Banks are concerned about encroachment by nontraditional banking service providers, which is lowering response rates to marketing offers, reducing new account openings and steadily eroding ROI.
Banks need aggressive customer-centric marketing strategies. By creating a complete single customer-centric view, banks can target the right customers with the right offers, communicate through their preferred choice, identify the behaviors that could generate higher responses and reduce marketing costs.
Achieving that complete single view typically is tougher than it appears. Bank legacy data alone are just the beginning. This customer view also requires extra horsepower from demographic and segmentation tools. This combination can create a targeted prospect consumer segmentation matrix across product mix and sales channels for a one-to-one marketing strategy. Customer enterprise management can raise wallet share by:
* Focusing on customer needs for new product development and bundling.
* Understanding which customer needs and behaviors are most profitable.
* Letting bank associates cross-sell better by identifying products likely to be of most interest to their customer, improving the lifetime value of profitable customers.
* Reducing customer attrition by cultivating current customers and using a relationship pricing model to give them the best offers.
* Letting customers drive what products and services benefit them most.
A defined, reasoned customer enterprise management solution lets banks improve in four areas. First, retail banks should use data integration and data quality to improve information management. Improving data accuracy by even 10 percent represents savings in IT by reducing duplication, incomplete or missing records and inaccurate data. A sound strategy around data integration lets banks get to know their customers.
The second area is increased customer satisfaction. Taking customer records and overlaying data such as age, estimated income and presence of children along with a household segmentation solution lets banks create “portraits” that allow for specific marketing strategies based on the customer’s needs.
A third improvement provides for better measurement applications. Data integration lets banks better measure new households as they come on board. Knowing what products the customer already has and measuring profitability by household just makes more sense than looking strictly at profitability by account. Banks then can segment, target and implement marketing messages more effectively and seek out high-potential, high-value clients by measuring the overall household. Taking a relationship view of the customer lets banks better determine the ratio of investment to reward. Banks can look at the overall household makeup and make informed decisions on the profitability of their products.
The fourth involves reinventing the customer experience. Customer-centric organizations deliver information to employees to improve customer satisfaction. In the inbound banking area, employees should be trained to know customers when they enter the branch and understand what offers are pending through the branch or other delivery channels, like online banking, and be ready to make those offers to the customer. Is a process in place to instruct employees in how to offer the next logical product? Are they trained to perceive an opportunity? Banks also should develop consistent contact management strategies for inbound and outbound opportunities. This lets marketing measure and manage the customer interaction.
When done properly, banks can realize savings. For example, a top 10 retail bank encountered challenges with its database – challenges probably experienced by similar banks. This bank wanted to:
* Improve customer recognition and data quality and move from account-level customer management to a customer-centric organization.
* Translate customer recognition and data integration to revenue, improved service and quality and more efficient IT operations.
* Move from operational execution to business results and integrate IT and marketing efforts to link investments to ROI.
This bank also had performance issues:
* Leverage and measure the effect of improvement in data quality and an improved single customer view.
* Document and measure the sources that store customer data and their effect on quality, integration efficiency and business results.
* Improve system performance and reduce IT cost, complex legacy system processing and intense manual intervention.
* Apply a new customer view along with process and technology standardization to improve strategy and technology decisions.
The solution was to implement data integration, address hygiene, data enhancement and data management. These processes also integrated more than 50 customer data sources into a single view for the enterprise. The customer information solution was aligned with marketing to ensure timely, accurate measurement of customer and acquisition marketing efforts. The resulting ROI projection was 4 to 1 in the first 12 months and grew to 6 to 1 in 24 months. Fueling these results was a 34 percent improvement in data quality compared with peer institutions, reduced associate and IT cost and improved recognition of newly acquired and deepened client relationships.
Many banks lack a firm grasp of the value or harm the data in their legacy systems provide. With a little guidance and strategy, banks can develop their systems to show great improvements in their marketing and information management processes while making profitable customers happy and drawing in new business.