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3C Model together with customer segmentation and customer experience management
DEEPAK RAWAT
IME PGDM 2
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The HSBC Group, one of the world's largest banking and financial services
organizations, had its beginnings in Hong Kong more than 130 years ago.
Sixth largest bank in world and eight largest company in world.
10,000 offices in 76 countries and territories in Europe, the Asia-Pacific region,
the Americas, the Middle East, and Africa.
As of 30 June 2010 it had total assets of $2.418 trillion, of which roughly half
were in Europe, a quarter in the Americas and a quarter in Asia.
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HKD/USD currency and multicurrency savings accounts
Integrated accountsMortgage finance
Personal credit services
Hire purchase and leasing for motor vehicles,
Term deposits and credit/debit cards,
Financial planning
Investment services such as unit trusts, bonds and certificates of
deposit Local and overseas securities
Broking services,
Mandatory Provident Fund investment options
Insurance
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Services are distributed through channels such as HSBC's ATM network, internet banking
service, 24-hour phone banking centre, more than 20 Mortgage Advice Centers providing
customized advice seven days a week, and a network of over 180 branches and offices. At
the end of April 2004, online@hsbc, HSBC's internet banking service, was being used by
over 700,000 customers.
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CUSTOMER CATEGORIZED
HSBC Personal Banking categorized customers by their "Total
Relationship Balance". To make it simple, it is the total amount of money
flowing between the bank and the customer, including money deposits,
investments, insurance, etc.
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KIND OF CUSTOMER
Top - this is the customer segment the customers of which are those who
have a total relationship balance of over one billion Hong Kong Dollars.
They are HSBC's Premier Customers, and are the top 5% of highly valuable
customers of HSBC Personal Banking.
Big - this is the customer segment of those who have a total relationshipbalance of over one million Hong Kong Dollars. They are HSBC's Premier
Customers as well and are in the next 15% of highly valuable customers
Medium - this is the customer segment of those who have a total
relationship balance of over twenty thousand Hong Kong Dollars. They are
the Power Vantage Customers of HSBC. They are the largest groupamongst the customer segments, and make up 60% of HSBC's Personal
Banking customers.
Small - this is the customer segment of those who have a total
relationship balance below twenty thousand Hong Kong Dollars. They are
the normal customers of HSBC Personal Banking. 20% of HSBC Personal
Banking customers fall into this segment.
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In actives - those customers whose account status is "Dormant" or "Closed".
Accounts with a dormant status are those accounts that have not been in
operation for a long period of time, say 2 years. Accounts with a closed status
are those that have been formally closed by the customers. Prospects - those customers who are using HSBC products other than
Personal Banking, such as Corporate Banking. The bank has some data about
them, and has already established communications with him/her through
their use of that product.
Suspects - the customers of other banks. HSBC has collected some data aboutthem, but has not yet established communications with them.
As is the case in this fast changing and dynamic financial world, changes will
occur due both to local and global factors, and the figure of "Total
Relationship Balance" in defining the customer segments should be changed
accordingly
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CUSTOMER VALUE PARAMETERS
High profitability, multi-product packages usage - There are many personal
banking products at HSBC. Investment and insurance are classified as high
profitability so that HSBC will try its best to cross sell and up sell for its
customers to buy more. On the other hand, money deposits are one of the
low profit products.Transaction amount per transaction - Transaction amount per transaction is
the amount of money involved in every single transaction. If a customer
always has a high transaction amount per transaction, the relative
operational cost for serving that particular customer will be small, which
means he or she is more profitable.
Relationship over time - Relationship over time can show the levels of
customer loyalty. The longer a customer stays with HSBC, the higher the
level of customer loyalty that can be attributed to them.
Referral record - Referral record is concerned with the number of customers
that are brought in by an existing customer. It also pertains to the
willingness of the customer to refer HSBC products to his/her friends.
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CUSTOMER PROFITABILITY GROUP
High profitability customers - they are the customers in the Top and Big
categories. They use the high profitability, multi-product packages. They
have a high transaction amount per transaction. They have a long
relationship over time with HSBC. They have plenty of referral records.
Sustainable profitability customers - they are the customers in theMedium category. They use the medium profitability, multi-product
packages. They have the medium transaction amount per transaction.
They have a relationship over time with HSBC but not for very long. They
have some referral records.
N
egative profitability customers - they are the customers in the Smallcategory. They seldom use the high profitability, multi-product packages.
They have a small transaction amount per transaction. They have a short
relationship over time with HSBC. They seldom have referral records.
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One of the main purposes of implementing a CRM
program is to retain the profitable customers.
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CUSTOMER EXPERIENCE
MANAGEMENT A loyal customer is a good customer. There are two Customer
Relationship Management principles about customer loyalty, customer
satisfaction and customer experience:
.O
nly very satisfied customers will be very loyal to a company.
. Customer Satisfaction equals Customer Experience minus Customer
Expectations.
From the above two principles, customers can become very loyal if they
are very satisfied. And, customer satisfaction can be achieved if they
offer a better (i.e. higher level of) customer experience or meet with low
customer expectations. As customer expectations are more or less
uncontrollable, increasing customer satisfaction by increasing the quality
of customer experiences is a big topic in Customer Relationship
Management.
