October 23, 2000 issue

http://www.businessweek.com/2000/00_43/b3704001.htm

Example: NationsBank Telephone Channel

• “How do we turn the call center to a revenue generator for the bank while making sure that we’re still cost effective and high quality? You simply can’t cross-sell to a dissatisfied customer! How do we create a value proposition for the customer that’s a win for them and for us?”

NationsBank Direct Banking Program

The NationsBank Strategy requires expanded competency in information, marketing, products, and distribution. Our success depends on our ability and willingness to focus resources, integrate across business lines and manage costs.

Vision “The Best Bank in America”Available, simple, Reliable, Personalized Experience

CustomerStrategy

• Provides easy access to a full line of financial services and product experts, enhancing core products and services with information and access options• Provides competitive value at the product level• Make it easy to do business with NationsBank across all customer contact points• Focus resources on creating value for target customers• Reward customers for tenure and consolidation

NationsBank Customer Strategy

• Retain high value customers.

• Improve the profitability of marginally profitable customers.

• Migrate unprofitable customers to lower cost delivery.

Direct Banking Target EnvironmentThe Direct Banking Change Program includes a comprehensive target environment which supports this strategic repositioning.

• Capture industry service leadership

• Leverage service calls into cross sale revenues

• Establish a significant inbound sales capability

• Establish outbound sales to existing customers and to new customers/markets

• Improve customer retention

• Improve “share of the wallet”

• Create a sales “mindset”

• Enhance existing service culture to focus on world-class performance

• Insitutionalize sales values

• Clearly communicate behavioral requirements for sales and service

• Establish a change program that can initiate and sustain the new culture

• Provide access to all capabilities through all channels

• Streamline processes to reduce time and improve quality of service

• Capture all customer contact information and make it available to all employees

• Build quality and measurement/continuous improvement into all processes

• Create a single architecture for all direct channels

• Reuse existing technology assets to greatest extent possible

• Reuse software across all channels to get a common customer experience plus economies

• Place a premium of flexibility to deal with business and technology change

Strategy Process

TechnologyPeople

Planned changesCurrent situation Planned improvements

Multiple telephone numbers Few 800 numbers to access bank

Undifferentiated service levels Service levels based on relationship group

Go to next available agent Skill-based routing of calls

High agent turnover Clear career paths in centers

Low sales effort Targeted cross-selling

Organization for Skills-Based Routing

Centers of Expertise

CardServices

MortgageServices

InvestmentServices

TreasuryManagement

Services

Consumer Banking (English) Business Banking

RG 1

UniversalBanker

RG 2

ProductExperts

RG 3

BasicProduct

RG 1

Universal Banker

RG 2

ProductExperts

Cross-Selling

Sales

Cross-Selling

Sales

How does the call center operate?

RG 1

UniversalBanker

RG 2

ProductExperts

RG 3

BasicProduct

Cross-Selling

Sales

Totalcalls

RG2service

RG1sales

RG1service

RG3service

RG2 &RG3sales

VRU70%

30%

85%

15%

90%

10%

RG2&3 x-sell

RG1 x-sellabandonments

The business case

a revenue story: share of wallet and customer migration to higher profitability; customer retention; household growth

estimating call volumes estimating potential for x-sell establishing staffing requirements establishing training and hiring (if any) needs establishing IT support needs impact on associates

The business case: revenue story

Retention: Given new service levels/segment what is impact on customer retention? how does this translate to revenue enhancement? take into account retention related incentives and training

needs additional resource needs

The business case: revenue story

Growth: estimating x-sell revenues what is the volume of calls on which x-sell is attempted? What is the conversion into sales? How much x-sell potential in each segment? (logical,strategic) what is the value of sales / segment? Costs in customer goodwill? Cost in terms of capacity? Take into account sales incentives and training needs

impact of better service and functionality on household growth

Other benefits

30-35% reduction in turnover less burnout? cost savings elsewhere in the system: branches

HR impact

career paths: impact on turnover? assignment to segments: impact on service motivation better skill match: happier people? better information on customer: happier people? change in technology: better IT user interface change in technology: new skills

IT impact

move from legacy to client server at NationsBank scale, such client server system does

not exist need for outside expertise and help: vendor

management undefined territory: difficulty estimating needs and costs people support maintenance and software support

Capacity impact

from fully pooled structure to organization with partial pooling

is it the right scale? how to staff the new organization?

new service levels new technology: impact on talk times? skills based routing: impact on call volumes x-sell: impact on call volumes, talk times, handoffs

