A Chance To Rebuild

Infor CRM > White paper
Infor CRM
A Chance to Rebuild: The Path Forward for Financial Service Providers

Establishing Best Practices in Multichannel Marketing Environments
Table of Contents
Introduction: What Have You Done For Me Lately? ........................................................................................... 3 The Evolution of CRM................................................................................................................................................... 5 Technology Challenges of Implementing CRM .................................................................................................... 6 Decisions, Decisions: Setting the Right Goals and Metrics.............................................................................. 7 Best Practices for Multichannel Marketing Environments .............................................................................. 8 Conclusion: Building (and Rebuilding) Relationships through Multichannel Marketing ......................11 About Infor ...................................................................................................................................................................12

Infor is in no way committing to the development or delivery of any specified enhancement, upgrade, product or functionality. See disclaimer paragraph contained herein.
Introduction: What Have You Done for Me Lately?

Banks, insurers, investment firms, and credit unions stood at the center of the financial storm that recently shook the global economy. For months, dramatic government interventions made the financial industry a part of the nightly news dietand everyone was getting indigestion. Faced with stories about bailouts, bonuses, and irresponsible business practices, many consumers reacted with anger and distrust.
Relations between consumers and their financial institutions have been deteriorating for some time. The financial crisis just made it worse. According to the J.D. Power and Associates 2009 Retail Banking Satisfaction Study, customer perception of banks has declined for three years running.1 A recent survey from Nielsen Claritas showed that 40% of respondents said their trust in the financial industry had weakened, while two-thirds said they didnt believe the financial services industry would ever help them to recoup the losses theyd incurred during the downturn.2
According to the J.D. Power and Associates 2009 Retail Banking Satisfaction Study, customer perception of banks has declined for three years running.
This widespread dissatisfaction is having some real consequences. The Nielsen Claritas survey showed that one in five respondents were likely to move funds from their current financial institution in the near future, while one in ten said that they would likely move them all.3 In addition, the percentage of so-called highly committed customers (those who are likely to use more products, give more referrals, and stay loyal to their financial institution) has declined steadily since 2007.4 In short, these institutions stand to lose their most loyal customers at a time when they need them most. So how can a bank, insurer, investment firm, or credit union prove their commitment to customers and win back their trust? By offering substantive help in managing their finances, communicating clearly and directly, offering communications channels to suit individual customer lifestyle and preferences, making it easy to move between channels, and actively seeking feedback on their products and quality of service. These measures will help improve service delivery while firmly establishing the financial service provider as a credible, trustworthy partner.
1 2 3 4
J.D. Power and Associates, 2009 Retail Banking Satisfaction Study (http://www.jdpower.com/finance/articles/2009-Retail-Banking-Satisfaction-Study). Kathy Chu and Sandra Block, A Costly Crisis of Confidence, USA Today, November 10, 2008. Ibid. J.D. Power and Associates, 2009 Retail Banking Satisfaction Study (http://www.jdpower.com/finance/articles/2009-Retail-Banking-Satisfaction-Study).

By applying a set of CRM best practices to their multichannel marketing, financial institutions can position themselves for post-recovery growth.
Enacting these measures requires a strong multichannel marketing approach that allows financial entities to reach customers through the Internet, mobile applications, telephone, direct mail, ATMs, branch locations, physical offices, and email. A multichannel approach accomplishes several goals simultaneously: It meets customers on their terms, through the channels they prefer; it can increase per-customer profitability by 25% to 50%;5 and it allows financial institutions to increase the value of one of their strongest business assetstheir customer information by adding depth and dimension to their data.
Most leading financial service companies already employ customer relationship management (CRM) solutions to help them connect with customers, anticipate their needs, and create targeted marketing campaigns. But they may not be using CRM to its best advantage, either because their solution doesnt provide the capabilities they need or because theyve failed to apply proven processes. By applying a set of CRM best practices to their multichannel marketing, financial institutions can position themselves for post-recovery growth. They can win back the customer trust and lay the groundwork for stronger, more profitable relationships in the future.
Corey Yulinsky, Multi-Channel Marketing: Making Bricks and Clicks Stick, McKinsey Marketing Practice, 2000.
The Evolution of CRM

