The Bankwatch

 Unfortunately for Alton he wrote this right when the need to turn the traditional paradigm on its head is becoming more and more evident

it is easy to forget about the foundation of effective marketing - have an integrated view of your customers and prospects

Source: The Marketing Consortium : Developing an Integrated View of the Customer

We have been challenging traditional marketing here for while, and very supportive of Forrester’s piece that stated Marketing is in a state of crisis.  We have also looked at CRM and it is in state of crisis, and not delivering on the promise – more here, and several posts on CRM here.

CRM is predicated on collection of customer (and prospect) data, and presenting it to the agent/ CSR with suggested next products, and magically new sales will happen.

Well I have been whining about this for a while, and highly supportive of new marketing concepts but, a nagging question, has been, what is the answer?  How do we solve this conundrum.

Last night I read Doc’s post on VRM, and this might well be the genesis of an answer.  This diagram is something they created at the IIW conference.

What I like about this picture is that it dramatically makes the point that the “foundation of effective marketing: have an integrated view” is relatively useless.  Zero in on ‘Vendor 2″ in the diagram.  Lets assume they have that “integrated view”.  Sit in their seat and look out … they have no idea what vendor 1, or vendor 3 knows, is thinking or is planning.  And more importantly they have no idea what is happening with “me” in the centre, because in this diagram the only person who knows everything is “me”.

This top of this diagram fairly accurately describes what happens even today.  “Me” gathers information from various sources, (data sources – online banking, statements, etc) and vendors (telephone marketers, junk mail, internet research) and assesses the results.  Its not as clean as that, and certainly but basically that is what happens.

VRM adds “comparison based on match quality” which could be a tool/ site/ form of broker, that assesses the offers independently and provides a selection.  This is the magic of an intelligent agent that we conjectured about in the 90′s …. an independent bot (your definition!) that is all knowing about you, but only provides enough information to vendors to get detailed quotes, that can be assessed, and a choice made.

Relevance to Bankwatch:

Back to the integrated view – the most important point is providing a capability to listen, understand, accept and make prospects an offer that they are likely to accept, within suitable timeframe, probably immediate.  Of course that hasn’t been built yet, but this is the challenge, combined with product intelligence to provide accurate offers. 

 Doc seems unusually excited about VRM following IIW where he has been attending.  If he is this excited, we had better watch out!

VRM finally delivers the Cluetrain promise

Source: The Doc Searls Weblog : Thursday, December 7, 2006

I love the concept.  I have hated CRM for ever as a failed mechanism – technology (CRM) can’t possibly bring individual employees or even self service to a sufficient level to satisfy customers.

Anyhow, VRM is defined as the reciprocal of CRM.  Its the customer equivalent, which provides the tools for the customer to interact with vendors/ sellers.

This is a thread worth following and thinking about.

 OpenId is a digital identity system.  It operates by keeping your identity securely with you, yet permits you to log into participating applications.  You control your identity, your information, and the degree to which your information is shared with the application.

This article explains the benefits of OpenId when compared to others in the same space.

• OpenID is a fully decentralized system.
• OpenID has a much lighter cost structure than any alternative.

Source: » The case for OpenID | Digital ID World | ZDNet.com

Its an important concept.  Consider your Bank … online banking, credit card system, online brokerage, cash management system, private banking, mutual funds etc etc – all separate applications, each with their own customer authentication built into the application.  This is one (of the many) reasons that its very hard to aggregate customer information in a meaningful way that supports Customer Relationship Management for self service channels at Banks.

The concept that OpenId is the antithesis of that approach.  In an idea scenario Banks would have implemented a discrete authentication method, standalone.  That method could then support each of the various applications, including the CRM system.  It would be …. customer centric.

The concept is that by keeping the customer ID separate, it can be easily adapted, and informed by preferences and other attributes.  Examples of preferences would be mainly generated by the customer themselves, and ideally through self service.  This could include for example:

• don’t call me at dinner time
• don’t ever phone me
• email me
• contact me only once a year
• contact me only about mortgages
• etc

Attributes could be bank generated things like customer segment, and marketing potential.  When we take the preferences and attributes together, we start to get a picture of how we should interact and work with that customer for their benefit, and the Banks benefit.

When the customer ID is tied into many systems it is much more complicated, and exponentially more expensive to address preferences and attributes for all systems. 

While progress is being made, most banks lean towards the left diagram, and this is why the customer experience is often fractured.  How many people have a CapitalOne credit card, and still get telephone calls trying to sell them a CapitalOne credit card!  I pick on them because they are flagrant about it, but they are not alone!

