Leveraging customer information

When the Toronto-headquartered insurer Foresters decided to upgrade an outdated operating environment of disparate legacy systems that created manual work, they studied the CRM offerings of 17 vendors. They sought technology to support the company’s vision of creating a relationship with each of their customers – whom they call members – that is more personal and rewarding than that of any other financial institution. Foresters chose software from Siebel Systems as the core of their member relationship management system (MRM).

In January 2001, they completed a phased roll-out of an enterprise-wide CRM system, and had in place an enterprise integration environment with both batch and real-time access to mainframe data. That system manages information that includes more than 570,000 contacts and 1.2 million insurance coverages and delivers it consistently across all sales and service channels.

When the company received a Canadian Information Productivity Award for its IT transformation last year, CEO Mike White commented on the role of technology in the company. “In the last four years, we have been rebuilding a 125-year-old enterprise, creating a new brand and the promise to provide a relationship more personal and rewarding than any other financial institution’s,” he said. “Technology helps bring that brand promise to life. We know everything about the member to give consistent experience and make them feel special.”

Previously, if a member needed to inform Foresters of a change of information, such as a new bank account number, the member would call in and speak to an individual who would write the request on a piece of paper. The administrator would go to the appropriate system and make the change, leaving no record of the action. Now a service centre rep captures the service request in the MRM, which automatically routes it to the appropriate area and assigns it for processing. Once the request is processed in the policy administration system and closed as complete, updates are sent to the MRM and the new information is made available to all users, leaving a full audit trail.

“Before we got Siebel in, we didn’t know who was contacting us on a daily basis,” recalls Niall Bracken, vice-president of Foresters’ North American service centre. “We didn’t understand what was going on. We now know who is contacting us. We know what they are contacting us about. They are seeing a consistency however they contact Foresters, the financial representative or service centre. We’re managing those contacts and creating the more personal and rewarding relationship by using this tool as an enabler to do so.”

The MRM is the key tool for handling about 220,000 calls a year from members and financial representatives calling on members’ behalf. It supports the company’s retention activities when members call. It serves as the platform across which information is shared between the service centre and the broader organization’s sales force. Bracken estimates that this year Forester will be generating close to 40,000 leads as opportunities for growth with members and prospects based on the needs of the individual by combining Siebel with a dialler for outbound calls. The company has measured a 58 per cent improvement in processing times for member service requests.

Growing into the technology

Bracken reports that the three year old system is still performing effectively and that Foresters is still growing into it. The company has a central repository providing a historical view of relationships over the past three years and is beginning to mine that for predictive modeling.

“Having that information may represent future opportunities in terms of growth,” he explains. “Someone who didn’t have a need at this point in time may have a future need. We can go back and mine it again based on what we understand about this particular individual and some predictive modelling that we’re doing. They may have a need that we have now identified and we can call them again to see if their needs have changed.” The system is compliant with upcoming privacy regulations as it indicates how a member or prospect wishes Foresters to use the data received from them. Also, each user sees only the information about the member that he or she needs to see.

The service centre was built at the same time as the company upgraded its information technology. As a result, business processes could be shaped with the new technology and in harmony with the company’s focus on members. Applying the MRM to the existing sales force has not been so smooth. Particularly in some areas in the U.S., the sales force tended to see it as a barrier rather than a benefit. Some tuning of the application was required in order to support rather than disrupt the sales process.

Foresters implemented an out-of-the-box, non-customized Siebel solution which Bracken describes as a sales process management tool. He would like to see Siebel evolve more on the call centre side, including a more granular view of business data intelligence in terms of call flow type data and the ability to capture the disposition of the customer at the call’s conclusion. “I look for tools like this to help me really understand what’s going on in the business and to get a sense of how well we’re doing in servicing the needs of our members,” he says.

Meanwhile, they are working at improving the company’s IT architecture. Currently the MRM system pulls data off legacy systems, but as those legacy systems get decommissioned, the plan is to have MRM as the single source of the data.

Although the system is aging, Bracken sees the company not growing out of it but growing into it. “This organization is not going to be leading edge in terms of technology. What we want to do is follow in a fast manner those technologies which bring value to the organization and its members.

“What separates this organization from others is its commitment to communities where members live and particularly to children through the Children’s Miracle Network,” he continues. “That is what the organization is about. Technology, people and processes will come and go. That value won’t.”

Beyond business intelligence

Siebel recently announced expanded customer analysis tools as part of its applications upgrade scheduled for next spring. Dan Lackner, Siebel’s vice-president of analytics and marketing, says customers are moving beyond business intelligence (BI) to customer analytics.

He describes BI as working with after the fact data and being limited to a number of power users and a query-based approach. “What you need to do now is to enable front-line individuals – people in the sales force, people in the customer service centre – with all the information they need to make fast, fact-based actions and interactions with their customers,” he argues.

