Building Strategic Advantage from a Single Customer View in Banking. Case Study and Insights Iain Jennings

Transcription

1 Building Strategic Advantage from a Single Customer View in Banking Case Study and Insights Iain Jennings

2 Contents! Introduction to the Case Study! Case Study in Detail! Starting Point! Single Customer View Model! Approach! Proof of Concept! Prototype! Solution Architecture! Insights for Retail banking! Insights for Customer Intelligence Solutions Single Customer View in Banking - 13/06/02 - I. Jennings / 2

3 Project Introduction! Organisation! National Retail Bank offering a full range of banking products! >5 Million Customers! >10 Million Contracts! >30 Million Transactions per month! Issues! Traditional approaches to grow the business often not profitable " unprofitable customers " customer retention often poor! New Product lines often shown not to be profitable! Poor targeting causes acquisition cost to be high! Objectives! Build a strategic capability! Develop an integrated set of indicators to judge performance of individual customers! Integrate segmentation model to enable assessment of individual segments! Ensure data is comprehensive - integrating data from silos as required! Ensure the solution enables business desk-top use! Demonstrate results quickly! Single Customer View in Banking - 13/06/02 - I. Jennings / 3

4 Profitability by Household 325% 300% 275% 250% 225% 200% 100% of Profit Maximise Profit Absolute Lost 175% 150% 125% 100% 75% 50% 25% 0% 0% 0.19% 1.64% 3.42% 6.22% 10.10% 16.13% 30.01% 52.35% 86.13% 99.77% % Cumulative Percentage of Household! 3.5% of households give 100% of profits! 30% of households provide maximum profit opportunity! 70% of households produce negative profit Data Source: John McKean (1999), Information Masters - Secrets of Customer Race, p.25. Single Customer View in Banking - 13/06/02 - I. Jennings / 4

5 The Response - Develop a Single Customer View that Integrates core Data & Key Performance Indicators Marketing Database Segmentation Model Finance Indicators Finance Database Single Customer View in Banking - 13/06/02 - I. Jennings / 5

6 So whaddya wanna know? Single Customer View in Banking - 13/06/02 - I. Jennings / 6

7 The Solution - Provide a desk-top capability that supports three alternate perspectives Product and Campaign Evaluation Product Internal Organisation Return on Investment Customer Customer Profitability Single Customer View in Banking - 13/06/02 - I. Jennings / 7

8 The Approach - Design - Build - Implementation Proof of Concept Launch Proof of Concept Design Proof of Concept Build Product Evaluation Concept Approved SAS Selected Integrate indicators, segmentation Prepare Data Sample! test ideas! identify issues/complexity! show sponsors and team members what they will get! build buy-in Prototype! test processes! understand training issues Confirm Scope Prototype Design Prototype Build Prototype Implementation Single Customer View in Banking - 13/06/02 - I. Jennings / 8

9 Proof Of Concept! Things to prove! status of data! which data mining and analytic software solution could meet the task! how data could be analysed! how to integrate recently developed segmentation model and other performance indicators! Design! Select number of indicators! Sub-set of marketing data! Development of solution structure! Development of calculation model Proved feasibility and gave fundamental design input for prototype Single Customer View in Banking - 13/06/02 - I. Jennings / 9

10 Prototype! Solution Design! Solution involves the development of two applets " Administrator tool - build data sample " Execution tool - select indicators and execute analysis! Primary output is a data file! Tools to be available on the desk-top! Use both Finance and Marketing data! Data is obtained on a query " a data warehouse / data mart will not be developed for the prototype! Use of SAS Enterprise Guide! Operational benefits! 1st time an individual can obtain performance information without waiting for IT development! Individual capability on the desktop! Integrates the majority of relevant data! Query basis prevented the need for development of a data warehouse and/or data mart for this stage Prove feasibility and estimate effort for the full solution Single Customer View in Banking - 13/06/02 - I. Jennings / 10

11 Prototype Solution Architecture Data Source Environment Harry Harry Generate SAS or TXT File Enterprise Guide Manual Import SAS Analysis Environment Calculation Engine Marketing Data Specific Aggregated Indicators FILTER & MANIPULATE Data Source Data Source Dictionary Calculation Dictionary Calculation User 1 Results User n Results Integrator Financial Data Import Auto Data Source Dictionary Calculation Results Single Customer View in Banking - 13/06/02 - I. Jennings / 11

12 Insights for Retail Banking! Strategic capability can be developed to differentiate from competitors! More targeted products, more profit, greater retention, less wasted investment! Stimulates Business Integration! Agreed indicators that cross operational divisions - supports a true balanced scorecard! Benefits can impact on operations on both revenue and cost sides! More appropriate service levels - matching the needs and value of the customer! Having the answer is one thing, seeing the answer implemented as required is another! Barriers to Implementation of the results from insight must be overcome eg. cost, legacy systems, incomplete data, training, etc. Single Customer View in Banking - 13/06/02 - I. Jennings / 12

13 Insights for Customer Intelligence Solutions! Infiltrate and support multiple business levels! There are different approaches that change the time to results! Outsource models - eg. CGEY Loyalty Factory! Query rather than build! Proof of concept can build the support to enable the change and implement the results! A single customer view provides the basis to evaluate investment (ROI)! Evaluate impact of new products and campaigns! Evaluate benefit of investment! Clear business objectives for the project will provide an on-going basis for making decisions! Separate the objectives from the means of achieving them Single Customer View in Banking - 13/06/02 - I. Jennings / 13

14 Bert s sense of guilt at making money from someone else s hard work didn t last long. Single Customer View in Banking - 13/06/02 - I. Jennings / 14

15 Thanks! Questions? Single Customer View in Banking - 13/06/02 - I. Jennings / 15