successful Implementation of Customer Lifecycle Management and Crosssell

7

A Leading Bank has done well in servicing

walk-in customers capitalizing on its brand pull, process efficiencies &

large network of branches.

Beginning of 2009, with Global Financial Crisis setting in, the challenge

was to get maximum out of a limited marketing budget

Marketing team at A Leading Bank introduced Analytics based targeted

cross-sell program, which after initial success, evolved into a full fledged

Proactive Customer Lifecycle Management Program.

Today we will take you through the key highlights and success factors in

implementing this program.

Page 8: Successful Implementation of Customer Lifecycle Management and Crosssell

8

“A Leading Bank’s vision is to be the market leader in customer lifecycle management in the

region…

This involves ability to manage customer lifecycle

using full suite of products and

services across

all banking channels embedded in

automated technology and efficient processes”

We set out with a holistic customer centric vision …

1

2

3

4

Page 9: Successful Implementation of Customer Lifecycle Management and Crosssell

9

Assets

Credit Cards

Insurance

Liabilities

-- Sell loan for a second car

- Sell a Watani top-up

- Prevent

foreclosure-- Sell loans

-- Increase insurance

holding- Retain customers -- Sell insurance

- On-board and

activate

customers

- Increase CA balances- Increase debit cards &

POS usage- Increase salary transfer

customers

- Prevent - silent attrition- balance erosion- salary transfer

attrition

- Activate customers

- Increase loyalty

- Identify segments in the market with high opportunities

- On-board and activate customers

- Increase spends and utilization

- Increase credit lines-Prevent attrition

- Activate customers

- Increase loyalty- Sell credit cards

Customer Lifecycle Management- Mass - Affluent - Private

ACQUISITION ACTIVATIONVALUE

MANAGEMENTRETENTION

RE-ACTIVATION

Customer Management

- Customer Insights - Customer Segmentation

Campaign Management

- Develop - Execute - Track & Report

CRM Integration

- One view of customer - All push and pull channels - Automated and optimized

The Vision was translated into specific initiatives for managing customer lifecycle under “House of Analytics” framework.

1

customer lifecycle

2

full

suit

e o

f pro

ducts

and s

erv

ices

all banking channels 3

4 automated

technology

and efficient

processes

Page 10: Successful Implementation of Customer Lifecycle Management and Crosssell

To implement this vision, we had to work across all key

components …

10

Dedicated analytics marketing team (including

consultants) + involved other teams within bank such

as products & channels

Put in place rigorous data, campaign management and

reporting process as they were done in silos earlier

Identified a series of low-hanging initiatives while setting up a

framework & roadmap for long-term strategic initiatives

Achieved & beat target by over 80% in 2009 & 1st qtr 2010

Set-up a separate data-mart to enable analytics

Page 11: Successful Implementation of Customer Lifecycle Management and Crosssell

We will deep-dive into one

initiative as an illustration

of work done

11

Cross-Sell

Program

Page 12: Successful Implementation of Customer Lifecycle Management and Crosssell

We have already achieved significant results across KPIs in the

Cross-sell program

Inc

rem

en

tal b

oo

kin

gs

fro

m a

na

lyti

cs

ba

se

RESULTSAbove the

monthly

targets

Beat the 2009

targets by 80%

5 months from start

of campaign

6 months from start

of campaign

12

Page 13: Successful Implementation of Customer Lifecycle Management and Crosssell

We kick-started our analytics journey by launching multiple

targeted campaigns for cross-sell of asset products to checking

customers…

13

Data SetupModel

developmentCampaign

launch

Campaign execution

and tracking

Revenue realization

• Test and control

mechanism

developed

• More than 25

campaigns

launched

• Optimized on

channels for

campaigns

• Campaign

scripts

optimized

• Lead

management

system

developed

• Out-bound

callers trained

• Several

analytical

models

developed

• Beat target by

over 80% in 2009

& 1st qtr 2010

• Data-Mart setup

which is

refreshed every

month

Jun-09: Demographic

& product variables

Jul-09: Added

behavioral variables

Jan 2010:

Differentiated

between salaried /

non salaried

customers

Feb 2010: Customer

life time value models

1 2 3 4

Page 14: Successful Implementation of Customer Lifecycle Management and Crosssell

14

We started with collating data from all sources, and created an analytical data-mart

