Professor of Marketing Customer Value Management: Trends & Challenges in the Greek Retail Banking Industry   George G. Panigyrakis Professor of Marketing The Athens University of Economics May 24, 2005 Copyright © 2005 Carreker Corporation. All Rights Reserved.

The Changing Customer in Retail Banking Has limited time Quests for quality Is easily attracted by competitors Wants personalized service Does not find important differences among products/services Has high expectations Has various sources of information and can compare Has a need for convenience and speed whenever - wherever

The future is unpredictable Surprises Management Low Frequency Prediction High Yesterday Today Tomorrow Stability Change Surprise The future is unpredictable Time

Create a LEARNING ORGANISATION “About Life. About You.” Client Information Know the client better than anyone Flexible Product Line Provide what the client needs Create a LEARNING ORGANISATION Distribution Management Offer the client preferred channels Consistent Service Help the client achieve goals

Client Data warehouse Teller Transactions ATM Transactions PC Banking Products Psychographics Demographics Interactions Measures Teller Transactions ATM Transactions PC Banking Loans Deposits Investments Name Occupation Head of Household Buying Preferences Financial Segments Lifestyle Groups Balances Fees Profitability Marketing Campaigns Customer Calls Mailer Responses

The Truth! The major part of the banks’ profits are generated by a small percentage of their customers 10% of the customers generate 75% of the profits ! 20% of the customers generate 98% of the profits ! 47% of the customers are unprofitable Top 10% of customers Bottom 10% of customers Distribution of customers (% percentage), based on the generated profit / loss (Source: “Tomorrows Leading Retail banks” – PricewaterhouseCoopers)

The Critical Questions : The optimal value proposition for the appropriate market segment, through the appropriate channel. A real multichannel bank

The Challenge Increasing customer value and satisfaction while simultaneously lowering costs

WHAT IS CVM? C USTOMER V ALUE M ANAGEMENT

WHAT IS CVM? CVM is not a technology, it is about creating a positive customer experience across every single interaction with a bank.

The Strength of the Chain If we compare the service channels of a Bank with the links of a chain… Its strength can NEVER surpass the strength of the chain’s weakest link !

CRM CVM CRM C V M

The key to attracting, satisfying, and retaining customers. The “Value” of Customer Value The key to attracting, satisfying, and retaining customers.

VALUE = benefits / costs Banks can revolutionize by creating a different value proposition. Low High Costs Area of Sustainable Value Low High Benefits

Employee Agent Customer in Center Customer CVM “Customer in Centre” Organization Structure Corporate Objectives Resources Process Customer Agent Employee Management Government Regulations CUSTOMER IN CENTER!

CUSTOMER VALUE CYCLE 1 6 2 5 3 4 Understanding Customer Value Sustain Customer Value Selecting Customer Value 5 3 Delivering Customer Value Creating Customer Value 4 Organising Customer Value

VS Satisfaction Value Current Service The Entire Customer Relationship Lag Indicator Lead Indicator VS Company Performance Company Vs. Competition -------------------------------------------------------------------------- Tenuous Link to Business Performance Proven Relationship to Business Performance

Although customer value creation is critical, it is not the only element of value creation. Can the following be balanced/integrated? Serving customers? Making a profit? Increasing shareholder wealth? Good environment for employees?

Where’s the Value? Customer’s willingness to buy Customer Value Price of product/service Shareholder Value Value Creation Cost of product/service Employee Value Employee’s opportunity cost

Culture & Personnel Added Value It all depends on people: a consistent quality of service and performance Proven methods of recruitment, training and individual Performance Monitoring Strong career development to decrease turnover Dedicated project teams representing all areas of expertise to prepare the client’s solution Client and knowledge management. Customer centric perception. Every member of the organization is a marketer.

Two types of organizations Source Nova Bank

Marketing Strategy Basics Create a LEARNING ORGANISATION

Marketing Strategy Basics Heightened market orientation and a focus on creating superior customer satisfaction Create a LEARNING ORGANISATION

Marketing Strategy Basics Heightened market orientation and a focus on creating superior customer satisfaction Create a LEARNING ORGANISATION Positioning built on exploiting marketing resources, assets and capabilities

Create a LEARNING ORGANISATION CVM Strategy Basics Rethink the role of marketing in the organisation Heightened market orientation and a focus on creating superior customer satisfaction Create a LEARNING ORGANISATION Positioning built on exploiting marketing resources, assets and capabilities Establish close relationships with key customers and groups

“Virtual Corporation” Ideal Corporation “Virtual Corporation” “Is a corporation without boundaries with penetrable and constantly changing intermediate communication systems (interfaces) which link the corporation with the external environment”

Experiences “Moment of Truth” Each and every customer contact represents a “Moment of Truth” Giving a chance for expectations to be exceeded, satisfied or disappointed This applies independently of the type of contact (face to face, written, by telephone, or via the internet)

…we can only succeed through our client’s success ! Don’t Forget …we can only succeed through our client’s success !