The Mexican bank shined over several of its competitors, which also effectively used technological and non-technological means to enhance their client relationships
Based on criteria from the global management consulting firm Peppers and Rogers Group Latinoam,rica,
Bank Technology News (BTN) has selected Mexico's Banco Bital as the best Latin American bank in 2001 for customer relationship management (CRM). In BTN's Second Annual Latin American CRM Bank Awards, Bital topped a list that included seven other of Latin America's most advanced CRM banks: Bancolombia (Colombia), Banco de Bogot (Colombia), Banco Tequendama de Colombia (Colombia), Banco Bradesco
(Brazil), Unibanco (Brazil), Banco de Cr,dito del Per (Peru), and BANCREDITO S.A. (Dominican Republic).
In contrast to the study in October 2000, when BTN, in conjunction with Peppers and Rogers, examined all of the basic components of a CRM culture, the two entities are ushering forth the new annual practice of researching specific CRM areas. This year the consulting firm assessed Latin banks' CRM performance in one area-the Unit of Claims, Requests and Suggestions (or RSS by its Spanish abbreviation). In particular, it
surveyed banks about the creation, administration, integration and performance of their RSS unit.
While banks' RSS units are measured in part by their technological abilities they also are judged on other crucial factors, since a bank uses more than technology in order to treat different clients ifferently. Indeed, a bank prospers by pursuing the principles of 1-to- 1 marketing: identifying clients, differentiating them, interacting with them and personalizing their products and services. Additionally, it should be noted that the selected eight banks hardly represent Latin American financial institutions in a comprehensive manner; however, hey do shed much light on some of the best practices now adopted by the egion's financial institutions.
Methodology
Peppers and Rogers Group Latinoam,rica, the Latin American unit of the Norwalk, Connecticut-based firm that focuses on developing, implementing and communicating customer development business strategies, posed several questions to bank executives. Questions about the practices and tactics adopted by their RSS units focused on eight areas:
1. Current strategies of an RSS Unit.
2. Technology tools for supporting the functions of an RSS area and the integration and automation of the information process generated.
3. Design of an RSS Unit.
4. Identification, establishment and
analysis of parameters that allow for
the generation of alerts to guard
against clients closing accounts.
5. Metrics of performance and service quality and responses offered within
the RSS area, as well as attention
to profitability.
6. Satisfaction surveys of clients.
7. Qualifications of employees involved
in the management of complaints
presented to the RSS unit.
8. 1-to-1 treatment inside the RSS unit towards clients.
Bital's merits
Banco Bital's performance in these areas was unrivaled. In particular, the Mexican bank best recognized the different characteristics of its clients and acted on its knowledge of individual customers to increase profitability. Through clever use of technology Bital converted clients' claims into opportunities. Indeed, Bital is the only bank that has metrics that allow employees to become involved, that provide them with incentives and that enable them to react quickly to the clients' needs, according to Peppers and Rogers.
Additionally, Bital explicitly expressed which processes it has and has not implemented and the direction in which it is headed with CRM. The bank has numerous specific merits in CRM, many of which will be described below. For example, it determines response times according to the client's value, permanently monitors the activity of its most alued clients, creates a link between client retention and executive ompensation, and pays special attention to the historical, present and potential value of clients.
While Bital showed the greatest merit among the banks assessed, most proved laudable. Indeed, few could be overlooked, as BTN is giving honorable mentions to Bancolombia (Colombia), Bradesco, Banco de Cr,dito del Per (Peru), Banco de Bogot and Unibanco (Brazil). As the following analysis of the eight surveyed areas demonstrates, each of the banks ushered forth creative CRM initiatives that responded to clients' concerns.
Current strategies
Peppers & Rogers asked the marketing director of each of the eight banks about the measures they had taken to promote an internal culture that committed employees to listen to clients. The executives also expressed how they relate that commitment to the public, and described the guarantees they offer to resolve clients' claims.
Representing the importance it puts on CRM, Bital has designed a special unit for RSS called Soluciones Bital (Bital Solutions) that receives, follows and brings to a conclusion all claims, requests and suggestions presented. Further, it pays special heed to its high-net worth clients, sometimes responding to their inquiries 50% more rapidly than to other clients' inquiries. The bank now is developing a systems integrator for its RSS unit for the Internet and Intranet so that operating areas do not serve as both judge and deliverer of part of the solution.