In a rather damning report (dated Dec 2005) on financial services efforts, their Customer Care Centres are seen to be lagging almost all, along every axis, with the exception of Insurance, government, and Telcoms – three hardly known as exemplars.  I would suggest that this is partly because they have not made the leap from Call Centre to Customer Care Centre, the second have cross channel implications.

I see this tying into the need to develop proper benefit from CRM within Banks.  The report does note that Banks’ have been investing heavily, so benefits should be expected.

Despite comprising nearly 23 percent of the U.S. CCC market, behind only telecommunications and technology (25 percent) and retail and manufacturing (27 percent), the efficiency and effectiveness performance of financial services firms’ CCCs has lagged that of most other industries.

Source:  Integrating sales with service in financial services customer care centers  pdf

Elements of expected investment are:

• Multi channel integration: expected to account for 28% of that investment.  Purpose is to integrate enterprise resources across channels, using a mix of technology and people-oriented solutions.
• Efficiency:  various activities depicted in this diagram:

• Cost reduction:  There is much focus on cost reduction activities including:

• Migrating customers to lower-cost channels
• Improving workforce deployment and agent productivity
• Outsourcing CCC operations

Raise revenue:  This component has less meat in the report

• Providing training tools and incentives that encourage
  and enable agents to cross- and up-sell
• Segmenting customers and developing targeted
  sales efforts
• Integrating product and channel strategies to
  optimize sales.

Customer retention (loyalty): 

• Integrating channels to provide optimal, consistent
  service
• Sharing customer data across channels and LOBs
• Tailoring services to customer needs and preferences

Contact flow management:  standardized processes, workflow and business rules cross the enterprise and across channels

• Identify and segment incoming calls – Using interactive voice response (IVR) in combination with customer data to determine customer needs, existing relationships, past interactions and recent transactions across all channels. In  addition, by using customer lifetime value or tiered customer ratings (such as gold, silver and platinum), banks can also tee up segment aligned products and services that provide special
  price considerations
• Direct calls to appropriate levels of service – Using skills-based routing and an agent proficiency matrix to route transactions to the agent who is best equipped to complete the call successfully on the first attempt
• Increase levels of self-service, where appropriate –
  Directing customers to lower-cost channels, including IVR and the Web. However, this strategy must be well thought out since a poorly designed self-service offering risks increasing the number of online calls exponentially, to the detriment of the initial objective

Achieving optimal customer profitability: Optimal customer profitability requires identifying and targeting customer needs with tailored customer service and product offers, including the following actions:

• Route customer calls to appropriate channel or media –
  Identifying and segmenting customers by needs and preferences, based on data from all interactions and
  transactions
• Build cross-selling and up-selling capabilities – Enabling
  agents to identify opportunities and close sales
• Make outbound customer acquisition and retention
  calls – Targeting desirable existing and new customers
  in target segments.

Its quote a sweeping paper, and worth the read for technology strategists, as well as business leaders trying to understand the leverage points of technology versus process, and when you need both for best impact.

Finally this diagram trying to pull together some of the activities.

This is an experience about Japan.

I grew up with the impression that ‘Made in Japan’ meant excellence in quality, and technology supremacy, represented by advanced phones, robots, and vending machines. This paradigm was exploded for me after visiting Japan, and I clearly remember one episode on my first visit.

I was off on a walk around town, soaking in the new environment, and I heard a siren from an oncoming Ambulance – as he reached the intersection just ahead of me, the driving pattern and speed were as we would see in North America, but one vital difference – the siren stopped for a moment, and a live voice from the ambulance came across a loudspeaker – ” … Japanese language …. kudasai (please) “.  

The Ambulance was apologizing and requesting permission to carry on across the intersection. This example was the catalyst for me, and reflecting and discussing this brought the realization, that Japan is not driven by quality, or technology supremacy – it is driven by the customer!   The customer is always right.  

No matter where you go, employees when confronted with an upset customer genuinely feel personally accountable for the fact the customer is upset.  This is genuine visceral reaction, that can only be corrected by addressing the customers need.  In North America, all too often the employee is always right, and not necessarily the employees fault. Some other examples I witnessed:

• a banker on his scooter arriving at a house to pick up a deposit
• an electrician arriving in uniform, to deliver and install a new washing machine. Shoes are automatically removed. Bows exchanged, and apologies made before he begins for the trouble he is about to cause; (recall, we ordered the washing machine)
• local noodle guy delivering lunch of noodles and dumplings, again with bows, and apologies for the intrusion … (we ordered the noodles)

Japan has a culture of customer service. We gaijin (foreigners) have a culture of various characteristics, but customer service while a natural desire, is in conflict with many other aspects.  We have other inbred desires when confronted, such as, to be first.  And worse the tools, training and messages provided often promote controversy for their employees.  For example, which firm is easier to work for – a firm with a focus on price or selection (e.g. Rogers) or a firm focused on quality and connection (Apple)?

