CUSTOMER RELATIONSHIP

MANAGEMENT
Lecturer: PHAM QUOC LUYEN
Presented by: Group 3
 Members
TRẦN THỊ HỒNG CẨM
NGUYỄN THỊ THUÝ DUY
NGUYỄN KHÔI NGUYÊN
NGUYỄN HUỲNH GIA THỊNH
ĐOÀN THỊ THU MINH
VÕ NGỌC TRÚC VY
NGUYỄN CẨM THƠ
Summary
- TRẦN THỊ HỒNG CẨM -

- NGUYỄN THỊ THUÝ DUY -

 Trần Thị Hồng Cẩm

PILGRIM BANK

Pilgrim Bank is an online bank

developed in 2000.
It was February 2, 2001 and Alan
Green was finishing his frist month
as an analayst in Pilgrim Bank’
online banking group.
 Trần Thị Hồng Cẩm

Alan, we have a meeting at theend of next week with the senior

management team to discuss our Internet strategy. There is
substantial disagreement in our group on whether we should start
charging fees for use of the online banking channel or if we should
begin offering
customer incentives such as rebates and lower service charges to
encourage greater use of the channel.

The debate really hinges on whether online customers are indeed

better customers, and if adoption of the online channel actually
produces better customers.
 As Green sat in Raines’ office, he explained his assigned project

I need to do some analysis to figure out wether online customer are better customers for the
bank and what the implications are for our online banking product. As a first step, I was thingking
about comparing balance levels between online and office customers.

Raines responded,

Balance are only part of the story. If you are interested in how profit directly. You dont need to
use balances as a proxy for profit, as balances are s subet of our customer profitability measure,
which we have been assessing at the customer level for the past two years. Roughly we calculate
customeR profitability at Pilgrim with a petty straighforward formula:

(Balance in Deposit Accounts)*(Net Interest Spread)+(fees)+(Interest from Loans)

-(Cost to serve)
Balance levels really only capture one piece of overall custome value to the bank. If you
focus on balance only, you are missing important composenis of revenue such as fees
and ignoring the cost of serving individual customers.

The graph demonstrated that the

relationship between balances
and customer profitabitily was not
as straightforward.
In particular, it showed many
customers with lower balances
had high profittability, and many
customers with high balance had
low profitability.
 Trần Thị Hồng Cẩm

Understand profitability at the customer level was particularly important

History in retail baking because customer trasaction generated incremental
costs but typically of customer profitability.
of
channel
inova-
tion
 Trần Thị Hồng Cẩm

LET THE DATA DO THE TALKING

Green need to analyze customer

profitability over the weekend and
he was hoping that you could help
me access some data.
And Dorstam downloaded the data
into next file and provided it to
Green on a disk.
 Trần Thị Hồng Cẩm

THE FIRST GLIMPSE INTO THE DATA

By sorting customers from most to
least profitable and charting percent
cumlative profitability versus percent
cumulative cutomers.

Formatting the data and

calucating summary
statistics:
 Trần Thị Hồng Cẩm
Even if the difference between online and offline customer
profitability did prove to be meaningful.
Green glanced at the
columns of data on
customer demographics
Did the online chanel and geographic region
make customers and wondered if there
more profitable. minght be more the story.

Green was unclear hat What did this imply

conclusions he might draw for the management
in teems of cause oand team’s decision
Effect. regarding fees or
rebate for use of the
channel.
 Nguyễn Thị Thuý Duy

REVENUE
Loan interest &
base lending rates

Investment income
from deposit balances

03 01

02
Fee income
 Nguyễn Thị Thuý Duy

COST – TO –
SERVE

Transaction related costs Allocated “fixed” costs

 Nguyễn Thị Thuý Duy

THE PROFITABILITY PROBLEMS

Tierer Service. Branch Consolidation.