A report shows that as recently as 2000, most organizations viewed CRM as unlikely to deliver business benefits. But by 2009, the majority of these companies expected to succeed with CRM solutions, because in the last decade CRM applications have become less risky and more predictable.6 Today, companies see CRM as not just a pure IT solution, but a set of business processes, workflows, and best practices that dictate the efficient implementation of a CRM system.7
As CRM practices have evolved from IT solutions to effective business strategies, the delivery channels for these practices have expanded to include traditional and emerging communication tools. Thanks to these multiple channels, financial service marketers can now target prospects and existing customers with a new level of specificity, flexibility, and measurability that would have been impossible even a few years ago. Of course, the benefit of multiple channels comes with its challenges: The question of how to integrate these channels to gain maximum leverage from their data. The financial services industry has yet to fully grapple with this question. In a recent survey of North American banks, over 80% of the respondents did not anticipate having integrated online banking or mobile banking channels within the next two years, while over 60% said they would not have integrated contact centers, ATMs, or mailing channels.8 The positive effects of fully integrated multichannel CRM are becoming well known. One study of industry leaders concluded that superior CRM capabilities could indeed improve banking performance.9 And a necessary part of well-executed CRM for financial services is the ability to target customers, understand their needs, and tailor offerings across multiple touch points. This implies a cross-channel approach that delivers a unified marketing message across numerous channels and drives consumers to a single goal: A promotion, a purchase, or the consumption of information. Organizations that take a structured approach to leveraging multiple channels in collaborative marketing efforts gain higher response rates from consumers, higher return on marketing investment (ROMI), and higher customer profitability.10
Organizations that take a structured approach to leveraging multiple channels in collaborative marketing efforts gain higher response rates from consumers, higher return on marketing investment (ROMI), and higher customer profitability.
6 7 8 9 10
Gartner, Inc. Gartner Says Reviewing the State of CRM in 2000 Foretells Its Future in 2020, Gartner Press Release (http://www.gartner.com/it/page.jsp?id=899012), February 26, 2009. Peter R. Dickson, et al., The Pursuit of Excellence in Process Thinking and Customer Relationship Management. Journal of Personal Selling & Sales Management, Spring 2009. CRM the Top Priority, Bank Technology News, October 2008. Tim Coltman, Can superior CRM capabilities improve performance in banking? Journal of Financial Services Marketing, March 2, 2007. CRM the Top Priority, Bank Technology News, October 2008.

Technology Challenges of Implementing CRM

A recent survey indicates that data-sharing issues are an important factor for many financial services marketers.
The financial services industry has a long history of mergers, acquisitions, and spin-offs. But, their ability to share information across lines of business has often lagged behind their ability to change a name or a stock ticker. A rash of bank acquisitions occurred in 2009 as strong institutions scooped up their weaker competitors, and many of those banks are now struggling to share information across established line-of-business silos.11 On top of this, different departments within these financial companies may have varying procurement processes, technical requirements, and legacy systems. Both inter- and intradepartmental silos threaten the data sharing and optimization at the heart of CRM and may ultimately detract from a positive customer experience. A recent survey indicates that data-sharing issues are an important factor for many financial services marketers. Nearly half (45%) of respondents cited Data integration/Disparate systems as their top multichannel marketing challenge. A lack of technology to centralize multichannel management was the most pressing concern for 44% of respondents, while just over one-third of respondents (34%) cited organizational or departmental silos.12 Such back-office challenges may surface in the front office when a customer is asked to submit data in a format theyre unfamiliar with, or to resubmit data theyve already supplied through another channel. Even if a bank is able to overcome its data-sharing challenges by centralizing and aggregating data from disparate IT systems and departments, it may not have the analytical tools necessary to make good use of that data. A company must be able to perform robust reporting and real-time analysis on its data and redistribute those findings to all parties in the business decision-making processfrom the contact center employee on the phone with a customer, to the marketing director trying to finalize next years online advertising budget.13 Research shows that there is often a disconnect between the type of customer information captured and the information actually used because companies store information in multiple databases throughout their organizations.14 Another obstacle is implementation: Taking the results of an enterprise analysis and actually using the findings to drive future marketing efforts. Businesses must track not only the data leading into a customer interaction, but also its outcome. McKinsey advises using a test and learn approach to execute multichannel initiatives, using a combination of both negative and positive incentives to influence high-value customers.15
11 12 13 14
Cashing in on Integration, CRM Magazine, August 2007. Ian Michiels, Aberdeen Group, Cross-Channel Campaign Management: Next Generation Multichannel Marketing, October 2008. Tim Montgomery, Focusing on the Real-Time Customer: How to Keep Pace with Rapidly Changing Needs and Demands, International Customer Management Institute, December 2008. Aberdeen Group, The CMOs Strategic Agenda Series: Creating a Customer-Centric Marketing Organization, November 2006. Corey Yulinsky, Multi-Channel Marketing: Making Bricks and Clicks Stick, McKinsey Marketing Practice, 2000.
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Decisions, Decisions: Setting the Right Goals and Metrics

