Assessing e-CRM through KMin ICICI BANK

The Purpose for CRM Measurement

Three main uses for CRM measurement systems are:

• To influence or validate decision making

• To guide ongoing activities or tactics

• To predict future states

Companies implement e-CRM measurement very differently based on their internal decision making styles. As companies make decisions about customer strategies, they look to customer measurement to help influence specific decision makers or the decision making process or validate initial ideas about how to manage online customer relationships.

Influencing or validating decision making

Readiness Factors organized by Categories within Dimensions

Intellectual Dimension

• Strategy• • Orientation• • Leadership• • Mgmt. support• • Champion

• Structure• • Organizational Structure• • Business Processes• • Incentives and Rewards

• Planning• • Corporate• • Business Units• • Information Technology

Social Dimension

• Culture• • Cultural Perspective• • Attitudes toward change, technology, Sharing

• Stakeholder Interactions• • Dynamics• • Involvement• • Technological Savvy

• Domain Knowledge• • Within Business Unit• • Across Business Units• • Sharing

Technology Dimension

• CRM Application• • Scope• • Complexity• • Customization

• IT Capability• • Project Management• • Skilled Team• • Similar Implementations

• Knowledge Management• • Integration• • Data Warehouse• • Infrastructure

Properties of Complementary Factors expected to enhance Readiness

INTELLECTUAL DIMENSION

Strategy

Orientation Customer-centric; market oriented

Leadership Visible commitment of top echelon

Mgmt SupportCommitment of resources for employee educatoin and training; assignment of

key employees throughout CRM process; money for technology and multi-year

implementation effort

ChampionUse the same high-level person throughout the project and dedicated him/her

full-time

Structure

Organizational Structure Centralized structure to implement; CRM compatability with org'l design,

authority hierarchy & reporting relationships

Business ProcessesLogical integration of customer-related knowledge; processes re-engineered to

mirror CRM application 'best practices'

Incentives & Rewards Reward employees that bear the cost of CRM (i.e. Updating knowledge

repository)

Planning

Corporate, Business Units, and IT Integrated, connected and established planning process

SOCIAL DIMENSION

CulturePerspective Integrated (shared values and behaviors), cooperative,

and trust-based

Attitudes Open to change, positive attitude towards technology

Empowerment Employee empowerment is the norm

Stakeholder Interactions

Dynamics Identification and awareness of CRM stakeholder dynamics

Involvement Inclusion of stakeholders in CRM planning efforts

Technology experience Technologically savvy stakeholders

Domain Knowledge

Within business units Enhanced depth of knowledge

Across business units Enhanced breadth of knowledge

Sharing Willingness to share knowledge

TECHNOLOGY DIMENSION

CRM Application

Scope and complexity Reduced functionality; phased implementation

Customization Reduced or eliminated

IT Capability

Expertise Project management experience; balanced team of experts; experience with

similar installations (e.g. ERP, SFA)

Knowledge Management

Integration Global view of customer

Data Warehouse Pre-existing data structures, standards, and models built into corporate

Knowledgebase

Infrastructure Communication networks, data warehouses, computing platforms, web servers

Banking Industry addresses the key CRM challenges that is faced by them today, including how to:

• Identify customers that have the most assets and would be the most profitable

• Identify the most profitable products• Cross-sell and up-sell products that are most relevant to a

customer’s life stage and financial needs• Improve customer service while reducing service costs in basic

areas, such as account inquiry, transfers, the trading of financial instruments, and cash management

• Find strategies to eliminate current operational inefficiencies• Implement technology that leads to enhanced productivity of

customers, partners, and employees

Assessing CRM Readiness in Banks

Facilities offered at Banks

• Internet Banking’• Tele Banking• Remote login for corporate customers• Electronic reconciliation • SWIFT – Society for World wide International Financial

Transaction• Structured financial marketing structure• Video conferencing • Single window service• WAN• Core banking solution• ePay

• ECS – Electronic clearing services

• Digital Signature

• e Cheque

• Truncated Cheque

• Online Banking

• Electronic Channels

• Paper money replaced by plastic money

Assessing readiness at ICICI Bank

– ICICI Bank - The journey so far– Key Drivers– Solution Overview– Challenges – Critical Success Factors– Business Benefits– The Road Ahead

ICICI Bank - The journey so far

• Established as a Financial Institution in 1955 specialising in Project & Development Finance.

• Retail foray in 1995– Largest private sector bank in India,

– Catering to over 11 million customers.– Total assets over INR 1 trillion

– Retail deposits grew last year by 50% compared to an industry growth rate of 17%

– Leadership in retail credit• Twice as large as nearest competitor in the vehicle loans

market• Fastest growing credit card base in the country.