Implementations issues

• Estimating revenue growth– Call volumes for different types of customers– Proportion of calls on which cross-sell attempted– Sales closing rate– Value of sales

• Estimating costs– Capacity– Training– Incentives

Key factors to get right

Understanding customer behavior identify segments correctly classify customers in segments achieve x-sell targets VRU design: utilization as planned

Communication to customers: explain new design, use of new PINs to employees: assigning to new roles; explaining full design

Implementation of new service levels anticipating call volumes staffing: pooling, x-sell, new technology

Points of possible failure

Technology undefined territory Over-design vendor management cost overruns underestimating maintenance and support costs

people new jobs, new roles: people tiering new technology sales in service jobs

Points of possible failure

marketing: customer and media response NationsBank discriminates conceptual leap: from price differentiation to service

differentiation customers do not use new system as planned

operations transition problems staffing combining service and sales

Strong point of the design: intelligent x-sell

Segment based targeted: rules linked to service

frequency of x-sell nature of x-sell

tries to manage HR challenge: blending service and sales

Strong point of the design: service level differentiation

Start from customer align strategy and service delivery service levels matching segment needs match resources to service delivery measurement intensity and type aligned with segment

needs employee and customer needs aligned try to keep dynamic view of segments

Service level differentiation

align segment strategy and service level specifications optimize use of resources challenge: determining revenue impact of activities risks: wrong estimates of segment behavior risks: customer alienation going too far enabler: information and technology people: danger of giving wrong message

Review from previous sessions

strategic service vision: applied to each segment service delivery design: translating customer strategy to

delivery specifications more on the idea of firing your customers: an example of

how you actually do it Last time: example of quantifying retention related

economics This time: implementation issues…

Lessons learned

a successfully implemented service level differentiation strategy is a very powerful tool in aligning customer needs with the service delivery system. The strategy allows a firm to provide the economically rational level of quality, to balance internal measurement costs with the resulting benefits, and to match employee skills closer to customer needs thereby improving both customer and employee satisfaction.

design and implementation of a service level differentiation strategy requires a good understanding of processes and operations. It is impossible to make a business case without the explicit ties to the underlying processes.

cross-selling works best when it is done in a targeted fashion. This alleviates the common problem of loss of customer goodwill and wasted capacity

understanding customer behavior is the essential ingredient of any service delivery design endeavor.

10 Point Customer Defined Vision for Telephone BankingQuick and Accurate

Customer Controlled InteractionHelpful, Caring and Respectful Attitude

Easy Access Effective Call Resolution

Basic Knowledge from Every RepFull Range of Banking Functions

Security and Privacy Specialized Knowledge from Product Experts

Proactive and Personalized Service

Transaction

ServiceCustomer

Defined Vision

SalesCredit Inve

s tmen

t

Telephone BankingVirtual Call Center Organization and

Skill Based Routing

Centers of Expertise

CardServices

MortgageServices

InvestmentServices

TreasuryManagement

Services

Consumer Banking (English) Business Banking

RG 1

UniversalBanker

RG 2

ProductExperts

RG 3

BasicProduct

RG 1

Universal Banker

RG 2

ProductExperts

Cross-Selling

Sales

Cross-Selling

Sales

Telephone BankingCross-Sell Rules

1 Logical Selected at path that has a logical cross-sell opportunityExamples: Inquiry on CD maturity, loan payoff

2 Strategic Direct Offer - Direct marketing campaign offer not responded to, next purchase recommendationQualify for product based on Account relationshipExample: Pre-approved VISA Credit Card; customer has

$15,000 in deposit account, not Advantage3 Strategic Logical At point in path, based on account information we can

suggest a complimentary product.Example: First mortgage >5 years and no home equity line

Cross-Sell Routing Rules All opt outs with cross-sell opportunity are routed to cross-sell skill agent.

All logical sales opportunities are routed to cross-sell skill agent.

Telephone BankingIntelligent Call Processing

Logic Flow

Access customer information file

Honor preferences

Play streamlined menu

Access account information

Honor preferences (Marketing rules)

Apply cross-sell rules

Play cross-sales message or Apply routing rules

Pass call to NationsBank

Service Provider

MENU1 Account Access2 Sales3 PC Banking4 ATM / Branch Locations

800-299-BANK

CustomerInformation

File

AccountInformation

Files

• Balances• Transactions

• Access ID and Authority• Preferences• Account Relationship• Relationship Indicator• Routing Indicator• Prodct Offers