A financial service provider looking to enhance its multichannel marketing efforts must first determine where it wants to end up. Does it intend to acquire new customers, increase average revenue per interaction, or increase customer loyalty? If the goal is to increase customer loyalty, the financial institution will have to pay special attention to servicerelated interactions with existing customers, given the historical correlation between customer service quality and customer loyalty. Fees can also be a major influence on whether customers stay or go: J.D. Power reports that onethird of customers who switched banks in the past year did so because of increased fees.16
Research shows that those companies with the highest year-over-year increase in annual revenue, customer profitability, and marketing investment tend to focus on increasing ROI through unique marketing to high-value customers.
The goal of customer loyalty brings with it an attendant question: Exactly which customers? Every financial service provider has a wide array of clients who use a large range of products and generate anywhere from very little to a great deal of revenue. Research shows that those companies with the highest year-over-year increase in annual revenue, customer profitability, and marketing investmentwhat the Aberdeen Group calls Best-in-Classtend to focus on increasing ROI through unique marketing to high-value customers.17 The definition of a high-value customer varies by industry, but many financial service providers have chosen to target the mass affluent (those individuals with $100,000 to $1 million in liquid assets). Recent research by Booz Allen Hamilton suggests that this demographic segment represents a rich marketing opportunity for retail banks, but will require specialized services in order to become satisfied customers.18 Regardless of a companys aim, establishing the metrics by which they will define success is vital. Do they seek reduced cost per lead, decreased call center wait times, increased online use of online financial tools, higher return on marketing investment, reduced cost of churn? Knowing precisely what to measure proves invaluable when it comes to evaluating results. The final step is to actually perform the necessary measurements. Yet, according to one survey, fully 14% of financial services marketers dont bother to measure the lift of their cross-channel marketing efforts.19
16 17 18 19
J.D. Power and Associates, 2009 Retail Banking Satisfaction Study (http://www.jdpower.com/finance/articles/2009-Retail-Banking-Satisfaction-Study). Ian Michiels, Aberdeen Group, Cross-Channel Campaign Management: Next Generation Multi-Channel Marketing, October 2008. Alan Gemes, et al., Booz Allen Hamlton, Striving for Growth: Best Practices in Retail Banking Sales and Service Channels, 2007. Bridget McCrea, Creating Synergies, ICBA Independent Banker, September 2008.

