Customer Experience & Strategic Communications

The More the Merrier: Leveraging Open

Data Sources to Increase Customer
Insights Through Predictive Analytics
Predictive Analytics World
Boston 2015

BeyondMarch
the Arc,
Inc.
2014

2014 Beyond the Arc, Inc.

Identify, resolve, and prevent consumer

complaints

Why analyze complaints

The case for customer experience

A few lessons our clients have learned

Complaint analysis highlights

Social media insights

Preventing complaints

Building a stronger complaint management process

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Why analyze complaints?

The shareholder value connection to customer

experience is within reach, given that the value of
a company is ultimately based on the amount of
money customers are willing to spend with it.
--Peppers & Rogers Group 2012

Customer experience leaders have more than a

16% advantage over laggards in consumers'
willingness to buy more, their reluctance to switch
business away, and their likelihood to recommend
-Tempkin Group

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The value of improving customer experience

is clear
Total
revenue
potential

Churn
reduced

Additional
purchases

Word of
mouth

Temkin

$246M

$91.8M

$82.3M

$72M

Forrester

$307M

$83M

$213M

$12M

Incremental purchases from existing customers in the same year

Revenue saved by lower churn
New sales driven by word of mouth

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Sometimes we just dont feel our customers pain

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Include social data to create an integrated

view of the customer
Internal

Data from across the

enterprise

o
o
o
o

o
o

Customer feedback
Frontline notes
Transactional data
Behavioral data
Net Promoter
Employee surveys

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Social

Regulatory

Twitter
o Facebook
o Blogs

Social media about you

and your competitors

Customer complaints

Federal
o State
o CFPB

Of the top 10 sites in 2005 only 1 was social

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Top Sites in 2005

Top Sites in 2015

1 yahoo.com
2 msn.com
3 google.com
4 ebay.com
5 amazon.com
6 microsoft.com
7 myspace.com
8 google.co.uk
9 aol.com
10 go.com

1 google.com
2 facebook.com
3 amazon.com
4 youtube.com
5 yahoo.com
6 wikipedia.com
7 ebay.com
8 twitter.com
9 craigslist.org
10 go.com
Source: SEOmoz.org, eBiz MBA, Alexa

People use social media to share product

experiences

70%
38%

of bloggers talk about brands on their blog

post brand or product reviews

Source: eConsultancy

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Consumers often share very specific complaints

If Bank of America doesn't fix their Mint.com synch issue I
am going to break out in hives. And switch banks.
@BofA_Help @mint . (Twitter) . (Author = gidgejane)
@BofA_Help please get bofa working with mint.com again,
i'd hate to have to switch to chase... . (Twitter) . (Author =
pylestyle)
@BofA_Help ... To me the biggest plus of BofA is the
mint.com integration. If that goes, you become a place to
deposit checks. #replaceable . (Twitter) . (Author =
trampel)
a Bank of America is considering capping debit card
purchases at $50 or $100. Final reason to move my
banking elsewhere . (Twitter)

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Google never forgets Not even at the

Greater Alliance Credit Union in Hackensack, NJ
I've been a member of this Credit
Union for over 12 years, but
tomorrow I'll ..close my accounts.
Would have done it earlier, but I
had a loan with them.

Photo: HOWARD McWILLIAM/UK Telegraph

Posted on Yelp on 1/14/2009

Found in Google search 9/29/2015

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There's the hostile tone of

voice over the phone from
people who never tell you
their name. There's also the
belligerent attitude of most
of the Hackensack folks and
the sophomoric website that
a high-schooler could have
built.
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A financial institution that has chosen

not to use social media should still be
prepared to address the potential for
negative comments or complaints that
may arise within the many social media
platforms...
FFIEC, January 22, 2013

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Case Study: American Express runs a variety of

Facebook campaigns
Most social data analytics focus on marketing

Categories of Amex posts

o
o
o
o

o
o

Event promotion
Amex PR
Earn points
Incentivize usage
Target communities
Offer merchant
discounts

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We analyzed customer feedback by lifecycle stage

within the Link, Like, Love campaign

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Advanced text mining and lifecycle approach

revealed actionable insights

Customer experience issues varied

over the lifecycle

Registration

Most comments generated during the

Registration and Usage stages.

