Wachovia has generated strong customer loyalty and profitability since emphasizing customer satisfaction in 2001, with help from SAS.
Wachovia Corp., Charlotte, NC, provides banking, asset management and corporate and investment banking products and services. It operates as Wachovia Bank in 16 states and currently as Western Financial Bank in California.
The company serves retail brokerage clients as Wachovia Securities in the United States and Latin America as well as investment banking clients in selected industries nationwide. Wachovia Corp. has more than 40 offices worldwide.
Customer satisfaction was on the minds of Wachovia executives in 2001. Heightened competition in financial services was pushing Wachovia and other financial institutions to become more customer-focused. Also in 2001, Wachovia Corp. announced its merger with First Union.
“When a merger takes place, you can easily lose customers if you are not sensitive to their needs,” said Dan Thorpe, senior vice president and statistics and modeling director of Wachovia’s customer analysis research and targeting group. “We took every precaution so that we didn’t lose one customer.”
Wachovia Bank turned to SAS at that time to get a 360-degree view of customers and continues to use the Cary, NC, company to define customer equity, all in an effort to understand the long-term value of happy customers.
Mr. Thorpe said Wachovia uses SAS tools and analysis for techniques including multiple-stage modeling, cluster-based modeling and data mining. These processes are used in a data warehouse containing the company’s 13 million customers along with third-party data. The warehouse is updated monthly.
“All of these tools and analysis allow us to look at our customers several different ways such as by segment, by account or by geography,” he said.
With SAS, Wachovia provides customer analysis for each unique channel and banking group, including wholesale banking, Wachovia Direct and the e-commerce division. This helps Wachovia decide how to spend its marketing dollars to address a customer’s unique needs and provide more targeted customer service.
The analysis can help examine a household’s or consumer’s purchase history, then know “what is the likelihood of the next product they would buy or need,” Mr. Thorpe said. If a customer has a credit card as well as a checking and savings account, Wachovia can determine “based on what they have done, combined with third-party data, if [they] would be a good candidate for a home equity line of credit. For example, they may have children at an age where they may be starting college, so they may be interested in this type of a loan.”
When targeting campaigns this way, Mr. Thorpe said, Wachovia generally sees 400 percent to 500 percent increases in response rates over untargeted mail pieces. Wachovia mails roughly 300 campaigns a year, “which generates 50 million marketing touches,” he said.
The bank also can use what it learns to understand what loyalty means to Wachovia and what drives customer loyalty.
“Over the years, customer loyalty has become a more important measurement than customer satisfaction,” said Kelly Campbell, senior vice president and director of customer satisfaction and loyalty performance measurement and improvement at Wachovia Bank. “This is because loyal customers stay with us longer, buy more products and services, create good word-of-mouth referrals and reduce customer acquisition and servicing costs.”
Wachovia consistently outscores peers in the annual Customer Satisfaction Index compiled by the University of Michigan. And according to Gallup surveys, the majority of Wachovia customers would recommend the bank to a friend.
Wachovia’s next step in customer intelligence is to define customer equity — a lifetime measurement of how much value each customer brings to the bank — and how Wachovia can improve each customer’s value. Wachovia is depending on SAS to assist in the analysis and data management.
“Executives want to know, if we increase a customer’s value, how much extra profit that means to the bank every year,” Mr. Thorpe said. “We’re using SAS to really understand and model our customers’ balance history, their revenues, their profits, the number of products and their tenure. We’re trying to roll it all up into a measurement called customer equity, which requires a very sophisticated analytical depth that plays in to why we’re using SAS.”
