New CRM solution helps banks fight attrition
Teradata and Cohen Brown Management Group have provided banks with a tool to close the back door to "silent attrition".
It is widely accepted that the cost of acquiring a new customer in the banking sector is many times the cost of keeping an existing one - some industry estimates are as high as ten times as much. The trouble is that, when many clients leave a bank, they don't storm out of the front door, slamming it behind them; they leave quietly by the back door. And by the time the bank even realises that they have gone, it's too late to do much about it. While some close their accounts quite openly, most simply write a cheque or make an electronic transfer, and so timely action simply can't be taken. Technology is a twin-edged sword, on the one hand helping the banks conduct their business but, on the other hand, replacing the bank clerk who would, a generation ago, have manually processed the withdrawal and noticed that it had emptied the account. According to CBMG's MD, CEO and co-chairman, Martin Cohen, this "guilt free attrition" will only intensify as the technological revolution progresses.
Australian bank in the money Now, technology is coming to the aid of the bankers. Retention Manager is a new product launched today by Teradata (a division of NCR) and Cohen Brown Management Group (CBMG). Although newly launched, the product is well tested. Teradata and CBMG employed their technology and consulting services to help a leading Australian bank generate many thousands of new leads and millions of (Australian) dollars in additional revenue.
Using Retention Manager, the bank discovered that 20% of marketing leads sent to sales channels are event-based, and 80% are from marketing campaigns. Interestingly, the 20% of leads originating from the events generate 80% of the total revenue from outbound calling sales staff. Who says Pareto is dead?
Between April 1999 and November 2000 (the initial phase of the operation), the bank generated some A$400 million in additional revenue. Now, the bank uses the technology in its business leads programme and it has generated over half a million new leads (resulting in A$4.4 billion worth of loans) in the first half of its 2001 fiscal year.
Prompt action The principle is simple but, clearly, the technology isn't, otherwise everybody would have been doing this long ago. During routine customer account processing every night, Retention Manager examines each customer's banking behaviour, looking for clues of potential core deposit withdrawals. It collects the information into a usable report, and passes it to the relevant bank employee the next morning - be it business or branch manager, private banker or call centre. They can then swing into action and contact "at risk" customers within 24 hours. Even if the customer was not intending to close the account, the contact can be used to possibly conduct fruitful business. The bank employee is made aware, before calling the customer, of customers who have asked not to be contacted for marketing purposes.
Teradata and CBMG have signed an agreement to combine their data warehousing software and sales consulting and training services, and to market the combined package to the financial services sector.