By:Joshpin BalaRoll.No: 171

• Customer Relationship Management at Capital One :

• Capital One is an American financial services company, which have about 45 millions of clients worldwide.

• The group is also present in the UK.

• Capital One proposes its customers opening accounts with credit cards, and other financial products like insurance.

• The company also proposes loans.

• How would you define CRM as implemented at Capital One ?

• At Capital One, CRM is present in all the company’s activities and services. The goal is to develop valued relationships with the customers and handle the risk, understanding intimately the consumer.

• The company is able to propose customized products which ideally correspond to needs and to the customer’s risk profile.

Over view of CRM at Capital OneCapital One, a credit card company, has built its business on a strategy with a clear customer focus:

• The company systematically gathers and analyses information on its customers in order to correctly assess their individual credit risk and to offer products and services tailored to their individual needs.

• The case is designed to illustrate how the concept of customer relationship management (CRM) can be translated into strategy, organizational design, hiring, marketing processes, and IT infrastructure of a company.

CRM Practices at Capital One

• Segmentation Strategy

– Targeting all types of risk profiles, offering different prices and products

– Customer database distinguishes high-risk ‘revolvers’ and low-risk ‘transactors’

---The company uses segmentation strategies in its business practices. This function divides the potential client base into high risk and low risk categories.

---The higher risk clients will pay a higher interest rate and the lower risk clients will be rewarded for their low risk status by being awarded a lower interest rate.

---With high risk comes profits in the form of higher interest payments and with low risk come lower interest payments but potentially a high profit from the monthly interest payments that are practically guaranteed from the low risk client.

---The company tries to maintain its dormant customers through an alert system.

• Operations aligned with customer requirements

– Personalized and flexible handling of customers

– Calculation of profitability on an individual basis to improve product offer to customer

– IT infrastructure

• Collections

– Payment assistance, recoveries and fraud

• Retention Strategy– Help retain customers when introductory rate expires or risk of ‘dormancy’

exists

• Sales

– Sales system (SALSA) enables targeting cross-sell offers to

specific customers

– Uses accumulated data on customers to suggest how to react

to specific customer requests

• Co-operation between Marketing and Analysis (M & A) and operations

– Partnership to review risk perspective of present and future

strategies enabled through IT

• Information Technology– Interaction with company in terms of prospect pool

management and solicitation, account acquisition, account servicing and call-center technologies, core systems

• Human Resources

– Managing associate selection and development of

company culture

IBS for creating competitive advantage for Capital One..

• IBS creates a competitive advantage by narrowing sectors for Capital One to use in its marketing of its various credit card products.

• The system is complex but also simple at the same time.

• IBS assists Capital One on sending the right products to the right consumers.

• The products and/or promotions are sent out and tracked.

• The tracking allows the company to know which demographic is responding and which demographic is not. This helps the business with its competitive advantage.

Test and Learn Strategy

Capital One: Systems Infrastructure

Different systems working together

VECTUS

SERVICE VIEW

BASS SALSA

MIS

Screen of front end associates

Data from customer applications

Account servicing data

Solicitation and marketing data

Data warehouse

Use of Data

Customer data SegmentationOnline decision of

associate

•Static customer data

•(Identity)

•Transaction data

•Products sold

•Campaigns received

•

Expected NPV = Expected

response X product NPV

For every customer

For all sales activities

Monthly recalculated -

Rank order of what to Offer/

cross sell

Which products

Value per product

Products already offered

= (barred from sale)

-

•

Decision captured and fed into data warehouse

Growth of Capital One’s Revenues (Worldwide Operations)

2529

1412.5

1924.5

1048.4

769.5

590436.9

$0

$500

$1,000

$1,500

$2,000

$2,500

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q41996 1997 1998 1999 2000 2001 2002

63% 40% 33% 39% 29% 36% 41%

Millions

Annual Growth

Rate

Revenues

Capital One: Summary• Illustrates successful implementation of a CRM strategy

• Business model founded on the crucial premise that each customer requires a different product and service from a credit card provider

• Adopted an Information Based Strategy (IBS), to collect information on customers

• “Test & Learn” tests customer related activity in a controlled condition before it is introduced in the market

• CRM is viewed as a key strategic process in Capital One; different depts. work in an integrated fashion towards understanding and satisfying customers

• 2001 - Capital One was named 3rd ‘Best Place to Work in the UK’ by The Sunday Times. Capital One named in Forbes 400 list -Best Big Companies in America

Capital One Commercials.mp4

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