The Marriage of CRM and Culture

Talk about your troubles, talk about your ills,
One man gathers what another man spills.
– Allman Brothers

For several years, there has been a somewhat circular conversation between banks and their vendors about deploying CRM systems and capabilities, bouncing around between statements such as these:

• “We will begin deploying CRM when systems can support our goals.”
• “We’ll design better CRM systems when you tell us what your goals are.”
• “When systems are reliable we’ll use them.”
• “Features and functions don’t matter until you learn them and take advantage of them.”

This “we’re dancing but I’m not sure who’s leading” approach, while frustrating at times, has nonetheless produced progress in the last few years. In fact, based on a fair amount of travel and reviewing vendor CRM options of late, I would say that vendors have begun to put some real meat into CRM systems that banks can start taking advantage of. For example:

• Most bank Customer Information Files now do a much better job of linking all relationships a customer has. Accounts not serviced on core can be shown. Personal and business relationships can be linked. Customer-to-customer relationships can be tracked, e.g. Terence is Cori’s dad (note: at 15, she’d be mortified if a system publicly revealed that fact). Non-owner relationships like guarantor or authorized signer can be tracked. A relationship manager, or several, can be assigned to a customer or household.
• Profitability systems, both customer and product, have matured and can incorporate just about whatever level of transaction costing, transfer pricing, cost allocations, and history a bank wants to collect.
• Contact history systems that track such things as encounters, problem resolution, loan application status, or sales attempts are slowly being merged with branch, loan, and call center delivery systems used for transaction processing by front line employees.

Now, don’t get me wrong. While integrated CRM systems are far from being mature, and our never-ending dream of automated sales tracking and reporting is, alas, still unfulfilled, CRM systems are beginning to give banks real capabilities that now put the ball back in their court.

In other words, banks now must begin looking at the capabilities emerging and begin asking how they can be deployed in a way that will add value and is consistent with their goals and their culture (and to those of you who have the gall to ask – yes, we at GonzoBanker know loads about this culture stuff).

Banks need to start thinking about the design and the process issues that will drive how CRM systems are deployed and used. Here are six key questions management needs to be asking before big financial bets are made on systems.

1. What are we measuring when we assess the success of a CRM initiative?

There are literally dozens of metrics a bank could use as measures of success – asset growth, market share growth, share of wallet, average account profitability, lower cost of delivery, and customer satisfaction to name a few. If we surveyed the employees, or just the senior managers, at your bank today, would they all list the same targets? Sorry, the answer isn’t “all of the above.” Trying for everything will net you nothing. It’s time to agree on key success metrics.

2. At what level will we define a relationship?

Think twice before answering this question. A relationship can be defined at an individual level or a household level. It may include only accounts an individual owns or might include non-owner relationships. For example, if a trust account is opened, do we have one relationship with the owner or two with the owner and the beneficiary?

A relationship might encompass business and personal accounts and therefore require linking a corporation and an individual. For example, if a business account has three authorized signers, do we have a relationship with just a business or a business and three individuals? If we have a relationship with the individuals, do we need to track personal information on them?

The more sophisticated a bank is in defining a relationship, the more detailed work will need to be done in branches and back offices to maintain the relationship. Putting a plan in place to use this information proactively to price or manage key relationships is time very well spent.

3. Who will manage a relationship?

The necessary system capabilities will be quite different based on how your bank is managing relationships. Is it done by an individual, e.g. a private banker, commercial lender or branch manager? Or is it by a team that includes, for instance, a branch CSR, a lender, an investment rep and a commercial banker? Many banks are migrating to this concept of team management. The more a team manages a relationship, the more important multiple officer codes, shared contact history, shared profitability, shared incentives, and shared transaction processing will become. My partner Steve Williams is fond of saying that “officer code” is the DNA of CRM systems. You read it here first, and you need to get the use of officer codes right.

4. How complete is current customer information that we would define as crucial?

We see many banks that for years have had the ability to track birthdates, e-mail addresses, gender, income, employer, and other personal information but actually have it on fewer than half of their customers. For the 80+ percent of customer or account records used for pricing, sales or service, you will need to have it. Most banks are facing a dirty-fingernail project of getting basic, mandatory fields populated with complete and accurate data. Time to get to work.

5. Does all CRM information really need to be universally shared?

Often, we find that much of the senior management talk about the need for retail branches, mortgage, commercial, investments, insurance, and other groups to share contacts and opportunities via CRM systems really isn’t endorsed by the front-line employees who would use them. In fact, many mortgage originators, insurance agents or commercial lenders will say they don’t need to interact at all with other groups to make their growth and profitability goals – and, often, they’re right. You can spend a mongo pile of money on an enterprise CRM system that silo’d groups will smile at before they go back to ACT and Outlook. Management needs to honestly debate who needs to share what.

6. Do our incentive plans reflect our CRM goals?

I was recently in a bank that had cited cross-sell and share of wallet as the major desired results from its CRM initiative. The bank spent a fair penny building cross-sell prompts and cross-sell reports that measured how it was doing. Not bad. However, branch, call center, and consumer lending employees are incented on… drum roll… the total number of accounts they opened, not how many per customer. Hmmm. Me senses a disconnect.

Bank employees will actively use CRM systems when they are motivated to do so by one of two things: greed or need. Incentive plans produce the greed that produces the need, and management has to use them to create an internal marketplace where there is a value to information being shared.

The way you answer these questions will have a huge impact on how you select CRM systems and direct vendor development efforts. But banks can’t take a “let’s see what’s available” stance with vendors before beginning to address these design issues. Successful CRM initiatives will require that banks proactively work with vendors to merge design and development. Careful planning means you won’t have to complain that your CRM system doesn’t meet your needs.
–tr