Remember when you got your first personal computer? Mine was an IBM 8086 machine that cost me $4 large in 1985. It wasn’t just the wonder of the machine – it was the software. VisiCalc changed my life. I went from a creative guy to a numbers guy overnight. I could prove out strategies with real sales, fixed and variable costs, contribution margins and overhead numbers.
The next big leap was my first MCIF (MPI — a forerunner of Harland Touche’). I wanted one of those MPI Red Rangers really bad. Holy smokes – I could profile customers! I could create segmentation models! Santa was flush that year, and I got it.
Next came profitability modeling, which from the beginning was painfully flawed. This was a while before MPI and Raddon Financial (people I absolutely love) worked out the kinks in profitability calculations.
Unfortunately, that is where many of us got stuck. Some of us got excited about matrix mailings for a while, but there has been little progress beyond that. Early attempts to actually load real revenue, real funding costs, real fixed and variable product costs and real overhead allocations were minimal. Dust started to settle on our trusty systems.
One day there was something new in the store window – CRM. These fabulous tools would allow us to actually manage customer data and share it in real time with the front line sales agents (who, by the way, were just getting over their first case of sales training). The vendors showed us amazing PowerPoint presentations that promised wonderful things. Jeepers – we could attach actual incentives to desired behaviors and sell more stuff, stuff that third parties would pay us commissions for. This initiated the head-long rush into front-line sales initiatives, and we all purchased another piece of software. We turned our attention to tracking campaigns and paying sales incentives, and once again, our trusty MCIF was left standing in the corner.
About the same time, financial modeling software came along. A few brave CFOs used these burgeoning modeling tools to produce their own meaningful numbers, like branch profitability and real product profitability, but most just used them to create budgets.
Fast forward to today. Now that we have the toys, the next step is to play with them together. A growing number of Gonzo marketers are doing some fun stuff, profiling new customers, loading in delivery channel data, capturing the data from credit reports and then delivering well crafted offers down at the individual customer level.
Our Christmas wish this year shouldn’t be another toy. It should focus on how we up our game and improve on the execution of marketing analytics and sales support. Can we finally get to the point of integrating our systems so that customer facing agents can leverage the data we have worked hard to gather? Can we finally deploy one of the most valuable CRM modules that most have not had the foresight to buy – customer contact management? Can we please get serious about systematically mining opportunities from loan applications, especially mortgage applications? Has management really taken the time to ensure that front-line staff has access to information regarding what products a customer is using, what they might need, and what delivery channels they are using? The simple fact is we have not taken the time to connect the dots and integrate these systems. If we did, we would see a powerful engine emerge (think Amazon.com).
Gonzo marketers have learned the hard lesson that data is not worth much unless you get it to the right people at the right time. So let’s talk a little about what we do if your toys are either rusty or they haven’t met the other toys in the shop.
Real profitability is achievable. It just takes some work. Your MCIF vendor will help you customize your profitability model with real data. The system already has rates and product durations. The vendor can add actual non-interest income data, delivery channel data and estimated real product costs at the account level if you give it to them. If you have Sendero, ProfitStars, or the like the actual revenues and costs can be modeled there and imported into your MCIF at the account level. Either way, the goal is accurate customer profitability deliverable to customer facing staff. What you end up with is the ability to calculate profitability that approximates your GL. With that done, relationship profitability is the next logical step. This allows more intelligent product development and market segmentation.
We just came through budgeting. Was it the same old incremental exercise, or did we actually talk to each other about what level of production might be possible, and how we could hit higher sales numbers? Gonzo banking teams actually do this, bringing systems and processes to bear to increase production by integrating systems to deliver better sales intelligence based on real profitability. This requires retail and marketing to really work together at a granular level, but it can be well worth the effort.
You already have that stuff at your bank, hmmm? Show me. An institution may have good profitability modeling, but is that information combined with individual customer profiles and behavior to predict the next logical product sale? NLP is one of the latest buzz terms that everyone knows and very few pursue. To get a true NLP projection might call for the help of a data mining expert. Once the algorithms are set up, the customized NLP message sent through the CRM to the sales agent can be far more appropriate for the customer and lead to a more intelligent way to sell product. It’s better than “March is IRA promo time, spring is HELOC time and summer is Mortgage time.”
The most frequent comment I hear is, “Marketing runs the MCIF, Retail runs the CRM, Finance runs the financial modeling software, and we don’t collaborate much.” I would like to suggest that more internal collaboration could be a valuable New Year’s resolution. The following is a list of neat stuff that can happen if a bank is serious about integrating its customer intelligence systems and processes:
Highly targeted and secured marketing messages and offers can be delivered to the customer on line, increasing the return on investment in an online banking (OLB) platform.So let’s dust off our toys, GonzoBankers, if they’re sitting in the corner gathering cobwebs. In the current cost management environment, Santa may not bring us any new toys until we are using the ones we already have to the max.
Merry Christmas, y’all.
-tt
Think of us as Santa’s helpers. Cornerstone Advisors can help you dust off the cobwebs and get the “neat stuff” in place at your institution.
Here are just a few of our areas of expertise that could bolster your crusade to get on Santa’s Nice List and maybe lock in some new toys for next year:
Contact us to learn more.