Banks like Bancolombia also are exploiting technology in their RSS strategies. Since 1999, the Colombian bank's CRM system has benefited from the link between the bank's programs that run on Lotus Notes and the bank's central system running on AS400. Bancolombia's systems direct claims to the appropriate area, and the employee who receives the claim must give the client a resolution date and follow the claim to its conclusion. The Colombian bank also is trying to enhance the customer experience by ensuring that it provides clients with a consistent response, by storing the history and result of claims in its client attention system, and by sending a thank-you card to clients for their suggestions.
Other banks, such as both BANCREDITO S.A. and Banco de Bogot , are only in the stage of developing a concrete CRM strategy. However, Peppers and Rogers praised Banco de Bogot for its initiative to develop an inventory of contacts with clients, as well as its efforts to change the bank's culture by motivating employees and making them aware of the need to establish loyal and profitable long-term relationships with clients.
Brazilian banks also have implemented viable strategies. Indeed, Bradesco became a pioneer in Brazil's banking industry when it launched ALO Bradesco in 1985, making this the client's center of attention, certified by ISO9000. The bank also provides incentives to clients for them to use its central line at no cost. Recognizing the importance of a good outreach strategy, Unibanco runs publicity campaigns that underscore the bank's segmented and differentiated service.
Technology tools
The RSS survey also examined banks' CRM technological infrastructure and their capacities and tools. Advanced banks have abilities that include using their databases to offer staffers a complete vision of clients so as to better give them 1-to-1 service.
Banco de Cr,dito del Per 's technology tools are exemplary in that they focus on boosting cross-selling and client retention. The bank's CRM officials, along with having the capacity to see all of the customers' products, have access to a logic engine that identifies the next product to offer them, which is a major asset. Additionally, the bank is planning to create a commercial platform containing historical information about clients' claims and suggestions that can be used to create predictive models on client desertion of the bank.
BANCREDITO S.A. is using the tool Vantive from the Pleasanton, California-based-firm PeopleSoft Inc. for two areas: its contact center and its solutions and services area. Each client inquiry has its own rules that determines its scale, route and allocation. Moreover, the bank hopes to reap technological benefits from consultants, for it has contracted a strategic consultant to establish a RoadMap for it for the next three years, in addition to other consulting firms for IT assessments and assistance in changing the bank's culture. Bancolombia's technology program administers the trail of client contacts, the claims system, administration and sales force evaluations, and the management of marketing campaigns. In the short and medium term the bank intends to expand its internal systems to include datamining capabilities.
Like Bancolombia, Bital uses inhouse technology, which covers the CRM functions of management, sales, transactions and workflow. The bank is currently integrating its claims and complaints modules for its best clients in order to enhance interaction with them. Bital plans on migrating to a system that requires almost no administration and that can be seamlessly integrated into its current system.
Design of an RSS Unit
The design of a bank's RSS Unit is perhaps the most important RSS aspect, as it refers to the norms for the RSS Unit's performance, the classification of claims, requests and suggestions, and the priorities for attending to clients. It also covers aspects such as what will occur if a client's case is not solved in the prescribed time, and the types of sanctions to be applied to employees with recurring problems.
One of the keys for success in this area is to efficiently channel the wide myriad of client cases to the appropriate business area or employee. Banco de Cr,dito del Peru channels client queries and complaints according to both product and employee expertise, while also defining the period in which clients' queries must be solved.
Indeed, most of the banks surveyed have various rules defining how quickly clients' cases must be brought to a conclusion to help employees prioritize their work and ensure greater customer satisfaction. In evaluating its RSS personnel, Banco de Cr,dito del Per puts great importance on their ability to meet the given deadlines.
In its contact center, BANCREDITO S.A. aims to resolve 80% of cases in less than 24 hours. Bank employees that consistently fail to meet their obligations are reported to their supervisors, and those receiving three complaints are put on probation for three months. Employees whose behavior continues to flag could be terminated. Brazil's Unibanco adjusts the salary of a bank department that fails to adequately satisfy customers.
Bital's procedures are exacting: its systems automatically designate cases to employees based on client type, status, and the case's expiration period.
The bank has standard time periods for process analysis, benchmarking and audits of external and internal clients.
For evaluations, the bank is considering expanding its use of a system that assesses commercial bank executives, who are paid according to performance. The system would use points to measure the success of CRM personnel in completing their objectives according to the requisite periods and standards.
