Forget just accumulating masses of customer information in a data warehouse. The hot new topic in customer relationship management is-to use the fashionable lingo-real-time, multi-touchpoint marketing. That means bringing all sorts of customer data together for sales and service through whatever distribution channels customers use, whether branches, ATMs, telephones or the Internet. This data supports inbound and outbound contact centers (they replace mere call centers by handling e-mail), and, increasingly, automated response to customers. Last year, banks spent a little over $4 billion on CRM in North America, and consumer credit firms spent another $575 million, says Kathleen Khirallah, a retail banking analyst at the TowerGroup in Needham, MA. She considers a handful of retail banks leaders, "because they're making progress, not only in their technology infrastructure, but also in terms of their organizational culture" to support CRM efforts. They are Royal Bank of Canada, U.S. Bancorp, Citigroup, Chase Manhattan Corp. and Wachovia Corp.Such banks tend to think of CRM not simply as a way to grapple with mountains of data, but as a way to offer personalized service to millions of customers. Says Asid Mumtaz, vice president of e-Care at Citibank, "We are trying to move away from customers feeling that they are just a number and more to thinking that they are a partner with Citi." Citi started its CRM efforts by simply collecting data on customers, like maturity dates of CDs, so senior management could determine what to do with the information. That evolved into database marketing. "Now our CRM efforts have a lot more to do with analytics," Mumtaz explains. "We have a lot of transaction and non-transactional, monetary and non-monetary information about the customers." Citi collects information from credit card transactions, so it can tell if customers go to Disneyworld or Paris for vacations. The focus now is on integrating the channels the company uses to reach customers, including personal digital assistants, such as Palm Pilots. Says Mumatz, "Our latest goal is to provide the same face from Citi to the customer no matter where they are all over the world-to make sure we provide them the same level of service and support in Brazil as if they were in their local branch in New York."In fact, CRM has two faces: sales and service. On the sales side, banks look to CRM to assist in selling new products and pushing new services.But the sales approach has its limits. To most customers, bank products are about as exciting as electricity-you don't really pay any attention until something goes wrong. And many customers are annoyed by telemarketing. Not only does CRM offer the prospect of calls from hyped-up salespeople interrupting your dinner, but it might mean hearing a service representative aggressively promote a home equity loan when you call to inquire about your new checks.For complex sales, a good CRM system is invaluable. The U.K.'s Barclays Mercantile, which leases everything from cars to oil rigs, uses Chordiant Software Inc.'s application to tap the information in several aging computer systems and provide its sales force with information on pricing, customers and credit risk, along with a sales decision process. "We have a concept called One and Done, where we want to give instant sales decisions to customers," explains Paul Roberts, operations director at Barclays Mercantile. "If you can close the deal at that first call, you have a much better chance of closing. Otherwise, if the customer has to make several calls, he has a chance to shop around." Roberts expects the system will lead to improvements in efficiency of 30% to 50%. Barclays Mercantile represents where CRM is headed. New CRM systems draw on multiple sources of customer data, analyze the patterns in customers' banking habits and automatically present information and targeted sales pitches that sales and service staff can act on while talking with a customer. This kind of system tracks all of a customer's various account balances, what retail channels each customer uses and how profitable each customer is. And it helps service staff to turn into salespeople. In less complex sales situations, banks can at least exercise restraint-as does with its use of a CRM application from E.phipany, a software company in San Mateo, CA. The Internet subsidiary of Bank One Corp. uses the software to deliver targeted marketing to customers, including real-time customized offerings based on the interests a customer has shown on its Web site. "But it doesn't pop up every time you are on the site," says Penny Joines, first vice president of marketing at Wingspan. "And we have other non-sales communications, such as reminders to set clocks ahead for daylight savings. We try to keep it friendly so the customers don't feel we are trying to sell them something every time they go to the site. We want to deliver an offer when appropriate without bombarding the account holder. Our intent is to communicate in a personalized way on an ongoing basis."The second aspect of CRM is using customer information to provide a high level of service. Considering that it costs far more to acquire a new customer than to retain an existing one, many firms are using CRM to improve service. Then, when that customer is looking for an auto loan or a new mortgage, the bank will be well positioned for the new business.At Fidelity Investments, says Philippe Mauldin, senior vice president of the high-net-worth segment market, the question asked of CRM is: "How do these CRM capabilities satisfy the customer?" Fidelity has learned that satisfied customers will provide useful information, and the firm treats customers with caution. "We know we can't expect full wallet share," Maudlin says. "But one thing we have found is that when we ask cusotmers about their other accounts, they begin to open up and tell us things when we have their trust. You can gain that information without spending millions to purchase data."Citi's Mumtaz says, "Over the years a customer becomes more profitable. The idea around CRM for us is retention, to make sure our customers are satisfied with us."Culture is Key
