Tailoring a Profitable Customer Experience Ted Brewer Vice President CRM

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Tailoring a Profitable Customer ExperienceTed
BrewerVice PresidentCRM Information
ManagementRBC BankingPresentation to WLU
MBAJanuary 20, 2004Waterloo, Ontario
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Agenda

• RBC Financial Group
• Whats Important To The Client
• Charting Our CRM Journey
• Our CRM Vision and Strategy
• CRM Business Architecture
• Success To Date
• Moving Ahead Leveraging Extending
• More Lessons Learned
• Questions

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(No Transcript)
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RBC Financial Group

• A diversified financial services organization
  operating in 30 countries world-wide
• RBC Banking ? Personal Commercial Banking
• RBC Capital Markets ? Corporate Investment
  Banking
• RBC Insurance ? Insurance
• RBC Investments ? Wealth Management
• RBC Global Services ? Transaction Processing

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RBC Financial Group

• More than 12 million personal, business and
  public sector customers in North America
• 60,000 employees in 30 countries
• 362 billion in assets
• Net income 2.4 billion (fiscal 2001)
• Market Cap approx. 37 billion

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North American profile
RBC Banking contributes over 50 of RBC Financial
Group earnings

• 12 million personal and business customers
• Assets 148B
• Deposits 115B
• 35,300 employees (Full-Time Equivalent)

• Products mortgages, loans, cards, deposits
• Manages physical and electronic delivery network
  for RBC Financial Group

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Multi-channel distribution

• Physical Network
• Canada
• 1,132 urban /suburban/ rural branches
• 60 Business Banking Centers
• U.S.
• 241 branches in 143 communities in the Southeast
  U.S.A.

• Mobile Sales
• Canada
• 508 Investment Retirement Planners Financial
  Planners
• 506 Commissioned Mortgage Reps

• ATMs/ POS
• Canada
• 2,502 on-site ATMs
• 1,735 off-site ATMs
• 75 of clients with debits cards
• U.S.
• 213 on-site ATMs
• 48 off-site ATMs
• 35 of clients with debit cards

• Telephone Banking
• Canada
• 2.2 million customers 7 million calls/month
• U.S.
• 800M calls/month

• Internet Banking
• Canada
• 1.9 million online clients
• U.S.
• 112,000 online clients

• Other Points of Sale
• e.g. 2900 car dealerships

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What is important to the client.
Trust
Mutual Benefit- Reciprocity
Reassurance
Comfort
Understanding
24x7 PC/Internet Banking
1-800 Number
ATM Access
GenericMail
Convenient Hours
Short Lines
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What customers really want.
Obtaining Standard Services
24x7 PC/Internet Banking
1-800 Number
ATM Access
GenericMail
Convenient Hours
Short Lines
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What we know about our customers

• 45 are currently unprofitable
• 90 of profitability comes from 20 of our
  customers
• 80 use 2 or more delivery channels (convenience
  is the driver of multi-channel usage)
• 70 use a branch in any 1-3 month period (50 for
  a transaction and 50 for advice and/or problem
  resolution)

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Charting the CRM Journey
Prior to 1997, focused on building strong data
management capabilities, developing a
profitability model, segmentation and sales
management approach, effective and efficient
direct marketing capability.
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Charting the CRM Journey
Prior to 1997, focused on building strong data
management capabilities, developing a
profitability model, segmentation and sales
management approach, effective and efficient
direct marketing capability.
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Charting the CRM Journey
Formed a CRM Program Office, implemented some
Quick Wins and built a CRM framework for
implementation. Generating revenue as you go.
Prior to 1997, focused on building strong data
management capabilities, developing a
profitability model, segmentation and sales
management approach, effective and efficient
direct marketing capability.
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Charting the CRM Journey
99 -00
Beyond
We organized around the segments - adopting CRM
as a way of doing business
97-98
Formed a CRM Program Office, implemented some
Quick Wins and built a CRM framework for
implementation. Generating revenue as you go .
Feb 97
Completed a CRM Readiness Assessment and gap
analysis, develop a CRM strategy and roadmap for
implementation.
Pre 1997
Prior to 1997, focused on building strong data
management capabilities, developing a
profitability model, segmentation and sales
management approach, effective and efficient
direct marketing capability.
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Our Client Relationship Strategy
To grow profitable relationships with each one of
our business and personal clients

