Emerging Thought Siebel February 2006

Customer Centric Experiences &

Insights(Making Love for Profit)

Stephen Coulter, Managing Director

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©2006 Emerging Thought


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What Customers Want

Spend less time banking and changing banks…• A bank that knows/respects/manages their relationship• A bank that makes better offers to retain loyal customers

than it offers its new customers• A bank that makes it easier for them to deal with it than

another bank• A bank that doesn’t make “junk mail” offers unrelated to

customer need• A bank that provides customer contact staff with

information to manage customers better

A bank that knows them………


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Is Your Organisation Customer Centric?

• Is there a single customer file linking relationships across your organisation?

• Can customer relationships be linked and aggregated?• Are common customer management segments used across your

organisation?• Is customer management information available pervasively?• Are customer segment managers in place to support, manage or

coordinate customer strategy across business units?• Is customer value an organisational driver?• Can Customer Acquisition, Retention, Share of Wallet & Profit be

Measured? (& accepted across the organisation)• Do common processes/procedures exist across products/channels

to make it simple for the customer to deal with your bank?• Are existing customers eligible for offers made to new customers?


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June 1989 – Paul Keating Helps a Bank!

• Home loan interest rates hit 17%• Unable to provide direct tax relief the Treasurer announces

offset accounts• What Happened at the Bank

– Segment manager assessed logical customer reaction• Have deposits and home loan at same bank• Easier to move deposits than home loan• What is the threat to the Bank’s deposit base?

– Customer information system was available bank wide • Information updated monthly• Simple menu driven that anyone in branches or head office could use• Customer centric system including customer profit updated monthly

– Segment manager ran simple query• Find customers with deposits at the Bank that are most likely to have

home loan at another bank• CIS found over $Xbillion in deposits at risk• Segment manager had executive attention and the business case to get

resources


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• Home loan interest rates hit 17%• Unable to provide direct tax relief the Treasurer announces offset

accounts• What Happened at the Bank

– Segment manager assessed logical customer reaction• Have deposits and home loan at same bank• Easier to move deposits than home loan• What is the threat to the Bank’s deposit base?

– Customer information system was available bank wide • Information updated monthly• Simple menu driven that anyone in branches or head office could use• Customer centric system including customer profit updated monthly

– Segment manager ran simple query• Find customers with deposits at the Bank that are most likely to have home

loan at another bank• CIS found over $Xbillion in deposits at risk• Segment manager had executive attention and the business case to get

resources

June 1989 – Paul Keating Helps a Bank!

All of this happened before 9:00am the morning after the Treasurer’s announcement!

How long would it take at your bank now – 17 years later?


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How the Bank Leveraged The Event

1. Protected the key deposit base by developing and launching the first major bank cash management account

2. Developed the home loan solution and home loan simulator to drive home loan market share (& cross-sell off it)

3. Developed a mortgage offset services around the customer to drive deeper relationships

All actions significantly exceeded targets and gained CEO & Executive support for the Bank’s customer centric strategy and further development of capabilities

The Bank’s market share gains from 1990-95 show the effectiveness


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Commonwealth Bank 1998

• CBA introducing segment management in March 1998

• Basic segment reporting implemented allowing segmented analysis of profit, account holdings, channel usage, etc

• NetBank was a new service with ≈20,000 customers• Analysis showed much higher profit and cross sales

potential for online banking users• Internet growth rates far quicker than banking• Established online segment manager and used

NetBank as a cross-sale, retention and acquisition tool for high value customers

• Leveraged internet market growth rates into banking


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Over 3 Years Drove Rapid Adoption of Internet Banking Maintaining High Value

Customer Profile

Source: Commonwealth Bank Investor Relations Website June 2001 Analyst Presentation


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CustomerAcquisition

Acquire customers your Bank wants to

retain

Build relationships

that drive value for

customers and the Bank

CustomerShare of Wallet

CustomerRetention Retain

customers & build

relationships

Customer

Value

Target customers your

Bank is best able to provide

value to and derive value

form

Customer Management Model

Customer Management Model(Able to be run at any segment level)

CustomerValue DrivenManagement

Model


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KPI’s to Manage Customer SegmentsDifferent Targets for Different Segments

Customer RetentionCustomer RetentionCustomer TenureCustomer Balance Retention

Customer ProfitCustomer Management

HierarchiesCustomer

Profit/RevenueMargins & Fees

Customer Share of Wallet

Balances Per CustomerProduct Groups/CustomersProduct Penetration Rates

Customer Acquisition# New CustomersReplacement Rate

CustomerValue DrivenManagement

Model


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Areas of Focus

Customer Segmentation & Analytic Capabilities

Event Marketing Capabilities

Customer Needs-BasedSolutions

Sales & Relationship Management Capabilities

Prerequisites

Customer Information

File

Group Data Warehouse

Data Integration &

Synchronisation

Data Integrity

Reliable MIS

• Ability to identify customers relationships across the Bank

• Segmentation framework that is accepted and applied across the Bank

• Customer metrics including profit

• Event library• Event detection rules• Lead Management

• Offers combining products, services and information required to fully meet the financial needs of the customer related to the event

• Sales System• Sales Management & Leadership• Relationship Behaviours &

Incentives• Pipeline measurement and

management

• Refine offers based on customer interactions

• Real Time Decisioning

Leverage Direct CustomerFeedback

See Siebel IBM Research


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Barriers to Customer Centricity

• Believing the talk and not walking it• Management seeing customer centricity as an

alternative to product or distribution models• Independent business units not collaborating or

lack of a cross business unit customer strategy/segment support or management group

• Management information systems not supporting customer centricity– Or being built around products and/or channels

• No crisis yet……


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Key Success Factors

• Leadership, People• Relationship between sales and marketing• Common information source (Finance, Products, Operations, Customers)• Customer “ownership”• Make it simple and convenient for your customers to do business with

you – leverage the knowledge you have to achieve this• Implementation Phasing –

– Start with basic segments that can be measured reliably– Know which customers you want and focus efforts– Share basic customer information across your bank– Stop doing things that aren’t win: win for the Bank and targeted customers– Prioritise retaining/developing targeted customers ahead of acquisition– Put basic customer management KPI’s in place– Target segments with solutions not products


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Find Out More

Stephen Coulter040.333.8888

[email protected]

Documents

Emerging Thought Siebel February 2006