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October 23, 2000 issue

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1 October 23, 2000 issue


3 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?”

4 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 Customer Strategy 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

5 NationsBank Customer Strategy Retain high value customers. Improve the profitability of marginally profitable customers. Migrate unprofitable customers to lower cost delivery.

6 Direct Banking Target Environment The 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 Technology People

7 Planned changes Current situationPlanned improvements Multiple telephone numbersFew 800 numbers to access bank Undifferentiated service levelsService levels based on relationship group Go to next available agentSkill-based routing of calls High agent turnoverClear career paths in centers Low sales effortTargeted cross-selling

8 Organization for Skills-Based Routing

9 How does the call center operate? RG 1 Universal Banker RG 2 Product Experts RG 3 Basic Product Cross-Selling Sales Total calls RG2 service RG1 sales RG1 service RG3 service RG2 &RG3 sales VRU 70% 30% 85% 15% 90% 10% RG2&3 x-sell RG1 x-sell abandonments

10 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

11 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

12 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

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

14 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

15 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

16 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

17 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

18 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

19 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

20 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

21 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

22 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

23 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

24 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…

25 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.

26 10 Point Customer Defined Vision for Telephone Banking Quick and Accurate Customer Controlled Interaction Helpful, Caring and Respectful Attitude Easy AccessEffective Call Resolution Basic Knowledge from Every Rep Full Range of Banking Functions Security and PrivacySpecialized Knowledge from Product Experts Proactive and Personalized Service Trans action Serv ice Customer Defined Vision Sales Credit Inves tment

27 Telephone Banking Virtual Call Center Organization and Skill Based Routing Centers of Expertise Card Services Mortgage Services Investment Services Treasury Management Services Consumer Banking (English)Business Banking RG 1 Universal Banker RG 2 Product Experts RG 3 Basic Product RG 1 Universal Banker RG 2 Product Experts Cross-Selling Sales Cross-Selling Sales

28 Telephone Banking Cross-Sell Rules 1LogicalSelected at path that has a logical cross-sell opportunity Examples: Inquiry on CD maturity, loan payoff 2StrategicDirect Offer - Direct marketing campaign offer not responded to, next purchase recommendation Qualify for product based on Account relationship Example: Pre-approved VISA Credit Card; customer has $15,000 in deposit account, not Advantage 3Strategic LogicalAt 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.

29 Telephone Banking Intelligent 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 MENU 1 Account Access 2 Sales 3 PC Banking 4 ATM / Branch Locations 800-299-BANK Customer Information File Account Information Files Balances Transactions Access ID and Authority Preferences Account Relationship Relationship Indicator Routing Indicator Prodct Offers

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