Case study on how to impliment a analytics led customer lifecycle management program in a retail bank.

1. Stories from the battlefield:
How Al Rajhi transformed itself through
customer management analytics
Anand Nigam
Head of Market Insights and Analytics, Al Rajhi Bank

2. 2
Are we prepared for the
challenges of
customer era?
Customer needs are ever evolving …
How well placed are we in
predicting
Customer needs and
proactively managing
customer value?

3. The dawn of the ‘Customer Era’ has thrown up a few challenges
3
…Customers have more
information on their
fingertips, Data on
anything and everything is
easily available
…Customers are plugged-in
everywhere and seek instant
gratification
…Customers trust their
social networks and not
brands
… Customers face paradox
of choice (more choice –
more confusion), hampering
decision making
Dawnofthe‘CustomerEra’
How to provide information
on everything & at the
same time build any
emotional quotient with
customers?
How to adopt this reality
in day-to-day operations?
How to have more ‘instant’
& relevant conversations
with customers?
How to simplify products
and services that aid in
faster decision making?
Challenges faced by firmsCharacterized by…
… more
‘informed’
…more
‘Connected’
…‘Always ON’
…looking for
‘Simplicity’
Customers are…

4. Banking needs of customers
Transaction
Needs
Credit Needs /
Borrowing
Security &
Insurance
Needs
Savings &
Investment
Needs
Core
Needs
The Circle of
Financial Needs

5. Banking needs of customers are very diverse … and keep evolving depending
on their progress in lifestage, wealth, risk appetite, acceptance of technology …
• Securing life
• Securing
health
• For future
• For business
• For purchase
• For education
• For retirement
• For emergency
• Travel / Holidays
• Personal need
• Auto, Home
• Marriage
• Education
• Travel / holiday
• Cash transactions
• Overseas transactions
• Local & international
Payments
• Govt. payments
• Online
• Transfers
Transaction
Needs
Credit Needs /
Borrowing
Security &
Insurance
Needs
Savings &
Investment
Needs
• Securing property
• Securing travel
• Securing from
theft and fire.
Core
Needs
Evolved
Needs
Evolved
Needs
The Circle of
Financial Needs
• Business
• Quick Cash

6. Banking needs of customers are very diverse … and keep evolving depending
on their progress in lifestage, wealth, risk appetite, acceptance of technology …
…and if we don’t give attention to little details, we have lost their attention.
• Securing life
• Securing
health
• For future
• For business
• For purchase
• For education
• For retirement
• For emergency
• Travel / Holidays
• Personal need
• Auto, Home
• Marriage
• Education
• Travel / holiday
• Cash transactions
• Overseas transactions
• Local & international
Payments
• Govt. payments
• Online
• Transfers
Transaction
Needs
Credit Needs /
Borrowing
Security &
Insurance
Needs
Savings &
Investment
Needs
• Securing property
• Securing travel
• Securing from
theft and fire.
• Personal loan
• Home loan
• Auto loan
• Business loan
• Education loan
• Overdraft
• Cash advance
• Life insurance
• Medical insurance
• Property insurance
• Car insurance
• Travel insurance
• Theft & fire
insurance
• Cash withdrawal
• Credit cards
• Cheque / drafts
• Remittance
• Internet banking
• Standing orders
• Phone banking
• Mobile banking
• Bank account
• Time deposits
• Recurring deposits
• Mutual funds
• Stocks / shares
• Bonds
• Property investment
Core
Needs
Product
Manifestations
Product
Manifestations
The Circle of
Financial Needs
• Business
• Quick Cash
Evolved
Needs
Evolved
Needs

7. 7
Al Rajhi Bank has done well in servicing
walk-in customers capitalizing on its brand pull, process efficiencies &
large network of branches.
Beginning of 2009, with Global Financial Crisis setting in, the challenge
was to get maximum out of a limited marketing budget
Marketing team at Al Rajhi Bank introduced Analytics based targeted
cross-sell program, which after initial success, evolved into a full fledged
Proactive Customer Lifecycle Management Program.
Today we will take you through the key highlights and success factors in
implementing this program.

8. 8
“Al Rajhi’s vision is to be the
market leader in customer
lifecycle management in the
region…
This involves ability to manage
customer lifecycle
using
full suite of products and
services
across
all banking channels
embedded in
automated technology and
efficient processes”
We set out with a holistic customer centric vision …
1
2
3
4

9. 9
Assets
Credit Cards
Insurance
Liabilities
-
- Sell loan for a second car
- Sell a Watani top-up
- Prevent
foreclosure
-- Sell loans
-
- Increase insurance
holding
- Retain customers -- Sell insurance
- On-board and
activate
customers
- Increase CA balances
- Increase debit cards &
POS usage
- Increase salary transfer
customers
- Prevent
- silent attrition
- balance erosion
- salary transfer
attrition
- Activate
customers
- Increase loyalty
- Identify segments
in the market
with high
opportunities
- On-board and
activate
customers
- Increase spends and
utilization
- Increase credit lines
-Prevent attrition
- Activate
customers
- Increase loyalty
- Sell credit cards
Customer Lifecycle Management
- Mass - Affluent - Private
ACQUISITION ACTIVATION
VALUE
MANAGEMENT
RETENTION
RE-
ACTIVATION
Customer Management
- Customer Insights - Customer Segmentation
Campaign Management
- Develop - Execute - Track & Report
CRM Integration
- One view of customer - All push and pull channels - Automated and optimized
The Vision was translated into specific initiatives for managing
customer lifecycle under “House of Analytics” framework.
1
customer
lifecycle
2
fullsuiteof
productsandservices
all banking channels3
4 automated
technology
and efficient
processes

10. To implement this vision, we had to work across all key
components …
10
Dedicated analytics marketing team (including
consultants) + involved other teams within bank such
as products & channels
Put in place rigorous data, campaign management and
reporting process as they were done in silos earlier
Identified a series of low-hanging initiatives while setting up a
framework & roadmap for long-term strategic initiatives
Achieved & beat target by over 80% in 2009 & 1st qtr 2010
Set-up a separate data-mart to enable analytics

11. We will deep-dive into one
initiative as an illustration
of work done
11
Cross-Sell
Program

12. We have already achieved significant results across KPIs in the
Cross-sell program
Incrementalbookings
fromanalyticsbase
RESULTS
Above the
monthly
targets
Beat the 2009
targets by 80%
5 months from start
of campaign
6 months from start
of campaign
12

13. We kick-started our analytics journey by launching multiple
targeted campaigns for cross-sell of asset products to checking
customers…
13
Data Setup
Model
development
Campaign
launch
Campaign
execution
and tracking
Revenue
realization
• Test and control
mechanism
developed
• More than 25
campaigns
launched
• Optimized on
channels for
campaigns
• Campaign
scripts
optimized
• Lead
management
system
developed
• Out-bound
callers trained
• Several
analytical
models
developed
• Beat target by
over 80% in 2009
& 1st qtr 2010
• Data-Mart setup
which is
refreshed every
month
 Jun-09: Demographic
& product variables
 Jul-09: Added
behavioral variables
 Jan 2010:
Differentiated
between salaried /
non salaried
customers
 Feb 2010: Customer
life time value models
1 2 3 4

14. 14
We started with collating data from all sources, and created an
analytical data-mart
Deposits
Products
Transactions
Watani
Mortgage
Auto Finance/
Leasing
Demographics
Comprehensive
Data-mart
Customer
Analytics
Campaign
Management
Credit Cards
Deposits
Credit Cards
ATM
Branch
Mubasher
Credit Filters
Contact
information from
different sources
The Data-Mart is refreshed every month
1

15. 15
We developed several analytics models and improvised on
them over time
2
Segmentation models
Next-best Cross-sell model Predictive models
Decision tree models
Look-alike models
Customer Lifetime Value model

16. 16
We developed several analytics models and improvised on
them over time
2
Segmentation models
Next-best Cross-sell model Predictive models
Decision tree models
Look-alike models
Customer Lifetime Value model
Helped us in understanding
customer needs and predicting
behaviour

17. Suitable campaign execution channels were selected to
optimize channel level RoI
Tele
Marketing
SMS & E-
mail
E-mail
Customer
Propensity
Customers were rank ordered
based on their propensity to
respond to the X-sell Campaign
Least Expensive
Channel
Most Expensive
Channel
Outbound
Call Center
Email &
SMS Script
• Professionally
designed call
script
• Trained agents
to handle
FAQs from
customers
Scripts designed
in the systematic
& structured way
• Random calling
without any
proper script
• Agents not
trained to
manage various
situations
Scripts were
designed in an
ad-hoc way
Before... After...
17
3
Set-up a structured process to
implement the campaigns

18. Control & Test groups were carefully designed to track
campaign results
C R E D I T F I L T E R*
Propensity of taking the product HighLow
Low Propensity Customers
High
Propensity
Customers
Test Group, T
Random sample
Control Group, C2 Control Group, C1
High
Propensity
Customers
Low Propensity Customers
* Except the SIMAH check
Benefits
We can test key
hypothesis to learn “what
worked” & “what didn’t”:
H1: By comparing results
from C1 & C2 we can
estimate lift due to
modeling
H2: By comparing results
from T & C1 we can
estimate lift due to
campaign offer
BAU conversion
Efficiency through
modeling & analysis
Incremental
conversion due to
campaign offer
18
4

19. An E2E process for campaign tracking was developed and
executed
19
4
 Every campaign was
tracked for 3 months
post launch
 Campaign results were
fed back into data for
fine tuning analysis for
subsequent campaigns
 Set-up a process for
managing leads for the
channels
 All results were shared
with entire bank in the
form of news-letters