Best Practices for Multichannel Marketing Environments

Virtually all financial institutions use multiple channels to interact with customers, but most are stronger in certain areas than others. A bank may have robust online services, but face continued challenges making sure their contact centers keep call times low and customer satisfaction high. An insurer may sell a number of policies through the physical offices while failing to convert many prospects through e-mail campaigns. This sort of imbalance in channel performance can cause many organizations to struggle with cross-channel marketing efforts, which require good performance across all relevant channels. For those organizations that master collaborative marketing efforts, the upside is significant: Higher response rates from customers.20 To fully realize the benefits of multichannel CRM, a financial institution should employ real-time analytics and decision-making; integrate data across all channels; create highly targeted, measurable multichannel campaigns; and deliver personalized service to customers. Implement Real-Time Decisioning Customers are voicing an increased desire for responsive, intelligent investment information that meets their individual needs. Companies in the banking, insurance, credit union, and financial services industries can better service these customers by empowering their employees to make real-time decisions and perform swift actions, based on immediate data access. Real-time decisioning capabilities help combine that data into one comprehensive and timely solution for the customer that satisfies an immediate need. Take, for example, a customer of a car insurance company who damages his car. He notifies his insurer by mobile phone. By crosscorrelating data on the individual customer, his history of contacts with the company, and information about his life cycle (i.e., marriage, birth of children, or retirement), the insurer can ask if the driver is traveling with his family and if he has special needs. The insurer can notify an appropriate car service to pick up the customer and his family, in addition to contacting the police about the accident.21 In this scenario, CRM enables fast decisions and action that directly address a very specific and time-sensitive customer pain. In doing so, it can also dramatically improve the quality of service interactions and help build customer loyalty. To maximize the relationship-building potential of customer interactions, a CRM solution should be bi-directional to ensure that insights gained from outbound marketing are available for inbound marketing. It should provide a comprehensive view of customer trends and interaction effectiveness based on experiences across all channels and touch points. Finally, it should contain a self-learning engine that uses information from customer interactions in any channel to determine the best characteristics for future financial product offerings and the ability to execute targeted campaigns within hours.
20
Ian Michiels, Aberdeen Group, Cross-Channel Campaign Management: Next Generation Multichannel Marketing, October 2008. Freimut Bodendorf, Enhancing e-CRM in the insurance industry by mobile e-services, International Journal of Electronic Customer Service Management. Vol. 1, No. 3, 2007.
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Integrate Information Across Channels One of the quickest ways for any financial institution to Data integration is also a lose a customer is to make it difficult for them to move between channels. For example, asking them to supply the necessary prerequisite for realsame basic contact information multiple times as they go time decisioning, which from an online application to a telephone conversation. Particularly for companies that want to retain customers depends on data that is both through periods of transition, such as a bank merger or fresh and comprehensive. consolidation, they must take serious measures to integrate data without requiring any extra effort from the customer. That means accepting data in the customers preferred format and retaining the transaction history, service enrollments, and account preferences established with the previous institution. Particular attention should be paid to online channels, as this is the area of integration thats most likely to cause customers to flee if it is poorly executed.22 To satisfy a financial institutions data integration needs, a robust CRM solution should collect and aggregate information about multichannel performance from a variety of sources, including web analytics, email marketing, lead management, customer databases, and campaign management. It should continuously update customer profiles based on multichannel interactions, then offer a single 360-degree view of the customer. This is not only a best practice, its a key enabling capability for the most successful organizations.23 Data integration is also a necessary prerequisite for real-time decisioning, which depends on data that is both fresh and comprehensive. After all, detailed customer information is only useful if all relevant parties can access that information in real time at every stage of the sales cycle. For example, AAA Northern California/Nevada/Utah lets members and prospects buy auto insurance online, through a contact center, or through local AAA insurance agents. By seamlessly tying together these channels, the insurer provides better, more efficient service and establishes itself as a trusted partner for all their clients insurance needs. Data integration allows an online applicant for car insurance to finish their application over the phone; it also allows a marketer to combine a clients car insurance policy history with demographic information to formulate a direct mail offer to add a second driver or expand their coverage. Unified data access thus allows a company to capture customer behaviors and desires and, in turn, design unique products that customers receive via their preferred channel.24 Create and Analyze Targeted Campaigns Banks and insurance companies can make great inroads to re-establish trust with customers through targeted campaigns that demonstrate the institution is aware of their individual needs and preferences, and has custom-designed solutions that meet them. Multichannel marketing is key to both discovering these needs and preferences and creating a positive customer experience by addressing those needs and preferences in a unique and concrete way. Customers who have a positive experience with a financial company are more likely to buy more financial products from them or increase their deposits. A recent survey showed those with the highest satisfaction rates actually held 2% to 5% more in deposits.25
22 23 24 25
Greg Goth, Luring Them In, Bank Technology News, February 2009. Ian Michiels, Aberdeen Group, Cross-Channel Campaign Management: Next Generation Multichannel Marketing, October 2008. Barton Goldenberg,, Put Your Call Center at the Core of Your CRM Strategy, International Customer Management Institute, September 2008. Beth Snuder Bulik, Banks Turn Message Back to What Consumers Want, Advertising Age, October 5, 2009.