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By performing the Customer Experience Management (CEM), the company
can find out the critical needs of and decisive stages in dealing with the
customers, make resource planning, marketing, as well as company
strategies effectively and efficiently. Under CEM, customer critical moments are defined accordingly under each
part of the customer process cycle, which are the PRE-
purchase/consumption, AT-purchase/consumption, and POST-
purchase/consumption.
Each customer process cycle will have its own customer multi-channeltouch points, and for simplification, they are grouped into "Physical
Touch", "Call", "Internet" and "Others".
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CEM critical moment spreadsheet
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PRE PURCHASE PHASE
In the Pre-purchase Phase, there are eight customer touch-
points, which include:
. Customer Service Center - Financial Analysis
. On-site service - Financial Analysis
. Events - Exhibition
. Inbound Calls - Call for Enquiries
. Outbound Calls - Tele-Marketing
. Inbound Email - Email for Enquiries
. Outbound Email - e-Marketing
. Portal - FAQ session
. Advertising - Image Building
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AT PURCHASE PHASE
In the At-purchase Phase, there are ten customer touch-points,
which include:
. Branch - Make Transaction
. Customer Service Center - Customer Package Upgrading
. On-site service - Contract Signing
. Events - Sales Road Show
. Inbound Calls - Place Order by Phone
. Outbound Calls - Tele-Sales
. Inbound Email - Make Transaction by Email
. Outbound Email - e-Sales
. Portal - e-Banking
. Advertising - Invitation to Use the Service
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POST PURCHASE PHASE
In the Post-purchase Phase, there are nine customer touch-
points, which include:
. Branch - Customer Enquiries
. Customer Service Center - Customer Enquires
. On-site service - Financial Review
. Events - VIP Gathering
. Inbound Calls - Call for Complaints
. Outbound Calls - Follow-up by Phone
. Inbound Email - Email for Complaints
. Outbound Email - e-Follow-up
. Portal - DIY services, e.g. customer information update.
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Due to the different needs of customers in their Pre-
purchase, At-purchase and Post-purchase, customer
critical moment will be different in every customerprocess cycle.
For HSBC Personal Banking, the critical customer
moments are
Financial Analysis for Pre-purchase
Making Transaction for At-purchase
Customer Enquires for Post-purchase
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Financial Analysis for Pre-purchase
Financial analysis in a customer service centre or as an on-site
service - The most important mission in the customer PRE-
purchase process is to attract new customers. In HSBC
Personal Banking, financial analysis is an effective way for
asking customers to buy the bank's product. So, it is regarded
as the critical moment for the potential customers, which are
still only a prospective ones at this stage.
In order to serve the potential customers, HSBC PersonalBanking employs many professional financial planers.
Together with the internal training in customer service,
banking service and investment knowledge, they are all well
equipped in their own position.
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Making Transaction for At-purchase
Making transactions at the branch - Among all of the banking services,
making a transaction is always the most critical service from the point of
view of the customers. Customers expect that they can make and
complete their transactions within a short period of time and in a
convenient way.
However, due to the large numbers of its customer base, HSBC's Personal
Banking service cannot meet the customers' need for "fast" service all the
time: there are always long queues at HSBC branches that keep customers
waiting for over 30 minutes. After considering the costs and effectiveness
factors against the customer satisfaction factors, instead of opening more
branches HSBC decided to improve this critical customer interaction
moment in the following ways:
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Dividing customers into customer groups, serving them separately
according to their needs and value to the bank (similar to thecustomer segmentation of the previous section).
Changing general service branches into service centers for specificfunctions, for example, HP Centers, Mortgage Advice Centers, Dayand Night Centers, etc.
Enhancing the automated channels which include the ATMnetwork, internet banking service, 24-hour phone banking centre,etc.
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Customer Enquires for Post-purchase
Customer enquiries to the customer service centre or from inboundcalls - It is understandable that customers need professional adviceand assistance in their banking/financial service. So, at HSBCPersonal Banking, customer enquiries are considered the criticalservice moment for customers in the Post-purchase customer
process.
For customer enquiries to the customer service centre, asmentioned in the At-purchase process, there are dozens of Day andNight Centers in Hong Kong to specially deal with customerenquiries.
For the inbound customer enquiry calls, once again by consideringthe costs and effectiveness factors against the customer satisfactionfactors, HSBC is moving its customer call center to a lower cost city.
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After finding out about the best customers, and about
their customer experience (critical moments), CustomerRelationship Management is ready to undergo
implementation by working together with the other four
Customer Relationship Management factors, which are
strategy, people, process and technology, a company-wide kick-off should be made by the top management of
HSBC.
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MECHANISM
Having a tailor-made version of the CRM 3C Method thatis best suited to the latest company conditions is essential
as it will directly affect how successful the Customer
Relationship Management can be. Therefore, adopting a
good feedback mechanism, repeating cycles of running
the implementation, and making adjustments, are all
essential steps.
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OTHER ELEMENTS
There are five elements in a Customer Relationship Management
implementation; they are customer, strategy, people, process and
technology. Although this presentation has focused on the Customer, it is
good to always bear in mind that all of the other four elements are
important as well. Successful Customer Relationship Management cannotbe done without anyone of them.
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