• By creating a tailored client experience
• By building a more personal and friendly brand
  and corporate image
• By reducing costs
• By effectively managing risk and capital

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Creating the Tailored Client Experience

• What we know about our clients
• Foundation research and profitability
• Insights on lifetime value, vulnerability,
  risk and propensity to buy

• What we do with this information
• Organize to deliver
• Develop personalized strategy for every
  client

• How we implement
• Optimize sales effectiveness

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CRM Business Architecture Fulfilling
the Vision
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Supporting the sales process
This process is fully deployed in all of our more
than 1,300 Canadian sales units/branches and call
centers. It is currently being rolled out in RBC
Centura.
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Early Success Indicators 1998 - 2000

• 60 reduction in direct marketing cycle time
• 15 increase in the of our most profitable
  client segment since inception
• Direct marketing efficiency continues to improve
• 1999 marketing revenue under CRM exceeded
  projections by 27
• 1999 revenue growth top in the Canadian market
• Employee Capability measures up
• Client Satisfaction measures all up RB now
  top-ranked among our peer banks

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What Have We Learned So Far

• Strong executive sponsorship is key
• Segmentation is a journey which will evolve over
  time
• Combination of research and analytics creates
  greater and more actionable consumer insights
• Create early wins to prove the concept and fund
  the investment

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What Have We Learned So Far

• First lead lists must improve staffs success to
  establish credibility for the future
• Centralized decisioning and automation raise the
  bar in terms of desire for perfection
• Change management plan is fundamental
• Operational alignment is key to success
• Make it an attitude, the way we do business

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Moving Ahead - Key areas of focus .

• Support the strategic goal of being The
  undisputed lead provider of integrated financial
  services in Canada.
• Continuously initiate, define, and deliver
  extended capability for our CRM / CIM platform
  with Enterprise Wide scope and cross platform
  leveragability, integration, optimisation, and
  performance measurement as key priorities.

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Baseline Requirements (current deficiencies)

• multiple decisioning levels at the client and
  account level
• supports life event requirements
• allows product bundles from a marketing
  perspective without hard coding them
• sequence decisioning
• keeping track of the history
• managing a multi step contact
• configuration tool / optimization tool
• end-to-end process
• prioritization facility (ability to run scenarios
  with multiple variables assigned to competing
  client strategies - at the initiative level)
• dynamic capacity management
• dynamic response mechanism (performance
  measurement feedback)
• direct data access
• get away from 2000 attribute limit
• continual movement of files and translation of
  code

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Baseline Requirements (current deficiencies)

• data quality tolerance
• utilization of other derived data (from other
  decisioning sources)
• be able to use prospect data for decisioning
• third party data utilization
• less data sensitivity to missing or dirty data
• rapid test learn
• can we impact the strategy development process
• how close can we get to true 11 marketing do we
  want to get (today creative limit set at 5,000)
• dynamic decisioning
• operational (periodic)
• marketing (dynamic)
• flexible tool
• limited learning curve
• time to market (duration from business
  requirements to execution)

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Extending OUR CRM Capability

• Enterprise Client Registry Creating a holistic
  client view
• Customer Preference Choice Facilitating a
  mutually beneficial relationship
• Client Current Value Metric Assessing total
  value to the Enterprise
• Integrated Decision Systems Strategic
  integration of decisioning events to ensure a
  consistent and coordinated customer experience.
• Integrated Decision Metrics Monitor, measure,
  and manage business performance that link results
  to action.

