2. Agenda
• Introduc/on
• The Importance of Knowing Your Customers
• Using Segmenta/on for Understanding Your Customers
• OTP Bank Romania’s Experience
• Lessons Learned
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3. Introduc/on
OTP Group
Branches 1507
Employees 30,047
Number of clients ~12.2mn
Profit a[er tax1 84.7 HUF bn
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4. The Importance of Knowing Your Customers in general…
• to preserve the most valuable
asset of the Bank Customer
retention
• to provide products and services
which effec/vely sa/sfy
customers needs
Customer Customer Customer
• to understand how and when you satisfaction profitability loyalty
are crea/ng value for your
customers
• to iden/fy and focus on those
Customer
customers which offers the best acquisition
opportuni/es for profitable
growth
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5. ….and the SMEs’ in par/cular
• Small businesses are different in • The tradi/onal approach of
many ways: compe/ng on price or product
alone is a losing proposi/on.
– Industry Instead you should look for a
– Needs sustainable, differen/ated value
– Capabili/es proposi/on.
– Trust
– Business strategies
Value proposi0on = “Why should I do business with you and not somebody else?”
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6. Segmentation is essential….
• for understanding where you stand
and obtain more informa/on about
the customers
• for determining customer
distribu/on and porbolio
sensi/vi/es
• for realizing that it is not possible to
serve everybody and that you need
a different approach for each
segment (loyalty, reten/on,
standardiza/on, up or out etc.)
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7. . . . and begins with an understanding of your data resources
A deeper understanding of small
business customers can be achieved
through the iden/fica/on of
homogenous groups of customers within
the small business segment based on the
following types of criteria:
Demographic: Non‐financial and
financial characteris/cs
Behavioral: Product usage and
purchasing paferns
AFtudinal: Preferences and needs
Value‐based: Customer value to Bank
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8. Our experience in segmenta/on is an example…
Customer distributrion • “Green” ‐ the most profitable clients.
This segment generates more than
80% of the revenues;
Green
9%
23% • “Poten/al green” – registering a good
Potential Green cross‐selling ra/o these clients are the
main providers of liabili/es within SME
40%
Orange segment;
28%
Red • “Orange” – the larger SME segment
registering a sporadically product
usage and an income contribu/on
which is not covering the opera/onal
costs;
• “Red” ‐ the inac/ve clients
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9. …and we looked for addi/onal insights to befer understand our
customers’ needs
I ‐ “Friendly approach/ kind
personnel”
R‐ “Very well trained personnel”
S ‐ “Electronic and on‐line
services”
F ‐ “Short wai/ng /me”
J ‐ “Professional (financial)
counseling”
D – “Loyalty program”
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10. Designing a customer loyalty program
The Golden rule: keeping old customers is always less expensive than geong
new ones
The risks: any loyalty scheme might generate an immediate decrease in net
revenues if it is not thought through
The general principles of the approach:
o Simple: easy to implement, easy to be explained to sales force, easy to
explain to customers, easy to be understood by the customers.
o Timely: if the /me to receive the reward is too long the risk is that the client
will lose mo/va/on.
o Win/Win: link the customer’s value with the value to the customer
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11. Key steps to build the scheme
o Compute the average expense paid by o Make simula/ons to es/mate the number
customers for each of the product of new customers to be enrolled or to
included in the scheme migrate from “dormant” to ac/ve
accounts to compensate the decrease in
o Compute the points awarded for each profitability
product based strictly on the difference
among average expense o Design, implement and pilot the workflow
o Decide upon the amount of generic o Construct the marke/ng campaign and
discount to be offered and compute the strategy (branding, message, channels
value of each point etc.)
o Decide the mul/pliers to be used in the o Internal launch of the system presen/ng
first launch of the program its features and work flow
o Design and test the automated tool to o Launch the reward system and make it
incorporate the algorithm of awarding available to customers
points
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12. Key success factors
• Maximizing reten/on of the most profitable
Define your goal customers
• Maximizing the profit per customer
• Understand where you stand
Segment database • “One size fits all” is not the way
Understand customers • What are the sources of sa/sfac/on/dissa/sfac/on?
mo/va/onal triggers
Gain addi/onal insights • Quan/ta/ve AND Qualita/ve research
Establish behavior • Understand product usage and place safeguards not to
paferns lose revenues
• Increase the probability that your customers will do
Build the bofom line more business with you and that when they call for a
product or service, it is ours they choose.
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13. Thank you for your aJen0on!
Contact details:
Roxana Hidan
Deputy Director ‐ Product Management Directorate
OTP BANK ROMANIA
Email: roxana.hidan@otpbank.ro
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