Managing
Customer
Profitability

Pricing Initiatives, Anticipating Customer

Fee, Behavior.
Cross-sell Programs.
 Customer
information
- ĐOÀN THỊ THU MINH -
 Đoàn Thị Thu Minh

COLLECT CUSTOMER DATA

Big data Credit card

“Large, diverse sets of information that This makes the bank with such a
grow at ever-increasing rates.” full picture of their customer’s
personal information.
 Đoàn Thị Thu Minh

COLLECT CUSTOMER DATA

Social media surveys or a mobile app survey

The bank collect customer psychology data from feedback through media survey
about customer service experience, level of satisfaction with the bank’s policies,…
 Đoàn Thị Thu Minh

CUSTO-
MER
PROFILE

Customer profitability Demographics information

 Pros & Cons
During

CRM deployment
- VÕ NGỌC TRÚC VY -
Võ Ngọc Trúc Vy
ADVANTAGES
Integrating with their other systems
Alan Green got the helps from Jane Raines and Erica Dorstamp
 Combine information from different departments and make
data transfer and access much easier

Determine data
Green spend almost time to find and determine data
 To empower users and maximize workflow efficiency

Analyze the user experience

Asking Dorstamp to give him customer’s profitability for year-end 1999
as well as whether they use the online channel
 Identify gaps and opportunities to re-work existing processes and
add new workflows
 Võ Ngọc Trúc Vy

DISADVANTAGES
01 Too much required input
Although having demographic information of 30,000 customers,
Green are not certain that what he would do with it

02 Do not plan the architecture

The time for Green to research is quite short so he did not
have a plan before analyzing data

03 Too little staffs

Alan Green is the person doing almost everything on his own

Cost
04 They found difficulties in estimating costs at the customer level
Results
- NGUYỄN CẨM THƠ -
 Nguyễn Cẩm Thơ

Analysis of profitability at the customer level yielded some

surprising profitability skews. The contribution of individual 01 The
customers to bank earnings varied widely with a small Profitability
percentage of customers cross-subsidizing the profitability Problem
of the bulk of the customer base.

Maintaining the most profitable relationships 02 Managing

and migrating customers from lower to the higher Customer
profit tiers. Profitability
 Nguyễn Cẩm Thơ

Develop profitability tiers to reallocate customer service 03

resources away, aimed at increasing retention of a Tiered
bank’s best customers. Service

Re-pricing products and services was intended to

motivate customers to use lower cost channels. 04 Pricing
Banks also pursued retention by selectively offering Initiatives, Fees,
their highest profit customers fee-waivers and Cross-sell
rate-breaks. Programs
 Nguyễn Cẩm Thơ

Convenience, often encouraged customers to

increase transaction volumes to a level that offsets 05
the cost-savings of interacting through a lower Branch
marginal cost channel. Consolidation

Created profit tiers based on some measure of

lifetime profitability that required a model linking 06
Anticipating
current customer characteristics to the probability
Customer
of retention as well as to future revenues and
Behavior
costs.
Others
- NGUYỄN HUỲNH GIA THỊNH -
 Nguyễn Huỳnh Gia Thịnh

Limitation
01 Companies may sometimes have erroneous data regarding the customers.

Implementing CRM is often very complex and time consuming and companies
02
are often reluctant to implement it.

Customer Profitability approach has drawbacks over product profitability

03 approach like ignorance of under performing products and services and unable
to make suggestions about the product line.
 Nguyễn Huỳnh Gia Thịnh

Conduct more exploration and research into what makes a more profitable
customer, so that the customer will feel more satisfied. Since the bank does not
have an insight because no relationship exists between online uses and profitability,
we cannot leverage it using fees or rebates.

Recommendation
Lesson
- NGUYỄN KHÔI NGUYÊN -
 Nguyễn Khôi Nguyên

Customer behavior seemed to be a key component

of customer profitability.

Survey a large number of customers to get more

data and analyze customer profitability from data.

Provide the suitable service for each client file.

 Nguyễn Khôi Nguyên
“CRM strategy is as important as business strategy.”

How will you attract new leads, manage How will you keep your customers,
ongoing deals, and manage customer ensure they continue to use your
relationships? services, and identify your brand
and values?
 Thanks
for watching!