This year’s InterACT was a showcase for EDM and how rules and analytics work together to make better decisions. As I listened to some of the sessions, however, it occurred to me that InterACT was really a showcase for how EDM, in helping to make better decisions, helps to solve business problems. To reflect this, I came up with the following equation:
S(i) Right Decisionsi = Solution to Business Problems
Let me motivate this equation by asking you to consider the following two scenarios:
Pune, India: A customer calls into a leading credit card issuer’s call center in Pune, India and asks that his account be closed down. Asked why he wishes to close his account, the customer responds that he simply has too many cards and needs to trim the number down. The call center employee records this information, but also quickly looks at the customers records and sees that the customer hasn’t used the bank’s card in months. Maybe the customer is right to close down this card she thinks, but she also wonders, as she processes the customers request to close down the account, why did the customer choose to stop using her company’s card? Why not close down another bank card? A thought crosses her mind – what if she could persuade the customer to stay with the company, and close another bank card down? Her thoughts are interrupted by reminders that she is coming up on the allocated time for this customer, and she has 2 more in queue that she needs to get to. She quickly closes the customer’s account and moves on to the next call…
12th floor, bank president's office, NY, NY: The president of the leading credit card issuer is meeting with her top executives and with consultants from a leading strategy consulting firm. The president is troubled that her credit card business is only growing at 4% a year. The industry is growing at an average of 6% a year. This means that someone else is growing faster than the average at her bank’s expense. Last night she read the strategy consulting firm’s benchmarking report. Nothing in it seemed to indicate that her products were lacking in any way – the benchmarking report instead showed that her bank was making the same loyalty offers, sending out the same number of mailers, and had the same APR’s as all the rest. So where was she going wrong? And more important, how could she fix it…?
Interestingly, the answer to the president’s problem lies in Pune, India at her bank’s call center. It was her idea to offshore her call centers to India – just as all of her counterparts were doing in the industry – to save cost. It never did cross her mind, however, that her call center could be a strategic asset. Or, more correctly, her call center in Pune could be a strategic asset that could be used to solve business problems if it was equipped with EDM and the power to make the right decisions.
Call centers are increasingly the front lines of customer interaction. As such it is at call centers that many of the metrics that drive business performance occur. It is through call centers, for example, that customers can be acquired, for example. It is at call centers that customers who are looking to attrite can be convinced to stay. It is also at call centers that customer satisfaction often occurs – customers often make their decisions on a company based on their interactions with call center representatives. If a business is driven by the sum of performance over all of it’s portfolio of customers, it makes sense that call centers will be one of the key interaction points where this performance can be monitored, influenced and improved.
Which leads me back to the connection between the call center employee in Pune, India and the business problem faced by the president of the bank in New York. Certainly, as the example of the customer who had called in to cancel his credit card showed, it is not enough to simply acquire a new customer as a means of growing a business. It is often necessary to do more, particularly in a hyper competitive market like the credit card industry, by encouraging usage of the credit card and by preventing attrition. If a bank is able to do this one customer at a time in the portfolio, the sum of performance of the entire portfolio starts to increase. Once the performance of the portfolio increases, the business problems start to go away. Rapid growth in the bank’s portfolio, for example, means that the bank’s credit card business will likely grow at higher than the average industry rate.
To grow the performance of the business one customer at a time means that the right decisions have to be made on each customer consistently. The call center employee’s instincts were correct when she thought that she should convince the customer not to attrite. If she had succeeded, she would have taken one small step to solving the problem her bank president was facing. The call center employee’s problem was that she did not know how, and be able to do so in the limited time she had with the customer.
Here is where equipping the call center with EDM makes it a strategic asset. The promise of EDM is that it delivers the right decisions, derived through the intelligence of Analytics - to the customer touch point through the use of rules. By presenting the call center employee in Pune with all of the right decisions necessary to prevent the customer from attriting, EDM enables the call center employee to meet the strategic goals of the company. The devil, of course, is somewhat in the details. It is possible to personalize the delivery of decisions for each customer through the use of rules. However, it is up to the Analytics in EDM to come up with the right decisions to deliver. The question is – are the Analytics up to delivering this right decision for each customer? For example, if the call center employee wanted to keep the customer from attriting, how exactly should she do it? Should she change the APR? Perhaps offer new loyalty rewards? Or perhaps change the credit line?
At InterACT, two of my colleagues at Fair Isaac, Bill Groves and Barkha Saxena, presented a session on Wallet Share that precisely addressed this issue. Using Analytics, it is now possible to ‘read’ each customer who calls into a call center and determine which offer they are most likely to respond to. This means that using Analytics, the call center employee is now equipped to understand which offer – be it a change in APR, new loyalty rewards, or a new credit line – to offer each customer as they call in. These Analytics can be delivered using Blaze Advisor as part of an EDM System.
This paradigm applies to all industries where the performance of the business is the sum of the performance of each portfolio member. If a company is able to make the right decisions consistently on each portfolio member, it can almost certainly guarantee that many of the larger business problems can be solved, and more importantly almost certainly guarantee that it can realize a significant competitive advantage. The key to realizing this paradigm is delivering the intelligence from analytics through rules to ensure that each customer decision is consistently right. In other words, the key to this paradigm is EDM.