Bancolombia is mindful that clients are only inflamed further when their queries are not quickly resolved. Knowing that such speed is sometimes impossible, the bank
provides a temporary credit to claimants who made purchases abroad so that these clients are temporarily pacified.
Parameters to generate alerts
An RSS unit proves its mettle through its ability to retain clients. Banks can do this by generating alerts about possible client desertion, as well by creating barriers against this eventuality. By creating metrics and through internal evaluations executives can try to understand why clients leave their bank. The bank's goal is to generate retention strategies and to train employees to guard against client desertion.
Since the beginning of 2000 Unibanco began systematically measuring client desertion, and has set goals for each applicable department to reduce desertion. The bank undertakes various actions depending on the level of alert over a client's possible desertion, and each month it measures the degree to which clients have closed accounts compared to stated departmental goals. At their disposal, Unibanco account managers have a system showing which clients merit preferential treatment, and the bank has developed both a statistical model for each bank client and a mechanism for classifying clients into high and low consumption groups. Additionally, to further guard against desertion, Unibanco has erected strong barriers against clients shelving some of its products.
Bancolombia too imposes requirements that clients must meet to cancel a product and, partly through marketing campaigns, establishes alerts against client desertion. The bank eyeballs variables such as when a client stops using a particular product or transfers funds to other entities. Furthermore, through its call center and market research firms, it is aware of the most frequent causes for desertion. What's more, Bancolombia especially battles desertion among high-profit clients by offering them loyalty programs, something also practiced by Banco Tequendama.
One way to retain clients souring on one's bank is to make outbound calls to them. Moreover, banks can guard against future desertions through tactics such as that adopted by Banco de Cr,dito del Per , which, through interviews and market research, assesses why clients closed accounts. Bital is creating a model that detects the behavioral patterns of clients that cancel their accounts in order to predict what clients have this propensity, from the first symptom they show. And for those profitable clients that have already left? Banco de Bogot uses commercial campaigns to stage counter-offers.
Metrics
In order to detect customers' problems from their inception and to enhance operating procedures dedicated to quality client service, banks must develop metrics. These could include statistical data on the number of clients attended to, the bank areas involved in the case or resolution times. They also might relate to how the bank measures a customer's profitability or how it evaluates its RSS personnel.
Bradesco implements strategies according to the life-cycle of its clients and the rise in funds moved from clients' current accounts. The bank has witnessed strong statistical results for serving clients rapidly: 92% of customers are attended to in 20 seconds, above the bank's goal of 90%.
Banco de Bogot also indicated impressive figures, as in a recent six-month period it reduced by an average of one-third the time needed to respond to consumers' claims. Further, the bank produces statistics identifying the greatest causes of claims, the products receiving the greatest objections, the contacts consuming the most time, average response times and the causes for the cancellation of accounts.
Banks also are using profitability statistics to determine CRM strategies and policies. BANCREDITO S.A. looks at the average time attending a client versus the client's profitability, as well as the amount involved, in order to determine the profitability of the procedures used to solve the claim. For its part, Banco de Cr,dito del Per decides how to respond to unjustified claims by evaluating the profitability of the client; if the unjustified claim comes from a profitable client, the bank may act differently.
Bital uses metrics to treat CRM employees. The bank's Kardex serves as a mechanism to evaluate personnel's completion of established objectives. Furthermore, Bital has a program that rewards and punishes account executives, unit leaders and assistant directors. To be top-rated, an executive can not have witnessed a single complaint for the month assessed.
Satisfaction surveys
Banks are frequently gauging the success of their CRM strategies through surveys that indicate how satisfied clients are and how they feel RSS is treating them. Peppers and Rogers questioned banks on the methods and channels they use to get customer feedback and on the surveys' frequency and representation of CRM concerns. The firm also looked at banks' readiness to disseminate results internally and to generate corrective actions.
Through its telemarketing department, Banco de Cr,dito del Per surveys monthly those clients that have submitted claims
and evaluates the claim's progress, the response letters sent, attention times, the employee's service and other aspects.
It also periodically contracts an external firm to evaluate the level of client satisfaction in various processes. Similarly, Unibanco conducts studies on client satisfaction through phone interviews and then submits results to its call center and other areas looking to improve processes. The Brazilian bank also gives questionnaires every two months, then distributes the results throughout the bank. BANCREDITO S.A. uses various channels, from telephone discussions to focus groups, to conduct its periodic surveys.