In creating targeted campaigns, a CRM solution should provide business-specific campaign management, integrated online analytical processing, and predictive analytics along with multichannel execution and built-in, closed-loop reporting. Functions such as automated business rules and system-wide, opt-in/opt-out functionality help enforce marketing policies. And tightly integrated, permission-based campaign management, reusable marketing components, robust analytics, and an intuitive interface help businesses rapidly develop campaigns and deliver them at the best time via the best channel. Gaining customer insight to create targeted campaigns requires analytical capabilities for developing predictable customer behavior. A system with self-learning analytics can output relevant feedback, including which characteristics are most predictive of customer acceptance, and adjust targeting for all subsequent interactions. Results from self-learning analytics can help organizations receive significant lift in campaigns deploying multiple channels. Successful financial companies use targeted campaigns to discover customer desires and formulate concrete actions that fulfill them. For example, Synovus Bank successfully attracted Generation Y customers by meeting them on their terms: Not by requiring them to walk into a bank branch or sign up for services by phone, but by launching a mobile project that extended bill pay to iPhones. The new, tech-savvy young customers received an experience comparable to the social networking services they have already embraced, with features such as quick page loading, transactions that post in real time, and fewer clicks to get around. The result: When the mobile project launched, 40% of its participants were members of Generation Y.26 Deliver Seamless, Personalized Customer Service Customer service represents a huge opportunity for banks and insurers to reach out to wary, discouraged, or mistrustful consumers and prove their renewed commitment to a more customerbased approach. Innovative customer service can help convey the message that institutions are both able and eager to help customers manage their finances and that they can be trusted to be clear and forthright about their terms and costs. Financial companies are getting creative with service delivery in the hopes of improving their image and re-establishing trust with consumers. Washington Federal Savings Bank helps its money market fund customers maximize their investment by notifying them when theyre within $2,000 of a higher interest tier. This move not only increased customer satisfaction, but also increased the banks deposits at the expense of their competitors.27 Charles Schwab establishes itself as a soup-to-nuts investment partner by providing its customers with actionable information and advice through online learning tools, then giving them the convenience of trading online, by phone, or in person.28 And Bank of America is working to counteract banks reputation for hiding important details in fine print with its recently introduced Clarity Commitment, a simple one-page document that summarizes the key terms for many of its loan, card, and deposit products.29 In formulating a new approach to customer service, financial institutions should pay special attention to inbound or customer-initiated interactions, which prove to be several times more effective than sell-initiated interactions. A customer service representatives knowledge, attitude, and efficiency at addressing the customers needs will profoundly affect the customers impression of the company as a whole. Because of this, inbound interactions can be particularly influential in building customer trust and satisfying customers increasingly high expectations.
26 27 28
Todd Lesher, Not Your Fathers Bank: Building Online Banking for Gen Y, CRM Buyer (http://www.ecommercetimes.com/story/66246.html?wlc=1254175781&wlc=1255384206), February 20, 2009. Greg Goth, Luring Them In, Bank Technology News, February 2009. Corey Yulinsky, Multi-Channel Marketing: Making Bricks and Clicks Stick, McKinsey Marketing Practice, 2000. Bank of America Introduces Clarity Commitment for Home Equity Products (http://money.cnn.com/news/newsfeeds/articles/prnewswire/200911030800PR_NEWS_USPR_____CL03753.htm).
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Conclusion: Building (and Rebuilding) Relationships through Multichannel Marketing

A recent Gallup survey showed that only 28% of respondents held a positive view of the banking industry, while over half held a negative view.30 Financial institution customers in 2009 reported being less satisfied than in the year previous, due largely to diminished perceptions of banks overall reputation, customer focus, and personal service. And the most valuable customers of allthose with deposits that are 15% higher than averageare now the least committed to their financial institutions. In light of these numbers, financial service companies must take serious action to retain their high-value customers.
The tumultuous events of late 2008 caused many consumers to withdraw from active investing until the markets stabilized. Now as consumers are tentatively taking steps toward more actively managing their finances, they are determined not to make the same mistakes againmistakes that include tolerating high fees, opacity, and poor customer service from their financial service providers. Those service providers who anticipate customers needs and meet them on their terms with thoughtfully conceived, individually targeted offerings marketed over multiple channels can capture this wave of consumer interest and build more durable long-term relationships.
Those businesses that take this methodical and systematic approach, powered by the right CRM tools, will be far better positioned to create new marketing opportunities, reach prospects, and satisfy existing customers than those businesses that do not.
According to Aberdeen, best-in-class companies use a cross-channel approach that delivers higher response rates and ROMI as they engage customers and prospects across multiple mediums with consistent, relevant, timely messages. These successful organizations achieve the highest customer acquisition and top-line revenue performance from their multichannel marketing efforts. For financial service providers, a cross-channel approach can help increase customer retention and loyalty, streamline marketing processes, and overcome the numerous technical, organizational, and logistical barriers to an effective multichannel environment. Those businesses that take this methodical and systematic approach, powered by the right CRM tools, will be far better positioned to create new marketing opportunities, reach prospects, and satisfy existing customers than those businesses that do not.
30
Gallup Poll (http://www.gallup.com/poll/12748/Business-Industry-Sector-Ratings.aspx).
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About Infor
Infor acquires and develops functionally rich software backed by thousands of domain experts and then makes it better through continuous innovation, faster implementations, global enablement, and flexible buying options. In a few short years, Infor has become one of the largest providers of business software in the world. For additional information, visit www.infor.com
Infor Corporate Headquarters 13560 Morris Road Suite 4100 Alpharetta, Georgia 30004 USA Phone: +1(800) 260 2640
Disclaimer This document reflects the direction Infor may take with regard to the specific product(s) described in this document, all of which is subject to change by Infor at its sole discretion, with or without notice to you. This document is not a commitment to you in any way and you should not rely on this document or any of its contents in making any decision. Infor is not committing to develop or deliver any specified enhancement, upgrade, product, or functionality, even if such is described in this document.
Copyright 2009 Infor. All rights reserved. The word and design marks set forth herein are trademarks and/or registered trademarks of Infor and/or related affiliates and subsidiaries. All rights reserved. All other trademarks listed herein are the property of their respective owners. www.infor.com. INFWP_ACREENODD_1209-1
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Infor CRM > White paper