Effective CRM, say industry practitioners and consultants, is as much a result of a company's culture and process as it is technology. True, many financial services firms have separate information systems for each product line or business segment. But that's often an outgrowth of management practices such as compensation structures that similarly keep business lines apart.Effective CRM also requires more thinking about how banks can work better to address comprehensive customer needs. As that trend unfolds, CRM software vendors are likely to put a lot more effort into taking care of their customers by helping them to spread its use throughout their companies-or consulting firms will come in with their high-priced hired guns. "The technology is one piece," says Mumtaz, "but making the cultural or organizational shift to use it in the right frame of reference is the more difficult part. That's where the industry will go soon-it won't be just a E.piphany or Siebel application but a complete integration package, with technology plus services on how to use that technology within the organization."But while management changes slowly, technology development is rapid. Vendors are coming to market with fast, real-time systems that can gather information, analyze it and disperse recommendations to sales channels while a customer is on the phone line, at an ATM or kiosk, or on-line over an Internet connection.Compaq Computer Corp. epitomizes the new approach with its clumsily named Zero Latency Enterprise. Compaq's goal, says Allan Greenberg, who led the ZLE initiative before decamping to Nortel Networks recently, is to bring all of a customer's data together on demand. It's designed to take customer information from call centers, Web sites and information updates (like billing status), create a comprehensive profile of the customer, and make it available to customer service reps, marketing executives and anyone else who might need it. Compaq modeled a system with one billion transactions providing real-time updates to a simulated 40,000 reps using a database of 111 terabytes.The hot topic in CRM is real-time. "Real-time information allows you to extend your customer management capabilities to the inbound channel," says Kevin Faulkner, vice president of market development at E.piphany. "That can easily be extended to the branch, to ATM and to kiosks. To extend your marketing and customer treatment, you need real-time customer profiling and use of real-time customer data to make contextual decisions about how to treat the customers. It can't be the result of off-line analysis done once every three months that comes back and says, 'The next best offer to present is X.'"By combining information from its data warehouse with analytical processing-and then adding any new information gleaned from, say, the customer's phone conversation or session on a Web site-a bank can evaluate the customer, seek a match with its existing marketing programs and make an offer while the customer is still on the line. "Then it is not just knowing the latest data, but making the decision in real-time as you are interacting with the customers," Faulkner says. "For this, you can't rely on classic back-office decisioning."Long Way to Go
Off-line analysis can still play a role in analyzing customer behavior and in using statistical tools and segmentation to determine that a customer might be likely to accept a particular product. Then if that customer comes to the call center, the bank can make a targeted offer. "A lot of banks aren't even there yet," Faulkner says. "We are talking about moving way beyond that."The more advanced systems track the offers a bank has already made, and they show the customers a little mercy. Good CRM systems provide consistency, control and coordination over all sales channels, says Faulkner. "If I have made you an offer on an outbound channel or on the Web, and you turned it down, I don't need to make it on an inbound call."Consistency requires a marketing program that sits above all the retail channels and integrates their information, he adds. "Banks are creating centralized control for marketing that says 'I have analyzed this customer-here are the models, here is how I have segmented the customer,' and then combine that with real-time profiling based on what the customer has done in all the channels."Who's using this advanced form of CRM? Not very many companies yet, but telecommunications and financial services firms express the strongest interest in it.American Express Co., for instance, uses E.piphany in its customer service call centers and card activation centers, Faulkner said. "I can't disclose results and cross-sell rates, but they are significant enough for Amex to buy an enterprise license for the software and to roll it out to their MyAmex Web site. They will be E.piphany's first banking customer to go live with a call center."David Disney, director of marketing for IBM Global Financial Services Sector, says that the high-end, real-time analysis available is still quite limited, at least in marketing. But real-time profiling and analysis are already used by credit card companies to prevent fraud. "If you never spend more than $200 for a dinner and then you try to charge $4,000 on your credit card, the program will detect that this doesn't fit your buying pattern," he observes. "As for real-time analysis of customer buying behavior for relationship marketing, the first place you will probably see that happening is on the Web. There, as you hit certain Web pages, a firm can see what your interest level is and combine that with information already in its data warehouse to make you an offer," Disney says. "There is no question that the technology is here."

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