Privacy and Security Concerns

Technical issues (Demand crashed
the American Express system)
News and discussion on this new
innovation, raised awareness.

Initial and Repeat Usage

Usage & Functionality (How does it work?)

Deals and Sharing

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Case study: analyzing Bank of America service breaks

by analyzing comments on Facebook and Twitter
Context.

Dissatisfied customers couldnt

access their accounts

What were customers saying?

o Bank of America has officially and permanently
blocked access to mint.com according to the
customer service guy I spoke with earlier. #mint .
o To me the biggest plus of BofA is the mint.com
integration. If that goes, you become a place to
deposit checks. #replaceable
o If Bank of America doesn't fix their Mint.com synch
issue I am going to break out in hives. And switch
banks.

Final assessment. Bank of America could

have quickly identified concerns and updated
customers on the situation, instead of allowing
misinformation to spread.
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What is VOC?

A Voice of the Customer program uses text analytics to turn

your unstructured data into structured data

so you can quantify what your customers are talking about for
analysis and take action
Page 16
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Voice of the Customer in financial services

Challenge Bank wanted to build a comprehensive enterprise Voice of

the Customer program to enhance services, reduce

customer attrition, and identify emerging risks.
Approach

Our client possessed customer satisfaction survey data that

contained text responses to open-ended questions. The company
also had a rich collection of detailed notes from its bankers on the
front line.
We created an Automated Customer Feedback Analysis Engine
that ingested over 1 million customer comments per month
(including customer email).

We categorized the unstructured customer feedback with a

Subject+Product+Channel custom classification model, and
pushed the tagged data out to internal systems at the bank. Our
approach used machine learning, text analytics, and data
visualizations to:

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Track top customer pain points to understand the customer

experience, from the customers point of view.
Identify emerging issues and make improvements to reduce risk
of attrition and avoid regulatory action.

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Case study: Quantifying the Silent Majority to

determine total impact and risk exposure
Challenge

A top 5 American bank wanted to prevent potential billion dollar enforcement

actions by reducing its regulatory risk exposure.

Opportunity

When the Consumer Financial Protection Bureau fines banks, it does so based
on the number of customers affected, not the number who complain. However,
the bank has access to complaints that were filed with the Consumer Financial
Protection Bureau as well as internal transactional and customer feedback
sources.

Solution

Client worked with BTA to identify problems through VOC analysis of customer
feedback, then determine size of the Silent Majority to prioritize action.

Our role

We developed an engine to discover emerging customer experience pain points

in customer feedback using a combination of Natural Language Processing and
statistics. In some cases, only a handful of customers commented. We deemed
these the Vocal Minority.
However, we were interested in all the potentially affected customers the Silent
Majority. To quantify this number, we had to translate the issues into structured
data. We analyzed the customer profiles of the Vocal Minority, then searched for
similar attributes in the entire customer base.

Wins for the

client

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Discovered a payment issue from 1,000 customer comments that affected

500,000 customers

Avoided between $200,000 and $500,000 in potential regulatory penalties

from the CFPB

In one case, 25 comments referenced a password issue that impacted over

1,000,000 customers, and could have cost millions in lost revenue

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Ignoring the Vocal Minoritys issues can

result in expensive fines and attrition
Vocal
Minority

Silent
Majority

Vocal Minority
provides feedback
about a customer
experience issue

FINES:
Regulators fine
company based on
Silent Majority

Feedback goes
unheeded

CHURN:
Disgruntled
customers leave for
greener patures

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Quantifying the Silent Majority leads to

intelligent action to address the biggest issues

Vocal
Minority

Silent
Majority

Vocal Minority
provides feedback
about a customer
experience issue

Take action to fix

issues posing the
greatest risk

Discover issues and

quantify the Silent
Majority

SAVINGS:
Prevent $$$
millions in fines
and lost revenue

Beyond the Arc, Inc.

