Topics and Objectives:

Today we'll use the financial services industry as a platform to investigate several issues related to CRM. Because of the nature of their business, financial sevices firm have a wealth of detailed customer data.  That said, it is no small task to integrate the various pieces of customer data and get them into a useable form.

Two success stories in this arena are Capital One and RBC. We'll focus in particular on RBC and how they have used customer information to model profitability and guide marketing programs.

Required Readings:

This is a Marketing Revolution, Fast Company

This article describes Capital One's aggressive use of customer data - resulting in both increased revenues and decreased costs.  It also stresses Capital One's committment to testing and experimentation.

Case: Customer Profitability and Customer Relationship Management at RBC Financial Group (Harvard case)

Case Preparation Questions:

• Why is RBC measuring customer profitability?
• What additional insights are likely to come from lifetime value computations as opposed to annual customer profitability numbers?
• Should RBC compute lifetime values at the segment level or individual customer level for strategy formulation? How about strategy execution?
• Do you agree with RBC's decision to withhold profitability, potential and segment information from its front-line employees?
• Should Jamie Reich make the car loan to "Niece"? If so, at what interest rate?
• What should RBC do about customers who are unprofitable because they use the retail branches and ABM machines for bill payments?

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