Stories from the battlefield: How Al Rajhi transformed itself through customer management analytics

Anand NigamHead of Market Insights and Analytics, Al Rajhi Bank

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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?

The dawn of the ‘Customer Era’ has thrown up a few challenges

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…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

Daw

n

of

the

‘Cu

sto

mer

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…

Banking needs of customers

Transaction Needs

Credit Needs /

Borrowing

Security & Insurance Needs

Savings & Investment

Needs

Core Needs

The Circle of Financial Needs

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

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 Needs

Product Manifestations

Product Manifestations

The Circle of Financial Needs

• Business• Quick Cash

Evolved

Needs

Evolved

Needs

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Al Rajhi 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 Al Rajhi 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.

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“Al Rajhi’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 …

Success Factor # 1

1

2

3

4

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Success Factor # 2

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 ACTIVATION VALUE MANAGEMENT RETENTION 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 s

uit

e o

f p

rod

ucts

an

d s

erv

ices

all banking channels 3

4automated technology

and efficient processes

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

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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

We will deep-dive into one initiative as an

illustration of work done

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Cross-Sell Program

We have already achieved significant results across KPIs in the Cross-sell program

Incr

emen

tal

bo

oki

ng

s fr

om

an

alyt

ics

bas

e

RESULTSAbove the monthly targets

Beat the 2009 targets by 80%

5 months from start of campaign

6 months from start of campaign

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We kick-started our analytics journey by launching multiple targeted campaigns for cross-sell of asset products to checking customers…

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Data Setup Model development

Campaign 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

Success Factor # 3

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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

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We developed several analytics models and improvised on them over time

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Segmentation models

Next-best Cross-sell model Predictive models

Decision tree modelsLook-alike models

Customer Lifetime Value model

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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 understanding customer needs and predicting behaviour

Suitable campaign execution channels were selected to optimize channel level RoI

Tele

Marketing

SMS & E-

mail

E-mail

Cu

sto

me

r P

rop

en

sit

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...

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3

Set-up a structured process to implement the campaigns

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 Customers

Low 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

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4

An E2E process for campaign tracking was developed and executed

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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

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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

© 2010 IBM Corporation

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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 CampaignX%

Natural Conversions

Natural + Execution ledConversions

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

• Sales: Incremental sales of SR2.3bn

• 30+ campaigns run• Products: Credit

cards added to consumer finance cross sell

• Execution: SMS and Outbound Calls

© 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 customerstill inactive on Mubasher

• Check on Salary transfer

Cross-Sell

• Customized Cross Sell offerthrough 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 programs1

Engage

Activate

• 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

© 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

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Success Factors # 4 & 5

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

POS

TRAN

SACTI

ON

S >780.1% 0.7% 1.0% 0.6%

42 - 771.2% 2.1% 1.4% 0.4%

20 - 415.2% 3.0% 1.2% 0.3%

1- 1940.0% 3.0% 0.9% 0.2%

ATM only7.6%

Inactive31.1%

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

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

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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 …

Cultural Challenge #

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…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…

Learnings

Success Factor # 1

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

Success Factor # 2

The vision should be broken down to clear manageable initiatives

Success Factor # 3

Identify success matrix with some linkages to profitabilitySuccess Factor # 4

Tracking & reporting results regularly against the success matrixSuccess Factor # 5

Devil is in the detailed planning and focus on execution

Cultural Challenge

Its about winning people not burning bridges

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Thank You

nigama@alrajhibank.com.sa