BI software and services vendor SAS also stresses the advantage in applying customer analytics to transform data into strategic intelligence boost and retain a profitable customer base.

SAS Canada’s Michael Turney, program manager for BI solutions in Toronto, says he is seeing in the marketplace a change in business model even within the past year from top line revenue to a value-based model. He says companies are recognizing the cost of bringing in customer revenue and are looking to better manage existing customers from acquisition to retention.

One of the challenges in handling customer data is dealing with the exponential increase of data and the multiple programming languages from sources as varied as IBM mainframes, NCR bank machines and Blackberry handheld devices. At the Royal Bank of Canada’s brokerage business, RBC Investments Dominion Securities, data is tagged and demarcated in a variety of ways that may range from online trading in HTML and Java, Oracle applications to home-grown systems built on Cobol, Visual Basic and C++.

Jay Slade, manager of Customer Intelligence and Analytics for RBC Investments, reports that they use SAS CRM Solutions to cut across those multiple programming languages to help them understand their customers.

He says they were lacking the ability to analyse customer transactions and related accounts to acquire new customers, learn who its best customers and prospects were, and increase customer assets through cross-selling and up-selling. While RBC’s retail bank arm uses a variety of enterprise tools to handle CRM, RBC Investments was more limited in budget, and chose to start with BI software and services from SAS.

Slade says that acquiring customer data requires gleaning multiple sources, each with its own programming language. “It can be very expensive to gather data. SAS was the only tool in this space that can do all this.”

Slade seems to concur with SAS’ claims that its technology allows data to be extracted from any location – enterprise applications, relational or legacy systems – making data a generalized and available resource regardless of the source or platform on which that data resides. SAS says its metadata exploitation tools allow users to understand complex enterprise application data structures and more easily and quickly populate their data warehouses. In fact, the company promises that no matter where the data is kept, it delivers the tools to access and analyse it.

That offers a benefit as the financial industry becomes more consolidated and integrating customer data becomes more critical. It means that when RBC Investments buys a business, says Slade, different business units can share customer data and insights even before everyone is on the same IT system.

Predicting life stages

RBC’s 1,500 investment advisors juggle 300 to 400 clients each and could be buying or selling as many as 300,000 pro-ducts at any point in time. RBC Investments uses life stages as windows of opportunity. Using SAS, Slade blended the brokerage transaction data with readily available databases such as Statistics Canada Taxfiler and Census Data to create a view of each customer with specific opportunities.

Slade says that the company segments its clients into one of four categories: trial phase, core value, price sensitive and premium. The predictive intelligence capability of the CRM solution is used to score if trial phase clients will be retained and, if so, if they are likely to go to the core value grouping as an infrequent trader or to the price sensitive grouping as frequent trader. Obviously the goal is to get clients into the premium category where RBC Investments has 100 per cent share of the clients’ wallets. Slade notes that all four categories represent thousands of different strata.

“We offer on the open market 300,000 different products,” he stresses. “We need to know our customers so we can make sure an offer of fixed income products, for example, makes sense. It is very complex to do so we need business intelligence [which we apply] at a client level, IA (investment advisor) level and firm level.”

The CRM solution’s flexibility has impressed Slade. He appreciates not being limited to pre-defined tables that are laborious to change. He has been producing individual reports for each investment advisor to help them identify opportunities within their client base and identify potential new sources of clients. He reports that many advisors have used the data to grow their average customer asset from $90,000 to $150,000.

Advisors have switched about 50,000 clients into a more appropriate investment level and risk profile, resulting in better service to the client, which is critical for allocating brokerage resources and enhancing profitability. The CRM solution helped identify some customers with multiple RBC accounts that could be consolidated. In other instances, it helped identify customers likely to want more brokerage services.

“We need to understand our clients as they move along their own scheme and their needs change,” Slade stresses. “What do they need today? What will they need tomorrow? What propositions do we have to offer them? What makes sense to offer them? What channels do they prefer? How do they want to be contacted? What are their goals? How much risk tolerance do they have?”

RBC Investments had made a considerable IT investment in multiple data sources to capture and store client information, says Slade. Instead of forcing those systems to perform in ways they weren’t intended, the CRM solution was used to turn that client information into usable data and, in turn, actionable business intelligence. Slade reports that by doing so, RBC has:

• built all-encompassing views of client base and households;

• classified clients by segmentation, profitability, loyalty programs and probability modeling;

• identified risks and opportunities within the client base to retain, cross-sell and offer new products;

• measured the ROI of marketing and other campaigns;

• run what-if scenarios around pricing changes, pay-out changes, etc.; and

• analysed demographics for new client acquisition.

These are two of many IT tools for leveraging customer information to improve customer service. Clearly the struggle to get, keep and grow now applies as much to customer data as it does to the customer base.

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