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Voice of the Customer analysis is the key to

preventing feedback from escalating

Voice of the Customer (VOC) analysis allows you to:

Identify customer pain points to improve the

customer experience and drive retention

Detect regulatory risks and

address them before the CFPB
takes punitive action

Tie VOC feedback to transactions,

complaints, and other data sources,
with Big Data and analytics

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The jurisdiction of the CFPB has grown to

include many products and services

Bank accounts
Bank services
Credit cards
Credit reporting
Debt collection
Money transfers
Mortgages
Payday loans
Student loans
Vehicle or consumer loans

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Many companies have voiced their concern about

the CFPB and the complaint database

Complaints are not verified for accuracy

Not representative of the population as whole

Cannot determine if complaints are related to

dissatisfaction or misunderstanding terms of service

However, analysis of issues in the CFPB can help you

determine where the customer experience is falling
short

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The card industry has struggled with complaints

Capital One had the most complaints overall and the most when scaled by
cards in circulation

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But, now some of those institutions have successfully

reduced complaints
% change
2014 vs 2013
Capital One
Bank of America
Citibank
Discover

-15%
-12%
-7%
-6%

GE Capital Retail
Barclays
Wells Fargo
Amex
JPMorgan Chase
U.S. Bancorp

48%
31%
10%
7%
6%
3%

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Across the credit card industry, nearly 13k

complaints and $500M in fines in 2013
Credit card complaints by month
1400

1200

1000

JPMorgan Chase
fined $389 million
for unfair billing
practices

800

600

GE Capital Retail
fined $34 million
for deceptive
practices

400

American Express
fined $69.1 million
for illegal practices

200

0
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

What can companies due to avoid complaints, and the fines?

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CFPB fines and penalties are getting larger

Average amount of CFPB

enforcement
(in $ millions)
300
250
200
150
100

50
0
2012

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2013

2014

Disproportionate levels of consumer complaints

draw regulator attention-- and action
Together, the two companies were fined over $400 million for
unfair marketing practices for add-on products

Capital One and Discover account for a disproportionate number

of complaints of this type
Percent of all complaints versus percent of marketing
and add-on complaints resulting in monetary relief

35%
30%

Capital One was fined

$210 million on 7/18/12

25%

Discover was fined

$214 million on 9/26/12

% of all complaints

20%

% of marketing and card

protection services
complaints resulting in
monetary relief

15%
10%
5%
0%
Capital One
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Citibank

Bank of
America

JPMorgan
Chase

GE Capital
Retail

Amex

Discover

Wells Fargo

Source: CFPB, Beyond the Arc

Barclays

U.S. Bancorp

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Monetary relief draws the focus of the regulators

The CFPB is most interested in
complaints that are closed with
monetary relief

These types of complaints are

important because:

The company acknowledged

responsibility, and

Owes the customer financial

restitution

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Billing disputes and APR are most frequent

drivers of monetary relief
The CFPB is likely paying attention to billing disputes since they
account for the highest level of monetary relief
30%

Top 5 issues that result in monetary relief

25%

20%

15%

10%

5%

0%
Billing disputes
Beyond the Arc, Inc.

APR or interest rate

Late fee

Identity theft / Fraud /

Embezzlement

Other fee

Source: CFPB, Beyond the Arc

30

Complaint data suggests Citi and GE Capital

are at risk due to billing disputes
The two companies account for a disproportionate number of
billing disputes that result in monetary relief

The CFPB is making investigative decisions based on this data

25%

Percent of all complaints versus percent

of billing disputes resulting in monetary relief

20%

% of all complaints

15%

% of billing dispute compliants

resulting in monetary relief

10%

5%

0%
Capital One
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Citibank

Bank of
America

JPMorgan
Chase

GE Capital
Retail

Amex

Discover

Wells Fargo

Barclays U.S. Bancorp

Source: CFPB, Beyond the Arc

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Citi is at-risk for APR-related complaints, and

social feedback is an early warning indicator

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Sample comments: rate complaints for Citi

How's this for cynical capitalism. Rang

Called up Citi to pay-off and close my
credit card. The lovely lady in the
Phillipines asked me why and I said:
your interest rate is far too High (21%)
and she said Well I'm now willing to
lower your rate because you are such a
valuable customer .....Well if that's the
case, why didn't you drop it earlier?