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ECR/CPC Business Architecture
Enterprise Client Registry
RBC
RBC
RBC
Others
Investments
Royal Bank
Insurance
Customer / Service Information
We have now added a fourth key priority called
Cross Platform Leverage, which addresses how we
at RBC Financial Group are working across
business platforms to deliver integrated
financial services to our customers and enhance
our efficiency.
RBC Employee Communications January 25, 2002
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Derived Linkages and Confirmed Linkages

• Two Types of Linkages
• Derived Linkages
• Matches based on an algorithm using client
  information such as name and address
• Client Confirmed-
• Matches generated by a nuggets of gold
• Matches confirmed by client during sales or
  service dialog

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CPC facilitates a mutually beneficial
relationship promise.
Customer
Relationship Promise
Expectations
Contributions
Offerings
Promise

• Coordinated effort across all affiliates and
  subsidiaries of RBC
• Consistent product offering across all channels
• Customer care initiatives
• Technology to manage customer informationacross
  the organization

• Integrated Financial Services
• Positive human contact
• To be listened to
• To be treated like an individual
• Service consistency
• Fair, predictable, simple
• Service accessibility
• Financial Solutions
• Choice and Control

• Buy products and services
• Stay with RBC longer
• Consolidate investments within RBC

• One-On-One Proposition
• RBC will ensure that all customers are treated
  as valued individuals. RBC appreciates,
  understands, and provides advice to help
  customers make decisions in order to achieve
  their goals.

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Three Domains for Customer Preference Choice
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Client Profitability - CCVM Recognized Industry
Leader

• Industry Recognition
• Case Studies
• Customer Profitability Fall 2000 (EFMA)
• Putting ABC into Customer Profitability
  Meridien Research, September 2000.
• Customer Profitability and Customer Relationship
  Management at RBC Financial Group Harvard
  Business School
• Presentations
• USA, Japan, Korea, Hong Kong, Taiwan, mainland
  China

(EFMA) European Financial Management and
Marketing Association
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Behavioural Based Model is Key
Business Unit Profitability
Product Profitability
Customer Profitability
Core processing systems (SOR)
General Ledger
ABC Costing
Summarized volumes
Averaged volumes
Actual volumes
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Client Profitability From a Traditional to a
Behavioral Model
- Some balance capture issues
- N/A not available
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Fit within RBC
Enterprise
BI Reporting
Active Data Warehouse
Analytics
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Components of the Intersection

• configuration tool (external)
• leverage CPC to manage the maximums
• enhanced targeting and sequencing
• contact prioritization (client)
• forecasting
• understand operational, fraud, triage,
  collections contacts
• optimization tool (internal)
• managing to the minimum (goal setting)
• channel and capacity management (load balancing)
• contact prioritization (tactic)
• employee considerations
• regulatory
• specialty areas
• skills base
• account management (customer assignment)
• enable life events
• access to other sources of data
• third party
• less precise/lower quality

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The Enterprise Vision
Objectives
Scorecard
IDM
IDS
Analytics
Business Intelligence
Results
Tactics
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Corporate Strategy

• Strategic Focus
• Back to Basics
• Differentiated Customer Experience
• Money in Motion
• Financial Advice
• Cost Risk Management

regulatory
economic

• executive scorecard/dashboard
• compliance reporting
• PL linkages
• aggregate roll up level
• customer satisfaction
• employee satisfaction

• Strategic Objectives
• Sales/Business Performance
• Customer Loyalty
• Employee Capability Commitment
• Management of Risk
• Corporate Reputation Image

• business case/PIR
• client/portfolio level
• trending
• retention

• tactics reporting (sales, channel, client and
  product
• sequence reporting
• problem management

• Client Strategies
• campaigns (sequencing treatments)
• sales programs
• Distribution Venue
• O/O SP
• LE paper
• TT
• Channel Execution
• branch call centre
• mobile online
• paper (mail, inserts)

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IDM the desired end state
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Balanced approach sustains CRM leadership position

• An interesting aspect of Royal Banks approach
  to CRM is that it does reflect a balance among
  technology, people, and business processes The
  acknowledgement of this reality and the
  willingness to allocate resources accordingly
  separates Royal Bank from most other financial
  services institutions.

- TowerGroup, January 2001 CRM Case Study The
Analytics that Power CRM at Royal Bank
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THANK YOU !
QUESTIONS?