Growing Your Business

49 percent of companies cannot identify customers at risk. They do not know what customers think of the products or services offered and whether they plan to stay or to go.

Start with those customers that hold the greatest growth potential for your business based on their existing relationship, not just the ones who currently contribute the majority of your revenues but those, as well, who have the greatest potential. Learn what your best customers value most about their relationship, ask the right questions, and look for the biggest opportunities: the largest sales, the best margins, the fastest results, the longest lasting results and, finally and most importantly, the biggest benefits to the customer.

Implementation

None of that information gathering will help you build relationships if you don’t empower your front-line customer representatives with real-time information to differentiate customers and to enable the representatives to interact in ways that will make your customers’ lives easier. BancoRio, a forward-looking bank in Latin America, understands this. Despite the overwhelming economic turmoil in Argentina in early 2002, when all banks were closed for days at a time by government decree and most bank offices had to cover their entrances with corrugated steel to protect them from angry crowds, the BancoRio team worked tirelessly. Even in these chaotic conditions, they continued to develop empowerment for their customer representatives.

Over several years the bank had developed sophisticated customer information systems. The systems made it possible to create effective and very profitable campaigns from the central office, but the customer information was not accessible by the customer representatives in the branch offices. Moreover, there was no way for the individual customer knowledge the representatives gained from personal interaction with their customers to be added to the central database.

Federico Tapper, vice president of the bank’s commercial division, moved BancoRio ahead of its rivals with the earlier customer information system. He wanted to be sure when some economic normalcy returned to the country that his bank would be the first financial institution ready with the most powerful tools to rebuild customer relationships. His plan called for six stages of implementation:

1. Segment the customer base.

2. Assign individual customer portfolios to individual customer representatives.

3. Define different service levels for the different customer segments.

4. Develop real-time customer information tools to enable the representatives to interact with their customers to improve the customer experience.

5. Create goals and budgets by customer portfolio instead of by product.

6. Communicate the strategy to the enterprise.

The BancoRio team—comprised of senior members of the marketing and IT departments, plus regional managers and branch managers—started with an in-depth analysis of the 1.2 million customer base to learn which customers offered the greatest potential for the bank, what share of business the bank was getting from each of these individual customers, and the specific needs of individual customers that would offer opportunities to make those customers’ lives better, while growing profits for the bank.

The customer segmentation grid ranked customers vertically by their potential value to the bank, based on income and other available measures: A for best, B for good, C for moderate, and D for poor. Each segment was ranked horizontally representing share of their financial services business these customers were giving to BancoRio.

A Big Change for the Bank

After its analysis, the bank made a profound change in the role of their customer representatives. Customer rep responsibilities had always been defined by product. In the new CMR plan each customer rep handles all products and has responsibilities for specific customer segments. The reps were changed, in effect, from product managers to customer portfolio managers. Each A representative became responsible for a segment of the A customer list, every B representative, for a segment of the B customer list, and so on.

A representatives are responsible for “gold” quality attention to their customers, giving very personal attention and catering to them with the level of communications and dialog each customer desires. B representatives are responsible for pro-active catering and personal attention, but with fewer communications. C representatives are responsible only for reactive attention and communications. D representatives are little more than greeters. Although D customer portfolios represent mostly unprofitable customers, these reps are responsible for capturing information from their customer segments to identify customers that develop the potential to upgrade.

An important element of the plan was not just making the customers’ lives easier, but also making the representatives’ lives easier by giving them the real-time information they would need to provide these personal services. The new system gives reps access to complete information of all customer interactions with the bank in real-time.

The first forty-five minutes each morning, before the bank opens, each representative opens a “sign-in” screen on his PC. The screen starts off with “alerts” for the day that will require specific customer communications. For example, if a customer’s deposit has not cleared, the rep is to notify the customer; or if an investment certificate is about to mature, the rep is to help with the reinvestment. Next on the screen is a section called “My Portfolio,” which digests highlights of the rep’s individual customer information, including notations of any current campaign offerings that have been made to each customer. Additional views of the customer data are available to give the representative in-depth detail of each customer’s interactions with the bank.

Goals and budgets for each representative are set based on each customer’s potential and each customer’s special needs. Even the C representatives have goals and budgets that are important to the bank and to the customers. With about 400,000 customers in the C customer segment, if the C reps can gain just one dollar a month in bank income from members in this group, that means a substantial gain.

Another important element of the plan was that the development team involved branch bank representatives in the planning at the outset. As a result the concept and the tools were accepted enthusiastically by the ultimate users. The new structure and systems were tested for ninety days in just three branches. Response from both customers and bank employees was so positive that the project is being rolled out to the other 267 branches as this is written.

This is a great example of a firm moving from a product-centric culture to a true customer-centric enterprise. BancoRio has found the way to identify the customers who hold the greatest growth potential for their business. They are learning what customers value about their relationship with the bank, and they are investing in the appropriate level of service for each customer. Hopefully, by the time this story is published, Argentina will have solved its economic woes and BancoRio will have developed high-intensity engagement with its customers and will earn its rewards for this outstanding restructuring.

• Understand it will never be possible to work one-on-one to allow every customer to manage the relationship with your business.

• Find the customers you can best, and most easily, turn into assets.

• Work with the customers that can provide the greatest growth for your business.

• Don’t waste time and money on customers that may never be profitable.

• Find different CMR solutions for your loyalists, those that are content, and those at risk.

• Use information from your customers to find the right CMR actions.

• Encourage customer participation, and develop permission intensity.