Case Study: BAWAG PSK
The Austrian bank BAWAG PSK achieves a sixfold increase in campaign success rates.
BAWAG PSK has accelerated its march to customer relationship management (CRM) maturity through a mix of need, persistence and management insight.
In less than three years, Austria’s fifth-largest bank has seen a sixfold increase in marketing campaign success rates, thanks to the implementation of two significant Teradata CRM innovations.
In the first, the bank and Teradata worked together on customer data integration, analytical processing capacity and predictive analytics for campaign lead generation.
In the second, Aprimo Relationship Manager helped the bank migrate from highly manual product-based campaigns to an automated relationship-based service presentation. Teradata consulting services and the tight integration of Teradata systems were critical in compressing the development timeline to deliver greater value earlier.
More Capable CRM
Following the 2005 merger of two traditional Austrian financial institutions, BAWAG (Bank für Arbeit und Wirtschaft AG) and PSK Bank (Oesterreichische Postsparkasse), the bank’s marketing group sought to capitalize on the cross-sell and up-sell opportunities created by its combined product and customer portfolios. But identifying prospects for product and service promotion proved challenging. The only source of aggregated customer information was an Oracle data warehouse that didn’t provide analytical capabilities. It offered marketers only basic customer segmentation that was inadequate for campaign targeting.
Marketing and IT made a strategic decision to acquire a dedicated analytical CRM (ACRM) system that would provide:
- Improved data management capabilities in a database completely devoted to customer analytics
- The ability to create customer profiles using financial data
- Predictive analytics with in-database analytical structures
- An increased rate of return through higher cross-sell, up-sell and next-best-offer success rates
- A higher rate of acquisition with fewer customer contacts
- Improved customer retention and lower attrition rates
After screening many vendors, BAWAG PSK piloted a Teradata Data Warehouse Appliance, the heart of the ACRM environment, in select branch offices. Teradata consultants developed models that would identify up-sell and cross-sell opportunities on five products among existing customers.
Contact rates for sales leads increased by more than 30% over 18 months thanks to the bank’s CRM initiative.
Branch advisers who used model-generated leads from the new ACRM system achieved a 12% success rate, compared with 1% to 2% in a control sample. The successful project formed the basis for a business case to implement a production-scale solution.
“We conducted a successful test pilot project and based on these factors, determined a high probability for success with Teradata,” explains CRM analyst Christian Fribert.
In this first phase, the new system propelled the uplift the bank had expected. Where early post-merger marketing campaigns had averaged 5% success rates, campaigns in the new ACRM warehouse achieved two to three times that percentage.
Kaspar Trachsel, CRM department manager, BAWAG PSK
Capitalizing on Opportunities
Building on the initial work done by Teradata, Kaspar Trachsel, the bank’s CRM department manager, found more opportunity for improvement. Topping his list for phase two was campaign automation. Up to this point, many functions remained manual, including lead quality control, lead data enrichment, development contact files and preparation for reporting. These inefficiencies limited productivity, increased marketing costs and made it impractical for the bank to effectively target niche markets. They also made it impossible to execute campaigns concurrently.
Under Trachsel’s direction, the bank’s marketing and IT groups developed a strategic vision for CRM at BAWAG PSK. Customer relevance became priority No. 1; every interaction had to be more meaningful to the customer and make the relationship more profitable for the bank. Trachsel and his team mapped out the business case for a more automated and better-integrated CRM capability, tracing potential contribution improvements through higher returns and lower costs.
Opportunities for near-term improvement included the ability to:
- Enhance customer loyalty and cross-sell effectiveness through event-based marketing
- Increase the consistency of customer communications by coordinating multi-step conversations across multiple channels and touchpoints
- Prioritize and optimize contacts across channels and segments to avoid message collision and communication overload
To capitalize on these opportunities, a new tier of cross-sell and customer retention programs was created and tightly synchronized with the customer life cycle. Personalized relationship-building interactions were triggered by business rules at specified intervals or by specific events. Cross-functional campaign management processes, enabled by new management controls, dashboards and reporting capabilities, improved governance of CRM processes and assets. This supports granular, action-oriented sales controlling.
Holistic Customer Relationships
The most important addition was Aprimo Relationship Manager, which let the bank integrate, automate and optimize its campaign activities and customer interactions across product lines, business units and channels. This created a streamlined closed-loop marketing cycle from concept development through analysis, lead generation and optimization, channel selection, execution, performance analysis, and resource reallocation.
With automated lead handling and campaign management capabilities in place, Trachsel and his team could focus on changing the mind-sets of the bank’s marketers relative to customer interaction. Instead of focusing on product-based sales opportunities, they now work on building holistic, long-term relationships and growing their value.
“The idea is no longer that each adviser is required to work out a list of campaign leads, but that we’re continuously providing qualified sales and service opportunities that are relevant to his customers, and that can help him lift his success rate,” Trachsel says. “It’s a completely different mind-set.” And it has generated remarkable results.
The bank’s CRM initiative has produced a significant boost in marketing efficiency and campaign results, including:
- Contact rates for sales leads increased by more than 30% over 18 months
- Sales doubled versus 12% to 13% phase one campaign success rates
- Certain event-based campaigns have registered success rates as high as 55%
- Set-up costs for new campaigns have been reduced by a factor of 3 to 5
- Automation cut the costs of recurring campaigns by a factor of 10 or more
Based on these performance improvements, BAWAG PSK anticipates recouping the complete acquisition and implementation costs of Aprimo Relationship Manager within one year.
More To Come
Trachsel and his team are hard at work on plans for the next round of service and functionality enhancements. Early leaders in the competition for a spot in the business case include:
- Improved channel integration, particularly with inbound channels and self-service (e.g., ATMs)
- More cross-channel personalization, especially for e-banking communication
- Multi-channel optimization that will bridge online and offline channels and underpin the long-term goal of a cross-channel, next-best-activity framework
- Integration of Web analytics and social media monitoring
“Our CRM capability has come a very long way in a comparatively short time,” Trachsel says. “But in this business you can never afford to coast. You have to commit yourself to continuously improving the service experience you provide to your customers, because your competitor is absolutely working on his. We’ve found the CRM accelerator, though, and we intend to keep our foot on it.”