ICICI Bank - The journey so far

• Wide Range of Products– Bank accounts, credit cards, loans, bonds,

insurance etc.– Products across income and age groups

• Distribution Network & Reach– Branches: Largest private network in India

– ATMs: Largest network in India

– Phone: Largest call centre in India*

– Internet: Maximum functionality in India

* Compared to any other Bank

Outline

– ICICI Bank - The journey so far– Key Drivers– Solution Overview– Challenges – Critical Success Factors– Business Benefits– The Road Ahead

Key Drivers• Transition to Universal Banking

– Necessity to have a single view of the customer.

– Integration of customer knowledge across businesses.

• Liberalisation of the Financial sector– Growing commoditisation

– End of the ‘passive’ customer

– Customer knowledge and increased focus would be the key

• Organisation specific issues– Information Silos

– Use of OLTP systems for reporting

– No single version of the truth

Objectives• To resolve disparate relationships across

multiple products

• To understand the behavioral and financial profile of customers

• To leverage this understanding to effectively target specific customer segments with relevant offers and communications; and

• To frame strategies from a customer perspective rather than the predominant account-centered perspective

• To create an analytic infrastructure which would be the single source of the ‘truth’

Outline

– ICICI Bank - The journey so far– Key Drivers– Solution Overview– Challenges – Critical Success Factors– Business Benefits– The Road Ahead

Building Blocks

Single View of the Customer

Knowing & Understanding the Customer

Transforming Knowledge into

Action

Phase 1.0

Phase 2.0

Phase 3.0

Building Blocks

Single View of the CustomerPhase 1.0

Solution Overview• Phase 1.0: Jan 2000- July 2000

– Base infrastructure set– Integrated a Customer matching tool

with the warehouse The result was a single view of the customer and their banking habits.

– Data extraction from 6 source systems. The warehouse consolidated information about customer

• Demographics

• Product holdings and balances

• Transactions and channel usage

Building Blocks

Single View of the Customer

Knowing & Understanding the Customer

Phase 1.0

Phase 2.0

Solution Overview• Phase 2.0: October 2000- July 2001

– Expansion of primary data warehouse to include 2 new source systems

– Implementation of Behavior Explorer - a front end for OLAP analysis - Segmentation,profiling etc.

• PowerPlay: Easy to use, multi-dimensional data views for the end user

• Impromptu: Drag-and-drop queries for ad-hoc reporting

– Resulted in reduced dependence on IT and OLTP systems for regular reporting

Building Blocks

Single View of the Customer

Knowing & Understanding the Customer

Transforming Knowledge into

Action

Phase 1.0

Phase 2.0

Phase 3.0

Solution Overview• Phase 3.0: Under Implementation

– Redesign of the logical data model to suit changing business requirements, and incorporate new businesses with a focus on channel integration.

– Implementation of ETL tool to ensure more efficient extraction of data from the source system

– Improvement in the customer matching logic

– Implementation of campaign automation tool

What we intend to achieve Till 2012

• Bring in better quality, profitable customers through targeted campaigns.

• Execute a rule-based customer contact strategy • Improve campaign efficiencies in terms of cost,

planning and roll out time and response rates .• Expand capacity and improve performance of

existing infrastructure.• Analytical framework based on current and

projected information requirements.

• Reduce load on production systems by moving time and resource intensive processing to the Warehouse.

Teradata Warehouse

Credit Cards

Asset Products

Bonds & FDs

Demat

Retail Banking

ICICI Direct

Customer Matching

ATM Web

Financial transaction data from channels

Consolidated customer and product information from the various source systemsStand alone systems

for each business

End

Users

Cognos

Current Architecture

Teradata Warehouse

Credit Cards

Asset Products

Bonds & FDs

Demat

Retail Banking

ICICI Direct

Customer Matching

ATM Web

Financial transaction data from channels

Consolidated customer information from the various source systems

Third Party Products

Stand alone systems for each business

End

Users

Cognos

Call-Center

ETL

Future Architecture

RO

Leads sent to channels

Campaign Calculator

Branch

SIEBEL

Outline

– ICICI Bank - The journey so far– Key Drivers– Solution Overview– Challenges – Critical Success Factors– Business Benefits– The Road Ahead

Key Challenges• Lack of role models

– ICICI Bank was the first in India to attempt a comprehensive EDW and CRM platform implementation.

• Disparate platforms– Each company in the group had built its own

customer databases and operating platforms. A complex integration task was necessary.

• Data integrity – Issues of accuracy and completeness of data,

particularly in a developing economy like India where there is no universal customer identifier such as a Social Security Number.

– A customised data matching algorithm was developed taking into account the specific characteristics of data available

Key Challenges

• Lack of a data driven culture – Historical issues in getting getting reliable data.

– Only data that was necessary to ease operational processes was captured.

– Structured, data-driven decision-making has not been very prevalent.

– The CRM team has had to demonstrate the value of collecting additional information.

• Market conditions – The Indian market moves very rapidly and often

unpredictably, so the bank needed to retain flexibility while developing better predictive powers

Key Challenges• Managing Vendors

– Co-ordinating with multiple vendors who each handle different parts of the overall solution

– Expectation management by vendors– Global best practices are available but

implementation in the local context requires the agility to adapt.