We all assume Japan is a technology culture. Wrong. Its a customer service culture. Advanced technology is merely a by-product of the true culture, and the high expectations that a customer service culture produces. Its not about companies listening to customers; it has to be employees who are listening. Very cluetrain – ish.

This quote from Gary Hamel at BAI is brilliant in its simplicity and unfortunately truth. (Courtesy of Jim at NetBanker)

The biggest profit center at banks is customer ignorance, which banks have mistaken for customer loyalty.” — Gary Hamel, speaking to 1000+ bankers at BAI’s Retail Delivery Conference, Nov. 15, 2006

Source: NetBanker 2.0: Bank-account switching tools from Intuit and uSwitch take center stage

His focus was internet based switching tools. 

The importance of switching tools

Hamel believes financial services loyalty will disappear once customers find out how easy it is to move their accounts to pick up a 100 basis points on their savings rate or avoid $35 overdraft fees.

I recall back at the beginning online in the late 90′s we all pontificated about the elimination of switching costs that internet wrought.  Well the product guys won round 1, and that prediction has not come true … yet.

The difference now is that there are enough customers using online and relying on it .. in fact insisting on it.  So along with the comfort level with online self service comes the willingness to use for new and innovative purposes, including switching.  uSwitch is especially interesting because Banks are just a subset of what they deal with.  This is a great model, and more reflective of how customers think .. banking at some levels is just another annoyance, along with electricity and phone service.

Gary rightly points to three examples:

1. uswitch.com
2. Yodlee.com (my coverage here from Sept)
3. Intuit
4. I would add Davis & Henderson in Canada with their eswitch product

Relevance to Bankwatch:

The issue for Banks here is not whether any of these services work well or not.  One way or another they will work and there will be more of them.  Its a pain to have to change all your direct debits, salary deposit etc, and if you get annoyed at your Bank and can switch with one call, this eliminates switching effort, costs (which will be picked up by your new Bank) and effectively reduce Banks to have to focus on the one thing that matters – service and loyalty.

Relevance PS:  Why can’t a Bank provide this service?  In particular it would be interesting for a Bank to disassociate customer relationship from financial products.  Build customer trust, help them find the services they need no matter which institution, and the benefits that will build from that trust would be enormous, and perhaps pave the way for the other 90′s prediction, Open Finance.

 I have been writing about CRM.  Turns out Wikipedia has a good discussion on this topic.

There are three fundamental components in CRM:

1. Operational – automation of basic business processes (marketing, sales, service)
2. Analytical – analysis of customer data and behavior using business intelligence
3. Collaborative – communicating with clients

Source: Customer relationship management – Wikipedia, the free encyclopedia

These three components are defined here as follows:

Operational CRM

Sales force automation (SFA) 

SFA automates some of a company’s critical sales and sales force management tasks, such as forecasting, sales administration, tracking customer preferences and demographics, performance management, lead management, account management, contact management and quote management.

Customer service and support (CSS) 

CSS automates certain service requests, complaints, product returns and enquiries.

Enterprise marketing automation (EMA) 

EMA provides information about the business environment, including information on competitors, industry trends, and macroenvironmental variables. EMA applications are used to improve marketing efficiency.

Analytical CRM

To enhance a company’s relationship with its clients. The results of an analysis can be used to design targeted marketing campaigns, for example:

• Acquisition: Cross-selling, up-selling
• Retention: Retaining existing customers (antonym: customer attrition)
• Information: Providing timely and regular information to customers

Other examples of the applications of analyses include:

• Contact optimization
• Evaluating and improving customer satisfaction
• Optimizing sales coverage
• Fraud detection
• Financial forecasts
• Price optimization
• Product development
• Program evaluation
• Risk assessment and management
• Strategic Marketing
• Operational marketing

Data collection and analysis is viewed as a continuing and iterative process. Ideally, business decisions are refined over time, based on feedback from earlier analyses and decisions. Most analytical CRM projects use a data warehouse to manage data.

Collaborative CRM

Focuses on the interaction with customers (personal interaction, letter, fax, phone, Internet, e-mail etc.)

