case studyBanking & Finance

Customer Cross-Sell and Portfolio Optimization

Business Challenge This top-20 regional bank had been performing cross-sell initiatives to its expansive customer base for many years, but had been using a completely product-centric direct marketing cross-sell approach. Starting with a group of potential products to cross-sell, offers would be extended to maximize the number of units sold. However, there was a desire to shift the paradigm, and instead of identifying the best customers to target for a particular product, to start identifying the best products to offer to particular customers. This approach – placing the customer as the central focal point – better optimized contact and offer strategies, producing higher customer portfolio value and satisfaction.

ApproachWorking in partnership with the client’s analytics and marketing teams, Merkle was able to:

f Develop a customer data integration (CDI) score – a key component of which was building propensity models to identify the likelihood of specific customer accounts to purchase specific products.

Property Propensity

Segment Weight

CDI Weight

Profit Equivalent

Channel Eligibility

Channel Affinity

Property Eligibility

Product Eligibility

CDIAffinity

Objective: Generate the highest number of accounts sold (by specific product type) at the lowest cost per incremental account

Objective: Focus on customers that have the potential to be the most profitable, and determine how to meet their needs through product and service cross-sell

Historical Approach - Product Driven

Desired Approach - Customer Centric

Starts with Products to sell

Identitfy customer need & potential value

Target for Conversion

Select best offers or products

Choose Media

Integrated contact / offer strategy

Value Opportunity

Relationship

Product Sales

Product Sales & Portfolio Value

CD’s

CashMgmt

MMIRA

Alerts

Online Banking

Savings

Visa CC

@

@

Merkle, a customer relationship marketing (CRM) firm, is the nation’s largest privately-held agency. For more than 20 years, Fortune 1000 companies and leading nonprofit organizations have partnered with Merkle to maximize the value of their customer portfolios. By combining a complete range of marketing, technical, analytical and creative disciplines, Merkle works with clients to design, execute and evaluate connected CRM programs. With more than 1,600 employees, Merkle is headquartered near Baltimore in Columbia, Maryland with additional offices in Boston; Chicago; Denver; Little Rock; Minneapolis; New York; Philadelphia; Pittsburgh; San Francisco; Hagerstown, MD and Shanghai. For more information, contact Merkle at 1-877-9-Merkle or visit www.merkleinc.com.

Jim CoyVP, Financial ServicesBusiness Development 501.837.7929jcoy@merkleinc.com

f With the CDI framework in place, a selection process was developed to select the product to offer to each customer, each month, utilizing product eligibility, product restrictions, channel preference, and contact management rules.

The key to success is the introduction of multiple products into the cross-sell program, with a range of appeal to the entire customer portfolio. Under this new process, the bank is able to realize direct marketing efficiencies as well – planning quarterly, and executing monthly.

OutcomeThe bank was able to realize many benefits after implementing this customer-centric cross-sell model, including:

f A more consistent and consolidated communication stream f Managing the customer experience f Focusing investment on households most likely to be profitable to the bank

f Making direct marketing offers offers based on customer need f Implementation of streamlined processes f Increased incremental response and overall program ROI

Looking AheadWe have an opportunity to expand the cross-sell engine from just outbound selection to an internal “moment of truth” decision tool. We will continue to fine-tune the application to optimize and improve overall product offerings as the client continues its journey toward a customer-centric model.

SelectionMethod (Product vs.

Customer

Channel(DM/EM/TM)

Product Set

Life Stage (min/max/null)

Affluence (min/max/null)

Affinity (min/max)

EM/TM (if applicable Y/N)

Control Management (months btw/max per yr)Desired Volume CDI Value

(min/max)

Product Propensity (min/max)

Communication (Random control vs. Weighted

Communication Count)

OFFER

0.7%0.6%0.5%0.4%0.3%0.2%0.1%

0.0%-0.1%

Bill P

ay

Estate

ment

MobileODP

Savings

Checkin

gTota

l

Incremental Lift by Product

3Q-11 4Q-11 1Q-12