Deposits

Products

Transactions

Watani

MortgageAuto Finance/

Leasing

Demographics

Comprehensive

Data-mart

Customer

Analytics

Campaign

Management

Credit Cards

Deposits

Credit Cards

ATM

Branch

Mubasher

Credit Filters

Contact

information from

different sources

The Data-Mart is refreshed every month

1

Page 15: Successful Implementation of Customer Lifecycle Management and Crosssell

15

We developed several analytics models and improvised on them over time

2

Segmentation models

Next-best Cross-sell model Predictive models

Decision tree modelsLook-alike models

Customer Lifetime Value model

Page 16: Successful Implementation of Customer Lifecycle Management and Crosssell

16

We developed several analytics models and improvised on them over time

2

Segmentation models

Next-best Cross-sell model Predictive models

Decision tree modelsLook-alike models

Customer Lifetime Value model

Helped us in understandingcustomer needs and predictingbehaviour

Page 17: Successful Implementation of Customer Lifecycle Management and Crosssell

Suitable campaign execution channels were selected to optimize channel level RoI

Tele

Marketing

SMS & E-

mail

E-mail

Cu

sto

me

r

Pro

pe

nsit

y

Customers were rank ordered

based on their propensity to

respond to the X-sell Campaign

Least Expensive

Channel

Most Expensive

Channel

Outbound

Call Center

Email &

SMS Script

• Professionally

designed call

script

• Trained agents

to handle

FAQs from

customers

Scripts designed

in the systematic

& structured way

• Random calling

without any

proper script

• Agents not

trained to

manage various

situations

Scripts were

designed in an

ad-hoc way

Before... After...

17

3

Set-up a structured process to

implement the campaigns

Page 18: Successful Implementation of Customer Lifecycle Management and Crosssell

Control & Test groups were carefully designed to track campaign results

C R E D I T F I L T E R*

Propensity of taking the product HighLow

Low Propensity CustomersHigh

Propensity

Customers

Test Group, T

Random sample

Control Group, C2 Control Group, C1

High

Propensity

CustomersLow Propensity Customers

* Except the SIMAH check

Benefits We can test key

hypothesis to learn “what

worked” & “what didn‟t”:

H1: By comparing results

from C1 & C2 we can

estimate lift due to

modeling

H2: By comparing results

from T & C1 we can

estimate lift due to

campaign offer

BAU conversion

Efficiency through

modeling & analysis

Incremental

conversion due to

campaign offer

18

4

Page 19: Successful Implementation of Customer Lifecycle Management and Crosssell

An E2E process for campaign tracking was developed and executed

19

4

Every campaign was

tracked for 3 months

post launch

Campaign results were

fed back into data for

fine tuning analysis for

subsequent campaigns

Set-up a process for

managing leads for the

channels

All results were shared

with entire bank in the

form of news-letters

Page 20: Successful Implementation of Customer Lifecycle Management and Crosssell

20

Significant progress was made and communicated across all initiatives with good results against a pre-defined success matrix

Acquisition - Cross Selling Activation - New Customer On boarding

Attrition - Account Depletion

• Sales: Incremental

sales of SR2.3bn

• 30+ campaigns run

• Products: Credit

cards added to

consumer finance

cross sell

• Execution: SMS and

Outbound Calls

• Objective to

accelerate customer

profitability through

managed

engagement

• Performance metrics

based on salary

transfer, online

usage, cross sell

• Silent attrition

identified as

significant point of

investigation

• Internal analysis

combined with

customer research to

identify root causes

Value Management - Credit Card Segmentation

• Understanding of

customer segments

in terms of usage

and revenue

• Foundation laid for

2011 credit card

portfolio

management

strategy

© 2010 IBM Corporation1

ANNUAL POS SPENDS

0 < 9,187 SR 9,187 – 18,247 SR 18,247 – 38,401 SR >38,401 SR

AN

NU

AL

PO

S T

RAN

SACTIO

NS >78

0.1% 0.7% 1.0% 0.6%

42 - 77

1.2% 2.1% 1.4% 0.4%

20 - 41

5.2% 3.0% 1.2% 0.3%

1 - 19

40.0% 3.0% 0.9% 0.2%

ATM only

7.6%

Inactive

31.1%

A1

A2

A3

A4

B1

B2

B3

B4

C1

C2

C3

C4

D1

D2

D3

D4

A

I

CUSTOMER BASE

Total base = 315 K customers

A1 – A2 and B1 – B2 customers should be maintained well

C1 – D1 and D1 – D2 customers should be moved towards higher spends

D4 and I need to be activated © 2010 IBM Corporation

We analyzed our customer base to understand if balance depletion was due to account closures or silent balance reduction…

