CRM at capital one case summary.

1. By:
Joshpin Bala
Roll.No: 171

3. • Customer Relationship Management at Capital One :
• Capital One is an American financial services company, which
have about 45 millions of clients worldwide.
• The group is also present in the UK.
• Capital One proposes its customers opening accounts with
credit cards, and other financial products like insurance.
• The company also proposes loans.

4. • How would you define CRM as implemented at Capital
One ?
• At Capital One, CRM is present in all the company’s activities
and services. The goal is to develop valued relationships with
the customers and handle the risk, understanding intimately
the consumer.
• The company is able to propose customized products which
ideally correspond to needs and to the customer’s risk profile.

5. Over view of CRM at Capital One
Capital One, a credit card company, has built its business
on a strategy with a clear customer focus:
• The company systematically gathers and analyses
information on its customers in order to correctly assess
their individual credit risk and to offer products and
services tailored to their individual needs.
• The case is designed to illustrate how the concept of
customer relationship management (CRM) can be
translated into strategy, organizational design, hiring,
marketing processes, and IT infrastructure of a company.

6. CRM Practices at
Capital One
• Segmentation Strategy
– Targeting all types of risk profiles, offering different prices
and products
– Customer database distinguishes high-risk ‘revolvers’ and
low-risk ‘transactors’

7. ---The company uses segmentation strategies in its business
practices. This function divides the potential client base into
high risk and low risk categories.
---The higher risk clients will pay a higher interest rate and the
lower risk clients will be rewarded for their low risk status by
being awarded a lower interest rate.
---With high risk comes profits in the form of higher interest
payments and with low risk come lower interest payments
but potentially a high profit from the monthly interest
payments that are practically guaranteed from the low risk
client.
---The company tries to maintain its dormant customers through
an alert system.

8. • Operations aligned with customer requirements
– Personalized and flexible handling of customers
– Calculation of profitability on an individual basis to
improve product offer to customer
– IT infrastructure
• Collections
– Payment assistance, recoveries and fraud
• Retention Strategy
– Help retain customers when introductory rate expires or
risk of ‘dormancy’ exists

9. • Sales
– Sales system (SALSA) enables targeting cross-sell offers to
specific customers
– Uses accumulated data on customers to suggest how to
react to specific customer requests
• Co-operation between Marketing and Analysis (M & A) and
operations
– Partnership to review risk perspective of present and
future strategies enabled through IT

10. • Information Technology
– Interaction with company in terms of prospect pool
management and solicitation, account acquisition, account
servicing and call-center technologies, core systems
• Human Resources
– Managing associate selection and development of
company culture

11. IBS for creating competitive advantage for Capital One..
• IBS creates a competitive advantage by narrowing sectors for
Capital One to use in its marketing of its various credit card
products.
• The system is complex but also simple at the same time.
• IBS assists Capital One on sending the right products to the
right consumers.
• The products and/or promotions are sent out and tracked.
• The tracking allows the company to know which demographic
is responding and which demographic is not. This helps the
business with its competitive advantage.

12. Test and Learn Strategy

13. Capital One: Systems
Infrastructure
Different systems working together
VECTUS
SERVICE
VIEW
BASS SALSA
MIS
Screen of front end associates
Data from
customer
applications
Account
servicing
data
Solicitation and
marketing data
Data warehouse

14. Use of Data
Customer data Segmentation
Online decision of
associate
•Static customer data
•(Identity)
•Transaction data
•Products sold
•Campaigns received
•
Expected NPV = Expected
response X product NPV
For every customer
For all sales activities
Monthly recalculated-
Rank order of what to Offer/
cross sell
Which products
Value per product
Products already offered
= (barred from sale)
-
•
Decision captured and fed into data warehouse

15. Growth of Capital One’s Revenues
(Worldwide Operations)
1996 1997 1998 1999 2000 2001 2002
63% 40% 33% 39% 29% 36% 41%
Millions
Annual
Growth
Rate
Revenues

16. Capital One: Summary
• Illustrates successful implementation of a CRM strategy
• Business model founded on the crucial premise that each
customer requires a different product and service from a
credit card provider
• Adopted an Information Based Strategy (IBS), to collect
information on customers

17. • “Test & Learn” tests customer related activity in a controlled
condition before it is introduced in the market
• CRM is viewed as a key strategic process in Capital One;
different depts. work in an integrated fashion towards
understanding and satisfying customers
• 2001 - Capital One was named 3rd ‘Best Place to Work in the
UK’ by The Sunday Times. Capital One named in Forbes 400
list -Best Big Companies in America

18. Capital One Commercials.mp4
Video: