2006 Dec 01
Trends in Financial CRM Systems
by David M. Raab
Curtis Marketwise FIRST
December, physician 2006
What are the latest trends in financial CRM? The answer really depends on where you’re looking. Activities that are old hat to some institutions are still new and exciting at others. So let’s consider three broad classes of organizations and talk about what’s happening in each.

Traditionalists. These organizations are the slowest to adopt new technologies and business approaches. Many are still moving from a basic marketing database (MCIF) environment, used primarily for outbound direct mail, to their first attempt at a CRM system that includes live customer interactions at branches and call centers. The key trends for this group are integration of data from multiple back-office and customer contact systems; making the integrated data visible to company representations at customer-facing systems; and providing basic sales functionality such as lead distribution, contact management, and sales funnel analysis. More advanced members of this group are starting to add some statistical intelligence to their marketing efforts. This can include simple predictive models to help target the best prospects for particular products and activity-based triggers to identify customers who have done something unusual enough to warrant personal attention.

Traditionalists are the most likely to use the increasingly-popular hosted CRM systems, such as Salesforce.com, which reside at an outside service agency. Such products are easy to deploy but somewhat limited in their ability to integrate with existing company systems. Particular issues are coordinating real time activities across systems and accommodating complex data structures. The hosted products appeal most strongly to buyers whose limited in-house technical resources make them willing to compromise on flexibility in return for get quick access to much-needed basic functions.

Leaders. These users are striving to make better use of the CRM systems they have already put in place, sometimes many years ago. They too are still working on integration, but from the more sophisticated perspectives of trying to coordinate activities across different channels (direct mail, email, Web, branch, ATM, call center, etc.) and different product lines. These involve organizational as well as technical issues, so the leaders find themselves worrying more about business process than pure technology.

The leaders are also making increased use of advanced analytics to help improve their customer interactions. Analytic tools include predictive models to pick the next best offer for each customer (which is more complicated than finding the most likely responders for a single offer), business intelligence systems to identify business opportunities and trends in customer behavior, and role-based dashboards to distribute customer information to everyone from senior managers to front-line agents.

Leaders are also the most likely to take advantage of the latest functions being added to high-end customer management systems. These include marketing strategy, planning and budgeting for top-down management; project management, workflow, collaboration and content management to improve operating efficiencies and relationships with service providers; and direct control by marketers of list selections, multi-step campaigns, email contents and Web offers. Direct control is important to leaders because minimizing the involvement of technical staff in marketing execution lets them react faster to customer needs and market conditions.

Futurists. These are the handful of visionaries whose firms have successfully deployed cutting-edge CRM technologies and are looking beyond CRM mechanics to true customer optimization. They are reorganizing their businesses around customer segments (although typically retaining product managers as well) and letting the segment managers try to identify and deliver the most suitable experience for each group. They are developing customer value models that analyze profitability based on specific activities and are using sophisticated statistical methods to understand how different marketing and operational experiences influence future customer behavior. They are exploring new interaction types such as social networks, blogs, RSS feeds, location-based messaging, and online communities to see how they can better meet customer needs and firmly cement relationships between the customer and their institution. At the same time, they are developing new techniques such as automated testing and data visualization to effectively manage the exploding number of interaction possibilities.

All organizations do share one trend: the pressure for compliance. Ever-tighter regulations for customer surveillance, privacy protection and financial reporting require more precise data integration, activity monitoring, and record keeping. The burden falls most heavily on the least sophisticated organizations, because their systems need the most improvement and they have the fewest resources available for the work. But more advanced systems require additional compliance techniques, so some effort is required at every level.

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David M. Raab is a Principal at Raab Associates Inc., a consultancy specializing in marketing technology and analytics. He can be reached at draab@raabassociates.com.

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