Building the ultimate CRM Universe post-merger

A programme named “The ultimate CRM Universe” with the objective of building the CRM Analytical infrastructure of the merged bank.

Innovation presentation

Following the merger of two banks of equal size (TEB and Fortis) forming a bank with more than 3,3 million customers and 600 branches; TEB has identified Customer Centricity as one of the key strategic levers to achieve its short and mid-term targets. TEB has built a programme named “The ultimate CRM Universe” with a investment in excess of € 2 milllion. The programme’s objective was to build the CRM Analytical infrastructure of the merged bank on three pillars:

(1) Data Strategy Initiative; action plans in three main areas have been defined together with the accountability structure: detection (data quality problems investigated); prevention (business processes and user behavior to prevent data quality problems) and correction (data correction tools and processes).

(2) Big data enabled analysis, modelling and prediction capabilities and a four dimensional customer segmentation: a) behavioral segmentation using 25 different customer dimensions through 1900 smart variables including some innovations such as financial fitness score, b) a needs based segmentation based on the factor analysis on face-to-face meetings with 4200 + customers and 600,000 questions c) Residual (“potential elsewhere”) and future value segmentation based income, AUM, Age, Profession, Socio-economic index d) credit card behavioral segmentation based on criteria such as spend frequency, recency, revolve, ticket size, diverse usage, MCC code

(3) Opti-CRM Programme built to balance the customer contact strategies with the best use of the bank’s resources incorporating “best next action” and real time campaign management capabilities.

The programme generated an ROI of 180% in the first year.

Uniqueness of the project

Four dimensional integrated customer segmentation is unique in the market in many ways: the needs segmentation based on 600K answers, customer residual value based on unusual parameters such as geocoded address data and credit bureau insight, financial fitness score for each customer and finally the ability to simplify the vast of data and analysis into an actionable set of limited marketing segments and migration strategies in between.

The advanced campaign management capability incorporates real-time campaigns as well as campaign optimization techniques including next best action and integration to social media data. The target segments are so refined that we are able to get more than 70% response rate in certain activation and credit card campaigns. We also have the ability to measure the real impact of the campaigns as we analyse the campaign results vis-à-vis universal and stand-alone control groups. The conscious decision of excluding certain low priority segments has been also rewarding in terms of controlling marketing costs.

The Reason Behind

TEB is committed to leverage customer insight to transform the bank into a customer centric organization. We acknowledge that the number of customers we have is only meaningful if we can talk of high quality of data exploited to serve customers with solutions tailored according to their beahaviors and needs. The ultimate CRM Universe Programme’s ambition has been to recreate CRM so that the infrastructure built would allow the bank to exploit all the present and future analytical capabilities. The new programme designed towards the bank’s 2023 Vision and mid-term customer centricity targets ( including the main bank ratio, the ratio of high value or high potential customers, and more traditional targets such as churn rate, activation of new customers and Net Customer Income per segment) has six initiatives under the three pillars explained earlier: Data Strategy, Advanced Segmentation, Attrition Management, Advanced Campaign Management, Next Best Action, Customer Onboarding. The programme covers all retail banking segments (individual, affluent, SME and small business.

Results

The revenue generation of the programme in place is €300 K per month. This corresponds to an ROI of 180% on a yearly basis. 2013 results of the programme has been as follows (First 8 months):

- a decrease of 1,4% in churn rate

- an increase of 1,1% in activation of new customers

- 0,03 increase in the cross-sell rate

- An overall increase of 4% in campaign responses

Completed with other projects; CRM Universe Programme has also played a part in the following areas:

- The adoption of the network campaigns ( action rate of the portfolio managers) increased from 2 % to 34%

- Customer satisfaction is monitored with regular NPS calls (125 K calls in 6 months) resulting a 5 point increase in the overall retail NPS score