【正文】 rsonal bankers ?Separate teller lines ?Separate teleservice phonelines ?Grace period to requalify ?Total vs. deposit balance criteria ?Free checks ?Overdraft to savings/MMA Action Implications: Banking Example: For your target customers, you must translate their needs into an improved value proposition. Customer Needs: Demonstrate that you know us “ Treat us better because we are good customers” “ Recognize the impact of life events on our needs” “ Do not nickel and dime me” “ Do these, and I will be willing to consolidate my business with you” Customer Loyalty 38 Loyalty Value Proposition Right Customers (Bank Example) Product Service Delivery Communication ?Bundled product to include: –checking –bankcard –service discounts –free checks –tiered savings rates –CD bonus tiers ?Total vs. depositonly balance qualification ?Create links with investments, annuities, etc. ?Assign a welltrained personal banker to each customer ?Access MMA/Savings account to cover overdrafts ?Preapprove loans ?Offer financial planning ?Offer premium service at each point of contact –separate teleservice line with shorter wait times, higher quality –separate teller lines ?Emphasize targeted vs. mass forms of munication –targeted mailings –high value phone calls/ telemarketing ?Semiannual statement on benefits of product, current usage of features ?Clear, consolidated statement for all accounts Bank Co. offered a new integrated value proposition to high value customers. Customer Loyalty 39 Loyalty Product Simplification Low Value Customers (Bank Example) FREE 30 Minimum to open Monthly maintenance Per check charges Balance for no charge ATM card issuance Free Automated Transactions Basic Checking Insurance Checking Premium Checking Simple New Bundle $50 $5 over 5 N/A $ 10 $50 $ over 35 N/A $ 10 $50 $ over 20 $700 $ 10 Bankcard APR discount 1st year fee Ready Reserve APR discount 1st year fee No Yes No Yes Yes Waived No Yes Yes Waived No Yes Yes Waived Yes Waived Incentive for not using branch for transactions No No No YES ? 3 products 1 product: Lower costs ? Incentive to use alternative delivery ? Incentives for bundling other products One standard price, fee, and balance structure Consolidate/Eliminate You also need to reduce resources serving the nontarget customers. Bank Co. streamlined service to low value customers. Customer Loyalty 40 Loyalty Optimizing Customer Base Summary (Bank Example) At Bank Co, streamlining offer to low value customers drove nearterm profitability which was used to invest in value proposition for higher value customers. High Value Customers Low Value Customers ?% of Households 20% 2040% 50% ?Average Value $250+ $0$250 $0 ?Goal ?Acquire ?Retain ?Perate ?Identify high potential upsell ?Lower cost to serve ?Reduce ?Lower cost to serve ?. to defect ?Percent of Year 1 Value Created 25% 15% 60% ?Percent of Year 5 Value Created 65% 2% 16% Customer Loyalty 41 Loyalty Achieving Full Potential Acquire Right Customers Maximize Relevant Share of Wallet Crosssell/ Upgrade Build On Retain/ Recover ?Customer segmentation ?Decliner analysis ?Revenue sieve ?Channel share/ growth analysis ?Lifetime value ?Behavioral economics Analytic ?System economics ?Expanded customer corridor ?Defector analysis ?Vulnerability assessment ?Customer needs research ? Targeted acquisition ?Awareness building (advertising) ?Loyalty programs Implementation ?New businesses ?Recovery units ?Dialogue marketing Product Development Bain Company assists clients in maximizing value of their customer bases. Customer Loyalty 42 Loyalty Customer Loyalty Agenda ?What is Loyalty? ?Evolution of the Loyalty Practice ?Loyalty Economics ?How Bain Helps Clients Maximize the Value of their Customer Base ?Example ?Loyalty Tools 43 Loyalty Customer Loyalty Insure Inc.* Background *Disguised client case ?Situation –Insure Inc. is the second largest auto insurance pany in the US –Historically, Insure has been profitable ?Complication –For the past two years, the industry growth rate and profitability have declined ? The market is only growing at the rate of population growth –Insure’s growth rate has declined recently, and for the past two years it has been running a loss ?Hypothesis –Insure will be able to regain its strong growth rate and high profitability by retaining target customers Bain developed a retention strategy for Insure Inc., a large . auto insurance pany. 44 CU7021398RSA Customer Loyalty Insure Inc. Profitability Drivers () Auto Premium Auto insurance premium paid by customers ?Premium per customer increases with customer tenure due to the following reasons: –customers tend to buy more insurance as they get older. For example, as they get older and their family size increases, they buy insurance for a second car –customers tend to buy more expensive products as they get older. For example, they tend to buy more expensive cars that require higher premiums. Investment Ine The ine from premium invested in securities ?It increases from $9 per year for a new customer to $52 per year for a 10 year customer ?The reason for this increase is a bined result of lower premiums and higher expenses for