RBC Financial group
LESAGE Quentin SUBIRANA Paul
[CUSTOMER PROFITABILITY AND CUSTOMER RELATIONSHIP MANAGEMENT AT RBC FINANCIAL GROUP (ABRIDGED). ]
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Evaluate RBC’s customer strategy.
Unlike most banks, RBC Royal Bank has well understood the need to leverage the economic value of customer information for many years. Since the late 1970’s, the bank has searched for and found innovative ways to use its customer data to improve its business performance and how to better serve clients. The CRM data system developed by RBC could capture millions of daily client transactions; the final goal is to serve the customer at the individual level. This RBC’s vision was confirmed by a study realized in 1997 which revealed that customers wanted banking where they were: Well understood, their needs anticipated and their business was valued. In this Environment, mass marketing to huge customer segments simply wouldn’t work. In order to realize these thinks, the bank developed new analytical techniques in order to offer more one to one service (applying database marketing techniques at atomic level). Due to an aggressive competitive environment and all the market’s changes the Royal bank has reached the conclusion that differentiation depends on its ability to realize CRM and to build a unique relationship with each individual client.
First steps to become Customer-oriented.
The customer strategy developed by the financial group start in 1997 with a study witch said that RBC was not delivering what clients really wanted. In fact this study shown that customers want to be treated as individuals, have the feeling that the bank knows them, to have their needs anticipated and to have the value of their business reflected. This study changed RBC’s thoughts about its own business and allowed RBC to reposition in order to develop a competitive advantage based on differentiation in the newly competitive environment. “This study identified a whole new area of differentiation that Royal could explore” (McLaughlin, vice president of CRM case study page 4).
Reorganization around CRM.
Royal bank developed a “segmented structure”, composed by 6 different segments which reflect life stages and the complexity of their financial needs. They also reflect commonalities in service and product requirement. This first segmentation permits to Royal to offer services which are adapted to specific customers. For instance “The prime grouping” consists of mature customers in the accumulation and preservation phase whit significant potential for full RBC Financial group offering. This kind of grouping represent an easy and intelligent way to separate needs, behaviors and was the first step to offer customized services. At the same time, the company decided to centralize the “sales leads”, in fact, before the CRM reorganization, every branches had a different way of generating sales leads, now the leads are generated centrally and everyone has a direct access to them. This change was possible because the leads have gone from paper-based to being available electronically. This centralization of all the information permitted once again to RBC to switch to a more customized products witch ate of real interest for the customers. The New CRM system.
The first segmentation of the customer was based on profitability. This first try realised in 1992, analysed client profitability and segmented the customer into three simply categories A, B and C. the A customers made the most profit, the B customers made same and the C customers broke even lost money. This new system showed that only 20% of RBC’s customers accounted for 100% of its profit. The system was the beginning of the new...
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