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Analysis of social data and CFPB complaints can

increase retention and decrease regulatory risk

Banks can monitor social media for emerging customer

experience issues, and resolve the problems before they
result in complaints to the CFPB

By reacting quickly to customer feedback, banks show they

value their customers

One companys mistake is anothers warning:

Banks can learn from competitors so they avoid similar problems

Data-driven comparison

Social media and the CFPB database allow you to compare yourself
to your competitors in key customer experience metrics

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You can prevent complaints

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35

Understanding the customer journey across multiple

channels and touchpoints
Customer perspective

Customer surveys
Online feedback forms
Customer email
Transaction & POS data

Frontline inputs

Feedback from customer-facing

teams
Agent and customer service reps
operating metrics
Supervisors

Escalation queues

Internal escalations
Team feedback
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Do we have a customer focus?

Viewing the entire relationship?
Have we captured channel insights?
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Key steps to strengthening Voice of the Customer

Define

1. Define your VOC strategy

Listen

2. Listen to the VOC

Analyze

3. Analyze and track customer feedback

Report

4. Report on the findings

Act

Measure

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5. Act to improve the customer experience

6. Measure results, and repeat the cycle
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Develop a process for managing complaints

Develop an enterprise-wide program for overseeing the

customer complaint process

Compile, analyze, and summarize customer complaints

across the enterprise

Use internal and social data to improve customer

experience

Robust governance

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What technologies are required?

Tools to manage complaints across channels:

Collecting the data (APIs, frontline data entry)

Integrating the data sources (data warehouse)

Reporting (Business Intelligence tools)

Deeper analysis to generate actionable insights (text

analytics, predictive analytics, social analytics)

Routing feedback to the appropriate departments

(enterprise feedback, CRM)

Archiving (data warehouse, cloud storage)

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Continuously improve or lose

Whats needed?

Why?

Manage regulatory complaints

Resolve customer problems
Prevent irritations before they become problematic
Customer retention, satisfaction, loyalty
Engagement that leads to increased purchases and referrals
Mitigating regulatory risk

How?

Predictive analytics
Text analytics for VOC and social media
Customer journey mapping across the lifecycle

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Pro tips and next steps

Build a predictive analytics strategy for

customer service

Analytics

The key to harnessing the

power of your data

Incorporate a wide range of relevant customer

behavioral data and build models to help understand
customer expectations

Expand Voice of the Customer analytics

Expand your VOC data sources, classification system
(taxonomy), and machine learning techniques
Predictive analytics
o Voice of the
Customer
o Social customer
insights
o

Further leverage social media to enhance

customer insights
Identify, collect and incorporate social media data into
your Voice of the Customer efforts

Beyond the Arc, Inc.

41

Thank you
Steven J. Ramirez, CEO
Beyond the Arc, Inc.
Office

1.877.676.3743

Email

sramirez@beyondthearc.com

Digital

beyondthearc.com
@beyondthearc
Facebook.com/beyondthearc
Slideshare.net/beyondthearc

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42

A little about us

Strategy

Analytics

Highlights and credentials

Recent press

Recognized by Forrester Research among 15

top firms in Customer Experience Consulting

Social media panelist, BAI Retail Delivery

Annual Conference 2012, 2013

Faculty Fellow, Pacific Coast Banking School,

August 2012

Featured speaker on VOC best practices, Text

Analytics World 2011, 2014

Featured speaker on social media data

mining, American Bankers Association 2013

43

Insights

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Action

Fortune, June 2014

Fox Business, January 2014
Loyalty Magazine, Summer 2012

Destination CRM, May 2012

American Banker/Bank Technology News,
Jan 2012

BAI Retail Banking Strategies, Jan 2012

ABA Banking Journal, Jan 2012
Social Business Today, Customer
Experience Management @ TMC.net, and
numerous blogs and online publications

Disclaimer and copyright

2015, Beyond the Arc, Inc. All rights reserved

This document provides our commentary and analysis. The information contained herein is
of a general nature and is not intended to address the circumstances of any particular
individual or entity.
Although we endeavor to provide accurate and timely information, there can be no
guarantee that such information is accurate as of the date it is received or that it will
continue to be accurate in the future. No one should act on such information without
appropriate professional advice after a thorough examination of the particular situation. No
warranty expressed or implied.

The information provided in this presentation is not intended nor should be used as a
substitute for legal advice or other expert opinions and services in specific situations.
This material may not be distributed.
Other company, product, and service names may be trademarks or service marks of others.
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