20. 20
Significant progress was made and communicated across all
initiatives with good results against a pre-defined success matrix
Acquisition - Cross Selling Activation - New Customer On boarding
Attrition - Account Depletion
© 2010 IBM Corporation
212
321
498
691
832 935
500
170
400
620
851
1,302 1,400
1,922
2,176 2,301
1,500
2,500
0
500
1000
1500
2000
2500
3000
Jun'09
Jul'09
Aug'09
Sep'09
Oct'09
Nov'09
Dec'09
2009Target
Jan'10
Feb'10
Mar'10
Apr'10
May'10
Jun'10
Jul'10
Aug'10
Sep'10
2010Target
2010revised
target
Hypotheticalnumbersfor
illustrativepurpose
Above the
monthly
targets
Beat the 2009
targets by 80%
5 months from start
of campaign
6 months from start
of campaign
BUSINESS RESULTS
EXECUTION TRACKING
Low
Propensity
Control
High
Propensity
Control
High
Propensity
Target
C2 %
C1 %
T1 %
Lift due to
Modeling
Lift due to Campaign
X%
Natural
Conversions
Natural + Execution led
Conversions
This represents the
converted
customers due to
the project
=> Booked amount
due to the project
Conversion here is
BAU conversion
Conversion here is due to
efficiency through modeling
Incremental
conversion over &
above C1 will be
due to campaign
offer
REPORTING
Dashboards for regular reporting
• Sales: Incremental
sales of SR2.3bn
• 30+ campaigns run
• Products: Credit
cards added to
consumer finance
cross sell
• Execution: SMS and
Outbound Calls
© 2010 IBM Corporation
…with well defined activities in the window of 180 days
Welcome
Day 1 Week 1 Week 2 1 to 3 months 3 to 6 months
• Account opening
• Welcome kit delivery
• Issue ATM Card
• Spend quality time with the
customer to understand the
need and explain the
relevant products and features
• Outline the benefit of Salary
transfer
• Guide customer on
Mubasher usage
• Thank you letter/email/SMS
Account opening Welcome SMS Welcome Email
• Welcome Email
Engagement
• Bill payment offer
• Offers on debit card
usage at POS
• Follow up calls if customer
still inactive on Mubasher
• Check on Salary transfer
Cross-Sell
• Customized Cross Sell offer
through direct mail/email/
SMS
• Offer Prepaid card
• Address needs of customers
who decrease their balance
by more than [70]%
Earn the ‘right’ to X-sell X-sell/Up sell programs
1
Engage
Activate
• Objective to
accelerate customer
profitability through
managed
engagement
• Performance metrics
based on salary
transfer, online
usage, cross sell
• Silent attrition
identified as
significant point of
investigation
• Internal analysis
combined with
customer research
to identify root
causes
© 2010 IBM Corporation
We analyzed our customer base to understand if balance depletion was due to
account closures or silent balance reduction…
12.0%
1.0%
0%
5%
10%
15%
Average US Banks Al-Rajhi Bank
Attrition Rate (Account Closure)
We undertook surveys to understand the
reasons why customers reduced their
account balance
Al Rajhi’s account closure rate is
much lower than that of the average
bank in a developed country, and
hence not a concern area
Silent balance reduction forms a major reason
for overall balance depletion
20
Value Management - Credit Card Segmentation
• Understanding of
customer segments
in terms of usage
and revenue
• Foundation laid for
2011 credit card
portfolio
management
strategy
© 2010 IBM Corporation1
ANNUAL POS SPENDS
0 < 9,187 SR 9,187 – 18,247 SR 18,247 – 38,401 SR >38,401 SR
ANNUALPOSTRANSACTIONS
>78
0.1% 0.7% 1.0% 0.6%
42 - 77
1.2% 2.1% 1.4% 0.4%
20 - 41
5.2% 3.0% 1.2% 0.3%
1 - 19
40.0% 3.0% 0.9% 0.2%
ATM only
7.6%
Inactive
31.1%
A1
A2
A3
A4
B1
B2
B3
B4
C1
C2
C3
C4
D1
D2
D3
D4
A
I
CUSTOMER BASE
Total base = 315 K customers
A1 – A2 and B1 – B2 customers should be maintained well
C1 – D1 and D1 – D2 customers should be moved towards
higher spends
D4 and I need to be activated

21. While implementing analytics within the bank, we are in the
process of establishing a fact based culture
21
Structured Model to change
organizational mindset…
Dedicated analytics marketing team
(including consultants) + involved other
teams within bank such as products &
channels
Rigorous data, campaign
management and reporting
process put in place
Clear goals and plans
incorporated by all teams
Supported by 'soft approach' to
make the team understand and
implement the change …

22. 22
…and we are currently transforming our organization for facing
the customer era by making every customer interaction count
We have established an end-to-end on-
boarding experience, walking the customer
through his first 6 months
This has earned us the right to cross-sell to
the customer
Providing relevant services to customers
through targeted cross sell up sell campaigns
Exceeded customer’s cross sell sales target
by 80%
Emphasis on a culture that is inclusive of
customers
Reactive Engagement Proactive Engagement
Generic Interactions Personalized Interactions
One way
Customer Interaction Customer Dialog
From… To…

23. Learnings
Have a vision and sell the vision to get all stakeholders onboard
The vision should be broken down to clear manageable initiatives
Identify success matrix with some linkages to profitability
Tracking & reporting results regularly against the success matrix
Devil is in the detailed planning and focus on execution
Its about winning people not burning bridges

24. 24
Thank You
nigama@alrajhibank.com.sa