12.0%

1.0%

0%

5%

10%

15%

Average US Banks Al-Rajhi Bank

Attrition Rate (Account Closure)

We undertook surveys to understand the reasons why customers reduced their

account balance

Al Rajhi‟s account closure rate is much lower than that of the average

bank in a developed country, and hence not a concern area

Silent balance reduction forms a major reason

for overall balance depletion

© 2010 IBM Corporation

…with well defined activities in the window of 180 days

Welcome

Day 1 Week 1 Week 2 1 to 3 months 3 to 6 months

• Account opening

• Welcome kit delivery

• Issue ATM Card

• Spend quality time with the

customer to understand the

need and explain the

relevant products and features

• Outline the benefit of Salary

transfer

• Guide customer on

Mubasher usage

• Thank you letter/email/SMS

Account opening Welcome SMS Welcome Email

• Welcome Email

Engagement

• Bill payment offer

• Offers on debit card

usage at POS

• Follow up calls if customer

still inactive on Mubasher

• Check on Salary transfer

Cross-Sell

• Customized Cross Sell offer

through direct mail/email/

SMS

• Offer Prepaid card

• Address needs of customers

who decrease their balance

by more than [70]%

Earn the „right‟ to X-sell X-sell/Up sell programs

1

Engage

Activate

© 2010 IBM Corporation

212321

498691

832935

500

170400

620851

1,3021,400

1,922

2,176 2,301

1,500

2,500

0

500

1000

1500

2000

2500

3000

Ju

n' 0

9

Ju

l' 09

Au

g' 0

9

Se

p' 0

9

Oc

t' 09

No

v' 0

9

De

c' 0

9

20

09

Ta

rge

t

Ja

n' 1

0

Feb

' 10

Ma

r'10

Ap

r'10

Ma

y'1

0

Ju

n'1

0

Ju

l'10

Au

g'1

0

Se

p'1

0

20

10

Ta

rge

t

20

10

revis

ed

ta

rge

t

Hyp

oth

eti

ca

l n

um

be

rs f

or

illu

str

ati

ve

pu

rpo

se

Above the

monthly

targets

Beat the 2009

targets by 80%

5 months from start

of campaign

6 months from start

of campaign

BUSINESS RESULTS

EXECUTION TRACKING

Low

Propensity

Control

High

Propensity

Control

High

Propensity

Target

C2 %

C1 %

T1 %

Lift due to

Modeling

Lift due to Campaign

X%

Natural

Conversions

Natural + Execution led

Conversions

This represents the

converted

customers due to

the project

=> Booked amount

due to the project

Conversion here is

BAU conversion

Conversion here is due to

efficiency through modeling

Incremental

conversion over &

above C1 will be

due to campaign

offer

REPORTING

Dashboards for regular reporting

20

Page 21: Successful Implementation of Customer Lifecycle Management and Crosssell

While implementing analytics within the bank, we are in the process of establishing a fact based culture

21

Structured Model to change organizational mindset…

Dedicated analytics marketing team

(including consultants) + involved other

teams within bank such as products &

channels

Rigorous data, campaign

management and reporting

process put in place

Clear goals and plans

incorporated by all teams

Supported by 'soft approach' to make the team understand and

implement the change …

The initiative is driving excellent results

across the organization and defining how we

should align our business for the future.

- DCEO A Leading Bank

Analytics team has provided us with a great

framework to effectively manage our cards

portfolio.

- Credit Cards Team

Page 22: Successful Implementation of Customer Lifecycle Management and Crosssell

22

…and we are currently transforming our organization for facing the customer era by making every customer interaction count

We have established an end-to-end on-boarding experience, walking the customer through his first 6 months

This has earned us the right to cross-sell to the customer

Providing relevant services to customers through targeted cross sell up sell campaigns

Exceeded customer‟s cross sell sales target by 80%

Emphasis on a culture that is inclusive of customers

Reactive Engagement Proactive Engagement

Generic Interactions Personalized Interactions

One way

Customer Interaction Customer Dialog

From… To…

Page 23: Successful Implementation of Customer Lifecycle Management and Crosssell

Learnings

Have a vision and sell the vision to get all stakeholders onboard

The vision should be broken down to clear manageable initiatives

Identify success matrix with some linkages to profitability

Tracking & reporting results regularly against the success matrix

Devil is in the detailed planning and focus on execution

Its about winning people not burning bridges

Page 24: Successful Implementation of Customer Lifecycle Management and Crosssell

24

Thank You