Outline

– ICICI Bank - The journey so far– Key Drivers– Solution Overview– Challenges – Critical Success Factors– Business Benefits– The Road Ahead

Critical Success Factors

• Technology Orientation – As an organisation, ICICI Bank has always been an

early adopter of technology solutions and therefore employees are open to new ideas and technology driven solutions

– Senior management has played a key role in driving use of the datawarehouse

• Organisation structure – The datawarehouse team is managed by a business

team and is not driven by IT– The team is not housed with any particular channel

or product group so it can assume a truly enterprise-wide perspective

• Phased approach – The EDW solution was implemented in phases to

ensure rapid ROI and immediate value delivery

Critical Success Factors• Designed for change

– The LDM is in the third normal form to increase flexibility for adding to or modifying the structure to accommodate new businesses, products and channels

– The ETL solution being implemented will ensure flexibility and reduce the time taken to add new data sources. With this touch-and-take approach, increased data volumes should be easily handled

• Scalability

– The Hardware platform of choice is designed for augmentation and planned scalability

Outline

– ICICI Bank - The journey so far– Key Drivers– Solution Overview– Challenges – Critical Success Factors– Business Benefits– The Road Ahead

Business Benefits

• Revenue enhancement– Over 150 large tailored marketing campaigns have been run,

generating 2.6 million leads, with response rates ranging from 8-36%.

• Significant savings in customer acquisition costs

• Reduced time-to-market for campaign execution from an average of 10 days to 3 days.

• Strategic decisions across the business groups are being aided through analysis like channel usage patterns, value migration, product basket analysis etc.

Outline

– ICICI Bank - The journey so far– Key Drivers– Solution Overview– Challenges – Critical Success Factors– Business Benefits– The Road Ahead

Roadmap

• Analytical applications– Implementation of applications, which would

allow business users to have almost real-time

information on key performance indicators,

balance scorecards etc.

– Delivery of this information through multiple

channels such as • Internet

• Mobile

• Wireless

Roadmap

• Campaign automation and shift towards a technology-enabled, rule-driven marketing environment. This would include:– Integration of the data warehouse solution with the

front-office solution

– Customer-level profitability models enabling service differentiation

– Predictive models that will enable the bank to touch customers at the right time with the right offer

– Integration with a marketing ROI and scenario planning solution, which will aid key decision makers to have a one view of their marketing investment.

Roadmap

• Campaign automation and shift towards a technology-enabled, rule-driven marketing environment. This would include:– Integration of the data warehouse solution with the

front-office solution

– Customer-level profitability models enabling service differentiation

– Predictive models that will enable the bank to touch customers at the right time with the right offer

– Integration with a marketing ROI and scenario planning solution, which will aid key decision makers to have a one view of their marketing investment.

4. ) Balanced scorecards - Introduced by Robert S. Kaplan and David P. Norton in 1992,

The balanced scorecard is broken down into four sections, called perspectives:

The financial perspective

The strategy for growth, profitability and risk from the shareholder’s perspective.

The customer perspective

The strategy for creating value and differentiation from the perspective of the customer.

The internal business perspective

The strategic priorities for various business processes that create customer and shareholder satisfaction.

The learning and growth perspective

The priorities to create a climate that supports organizational change, innovation and growth.

CRM measurement metrics

CRM Balanced Scorecard metrics

• Developing successful business build good relationship with customers. But not all clients are equally desirable for the business. You really need only those customers that will help the company become strong, flourishing and prosperous. Customer Relationship Balanced Scorecard Metrics is created to estimate customers.

• But, even having got right clients you can not be sure that success will constantly follow the steps of your business. If something goes wrong, customers can change their attitude toward the company, demonstrate dissatisfaction and indifference. To prove efficiency and turn clients back recovery tools are to be used. And the global task of the policy is to find the reason for displeasure, extirpate it and build favorable relationship with the customers again.

Customer Relationship Evaluation Balanced Scorecard Metrics details

• . This is the actual scorecard with Customer Relationship Performance Indicators and performance indicators. The performance indicators include: customer relationship scorecard, customer quality, customer long-term value, customer life span, customer segmentation, satisfied customers, dissatisfied customers, customer potential, damage and recovery manager ,dissatisfaction management.

Measure performance and benchmark with Balanced Scorecard

How to use Balanced Scorecard concept to measure a business performance? It's actually easy. You will need to pass tree simple steps.

• First, you will need to design a set of proper metrics, which will describe your business well. It is very important step, as it will affect all your future estimations,

• Second, the metrics should be grouped. There should not be too many metrics and groups of metrics. It would be great if you will have four or five metric groups and about 3-5 metrics in each group. You will need to set the importance values for every metrics, you will need to describe the way, how do you measure the metric value, you will need to set a target values for metrics.

• The final step is calculating the performance, using your estimation of metric values, their weights and weights of their groups. The total values will tell you how the business is performing within the certain viewpoint.