For all the hope and money that went into customer relationship management software and strategy in the 1990s, the final results were lukewarm at best.
But now many of these plays are being improved upon, and Webster Bank svp John Menke hopes the maturation of data management strategies and technology advancements such as the use of open systems will carve a new path to optimum customer service, sales and profitability.
The bank is adopting new technology that aims to upgrade data storage capability, turning it into a tool that gives a much broader view of customers, their financial profiles and banking relationships. And it does so in a manner that leads to the kind of quick action that serves the customers, keeps them from fleeing, and maximizes revenue for the bank.
Webster's strategy is based on using increasingly detailed data to predict and anticipate customer behavior. It's also using real-time proactive and reactive rules-based marketing programs using transaction and demographic data. The bank hopes to move its marketing beyond what Menke sees as the traditional bank marketing organization around products over the customer.
The pillar of this new strategy is solid actionable data management. Menke says that if "you're basing your pricing structure on the value of a relationship, then your data better be good." He says that you can't look simply at averages, but at actual accurate data when accessing relationships.
"Now you have the ability to capture transaction data in a better way than you had before and can get to what really makes money for an institution and what doesn't," says Menke, whose bank is deploying retail, small business and location-specific databases that encompass customer and prospect data for more than 140 branches. "There's now a potential for reaping greater rewards, and obtaining additional business from the customers who are most likely to give it."
That was the stated goal of prior customer retention and acquisition strategies implemented in some form by almost every bank in the late 1990s. What's improving for those who choose to adopt customer centric/data-driven service is server technology that's enabling better tracking and storage of individual transaction information. Menke says that more sophisticated data can lead to better analytics and models that are improving the institution's view of the customer. "You used to not be able to store transaction data. Now the server enhancements that are available allow you to store almost unlimited data."
Combined with improved modeling, Webster is hoping to identify variables in customer relationships and transactions more quickly and in a more actionable manner than was previously possible.
David Siesel, svp of product and systems development for Harte-Hankes, whose client roster includes Webster and about two dozen other financial services clients, says the increase in open systems gets some of the credit for improvements in data management technology.
"Traditional systems were disparate, now all of these applications are coming together. The ability to capture and utilize data from many different touchpoints can create a 360 degree view of a customer. Before, people knew this was the right thing to do, but the tools were cumbersome. Today, these technologies are coming together."
Robert Lord, vp and database services and operations manager for Harte-Hankes, says a broader league of financial services competitors, including insurance firms, brokerages and banks is making the concept of "wallet share" increasingly important. "Getting that field of data to predict customer behavior is paramount," says Lord, whose Harte-Hankes faces competition from the likes of Acxiom and Fair Isaac.
By making data storage more of a proactive tool than just an information repository, Menke says customer information is always available, and always changing as per the customer's actions. "You're pulling in data from that warehouse on a regular basis into specialty systems that are geared toward data marts that would perform marketing functions, or accounting, or product functions," he says.
By way of example, Menke says a consumer who makes a huge deposit into an account that pays no interest can quickly be engaged in a dialogue as to how that money can more profitably be invested because the transaction is immediately integrated with other transaction and customer data-quickly hatching a plan. In the old days, that cash could sit in a non-interest account for some time before anyone noticed. "That's what happens with a windfall, they don't tell you, and you wouldn't have know unless somebody made a note and physically intervened," Menke says.
Kim Collins, research director at Gartner, says there's a growing sophistication in data-driven marketing techniques across the industry. She says some of the techniques have become so sophisticated, even the channel the bank chooses to utilize for a specific customer is based on profitability. "A lot of marketing is driven into the call center or other channels, based on the value of the customer."