Discreetly assessing CRM employees also can yield strong results. Bancolombia uses mystery shoppers, or professionals
contracted to play the part of client so as to get a natural response from bank employees. On a semestral basis the Colombian bank has these individuals make visits to critical branches in order to evaluate service quality, and on a monthly basis mystery shoppers make four evaluations of each branch through phone calls. Bradesco and Banco de Bogot also use similar tactics to see whether their CRM staffers are meeting expectations.
Employee qualifications
And are clients-mystery or otherwise-finding that banks' RSS staffs are equipped to meet their demands? This theme examines how the surveyed banks choose their RSS employees and what types of programs
are offered on their behalf. Banks must make special efforts to ensure that their employees are able to handle complaints and manage other difficult situations.
For Bital the most desired RSS staffers
are those who are young and have a service spirit. They must have finished higher education and be technologically-versed, with experience in Lotus, Access, Microsoft Office and the like. Unibanco's criteria is somewhat different. The bank seeks employees with traits that include verbal and analytical skills, negotiating ability and maturity. Individuals who are expressive, have analytic ability and understand stress management top BANCREDITO S.A. list of desired characteristics. Whereas Banco de Cr,dito del Per looks for individuals who have a calling for service and who have experience in dealing with the public, particularly in difficult situations.
Individuals with the proper backgrounds can be shaped into gifted CRM employees. Bradesco continuously provides technical training, requiring each staffer to train for 56 hours annually. It also scores employees' performance according to their productivity, attention to quality and personal capacity in order to choose which ones will be able to pursue a career at the institution. Importantly, Bradesco also recognizes its competition: it asks customers about their perception of the bank and how it stacks up against others.
Other banks also provide training. For instance, Banco de Cr,dito del Per offers employees courses in service quality, while BANCREDITO S.A. teaches conflict and stress management and service techniques.
One of the most important strategies for gearing up CRM personnel is simply to brief them on the bank's CRM approach. Bancolombia informs new employees about the best way to respond to complaints, claims and suggestions. It also offers employees an initiation on CRM and programs called Distinctive Service Training and Versatile Salesman Advisor.
1-to-1 treatment towards clients
The best CRM banks know their customers-individually. In order to provide optimal personalized service, banks need to track each client's history and to know which clients deserve special treatment.
One of the most sure-fire ways of satisfying individual clients is to remember them. Like many banks, Banco Bital executives closely track the histories of their customers.
Bital executives can see a history of their relationships with their best clients and correspondingly treat them specially.
For instance, Bital might provide them with quicker service and call them to inform them of their inquiry's status, rather than making them call the bank first. Bital meticulously segments its clients into past profitability (looking at the last six months), present profitability (looking at the past month) and future profitability (looking at what the client's worth might be given his life expectancy and the bank products and services he is expected to buy). Bital also has a personalization strategy and is adding voice and data services that will identify clients and ensure that they never need to repeat historical information about themselves to bank officials; the bank will remember clients just as well as they remember the bank.
Other banks also have shown strong consideration of 1-to-1 service. For example, Banco de Credito del Peru gives preferential treatment to exclusive clients and to those who have reiterated their queries (which are given a statistical entry). The bank also has created various model letters for clients-with special formats for exclusive ones-that enable bank employees to personalize missives. For its part, Brazil's Unibanco tracks clients that have had problems to see if they have recurred.
While much of banks' 1-to-1 work is complex, Bancolombia's efforts in the sphere show that one should never overlook the simple ways of making the client feel special. It greets clients by name and wishes them a happy birthday.
Working for the Future
The Peppers and Rogers survey showed that banks are recognizing that they must provide clients with the attention they deserve if they expect customers to stay loyal to them. Indeed, this elevated service is even more vital in Latin America than elsewhere, since Latin clients tend to value service excellence above factors such as improved interest rates, products and new channels.
Still, banks must continue to tackle the key CRM challenge, which, as Peppers and Rogers puts it, is: What must banks do to detect and avoid a lack of satisfaction among clients, while maintaining costs manageable and integrating this into an integral CRM strategy? Fortunately, Bital and other banks are starting to offer some answers.
The Latin American CRM Bank Awards will be officially presented on August 28 in Miami Beach, Florida, as part of the Strategic Conference on Financial Technology and Marketing-Felaban.
This study was performed by Peppers & Rogers
Group Latinoam,rica, Fernando Valenzuela, President;
Mc Neely Kroupensky, Managing Partner and
Alicia Perez-Grovas, Research Director.