• Providing efficient communication with customers across a variety of communications channels
• Providing online services to reduce customer service costs
• Providing access to customer information while interacting with customers

This is a highly theoretical view of CRM.  I like it but I don’t recognise this in my travels.   My observations to date:

CRM implementations include the following, but not necessarily automated or integrated:

1. Operational CRM:  customer service & support
2. Analytical CRM:  elements here like Fraud, and operational marketing, but non-integrated with 1.
3. Collaborative CRM:  most elements, but again, non integrated with 1. and 2.

Relevance to Bankwatch:

The vision for CRM is entirely relevant for Banks, but is way ahead of either capacity to afford, or certainly capacity to implement due to disparate systems.

I can safely say I have lived through all the mistakes and flawed assumptions since the beginning of online banking, when we simplistically spoke of the near future where marketing was as simple as the right message, at the right time, to the right customer.

I like James blog because he talks about how we should just do it based on what he calls EDM.

Essentially I proposed that using technology like business rules and analytics to improve the moments of decision when interacting with a customer can improve their experience. Targeting, rewarding loyalty, empowering staff and leveraging information are all part of this.

Source: Enterprise Decision Management – a Weblog: Live from Teradata (almost) – Improving Customer Experience with EDM

This evolutionary path is fascinating. The devil is in the details. I know from experience having seen Banks spend multi millions, yet fail to achieve the dream.

What I like about this model is the evolution of several components:

1. exploratory analysis
2. customised communication
3. multi channel managed relationships
4. actionable analysis
5. event driven

Whether we agree on the components is neither here nor there. The point is that in 1999, the components were only # 1, and #5. The gradiency of 2-5 is what makes this a much more intelligent model, that has a chance of success. My personal space is #3, and it always felt like I was speaking ancient Greek to #1, and #5 because number 2, and number 4 were not there.

Now let me contradict myself, and throw in a new problem for EDM. By definition, EDM is decision based, that is, Enterprise decision based. I question how that factors in the customer decision process, based on external influences, community based opinions, and generally external influences. This is a very real matter now, and marketing is no longer as simple as how the Enterprise appraises he customer potential.

This from the deck, does have “external data” as a component, so we need to understand that.

For example, an internal decision process not matter how sophisticated, that predicts say, a line of credit, for a customer, is diminished in value, if that customer has reviewed lines of credit amongst banks, and prefers the stability of a loan, because a loan suits his personality. Another example could be a customer who has compared banks, and values convenience that DF Bank provides, yet your Bank is predicated on value added advice. He doesn’t need advice. How can we factor that behavioral aspect into the equation? There are probably better examples I should think of, but generally, I am asking how the external influences that customers are more and more receiving through communities of interest can be factored into the decision process.

Anyhow, the whole deck is here, and I do recommend it.

Technorati tags: marketing, 1-1+communication, personalization, pinkomarketing

David at Infoworld succinctly sums up the problem with CRM. The customer benefit is not there.

Quick. When was the last time you remember being pleasantly surprised by how effectively a company used data about you to improve your customer experience?

Source: Customer Relationship Management (CRM)? So What?

I wrote about the frustration with CRM recently.

David goes on to touch on why this problem exists.

Based on surveys it appears that corporations have simply not decided to make good use of customer data a priority, mostly because no single person or part of the organization owns the issue.

He concludes that lack of single point of ownership for customer data is the issue.

“Data is a bit like global warming,” explained PricewaterhouseCoopers partner Bob Zukis. “Many people see it as an issue, but nobody really owns the issue, so it often suffers from a lack of focused effort.” Will corporate America hear the wake-up call on the importance of leveraging data in time to outpace the competition? Or will it stand by and lose out to rivals that know how put customer data to work?

I think that’s true if you are a data guy, but the root cause might be deeper, and dare I say simpler.

At its core, the premise of CRM was that anyone in the firm could continue the customer relationship at every interaction, because they had such good information (data) about the customer. The customer would feel so well know because of this use of the information, that they would become intensely loyal to the firm, and reward the firm with new business.

I think the premise is generally right, but specifically wrong. The first key is the nature of the benefit that would be useful to the customer. Examples would be:

• details of past problems/ complaints issues resolved
• transactional details including how the customer interacts generally.
• relationship between the contact method, and the requirement of the contact. This would provide for prediction of out of the normal pattern behaviour … for example if some customers phone, this should be a clue that its serious, because that’s not their normal mode of contact

Back to David’s article. I think the single point of ownership is needed at the point of defining the right business requirements to cement customer loyalty through relevance. Then the data discussions can happen, and central ownership may in fact assist.

Relevance to Bankwatch:

Its time to reassess the business requirement for CRM. Just taking the product that the vendor provides and plugging it in doesn’t work.

Technorati tags: crm