Capital one case study

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  • Publié le : 12 octobre 2010
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1) Customer Relationship Management at Capital One

The case illustrates how CRM can be translated into strategy, organizational design, hiring, marketing processes, and IT infrastructure of a company.

Suggested Preparation questions:

* How would you define CRM as implemented at Capital One
* What are key CRM activities and processes at Capital One? You may prepare a table asthe one below
* What similar activities/ decisions/ situations can be found in other industries/ at competitors?
* Does CMR create competitive advantage for Capital one? How? Why?
* How do CRM activities differ from one customer segment to another?
* What are futures challenges for CRM at Capital One?
* -------------------------------------------------
How has Capital Oneadvanced their CRM strategy/ tactics since 2003 (=date when the case has been published)? Please check www.capitalone.co.uk

INTRODUCTION

Capital One is a US based bank holding company, created in 1988 by Richard Fairbank and Nigel Morris, specialized in credit cards offers.
This company is particularly interesting from a customer relationship management thanks to the aim of Mrs Fairbank andMorris to create an information-based company.
In effect, they took advantage of the situation in the 1980’s concerning the market of credit cards that suffered from a lack of customization offers.
However, contraring to their competitors, they understood a very important point: “Credit cards are not banking, they are information”; and this is the point that made their competitiveness in thisperiod.

ANALYSING

We can understand easily that Capital One was the first company in banking to integrate customer relationship management in its strategy in order to improve its portfolio of products and services, so in order to be competitive by proposing “customized” offers to its customers. This declared the beginning of credit card’s market competitiveness as we know it nowadays.The main point of CRM at Capital One is an information-based data about customers: the most important thing for the company is to know as much information as possible in order to be able to do a “pricing strategy” because they consider that each customer needs a different product and service. This strategy is set up in several points:
* Personalizing as much as possible the offer referringto the several data bases (customers classification)
* Improving the portfolio of products and services: cross-selling other personalized financial products (insurance against fraud)
* Being able to propose the lower interests rates and fees than competitors in order to make customers enter the bank
* Keeping customers in the bank so not increasing prices for having loyal customers;proposing other factors of interest for the bank as reward point system.

Serving their strategy, Capital One segmented customers in order to deal with the different level of risk according to each customer:
* Transactors: very interesting customers as the risk is very low
* Revolvers
In a few words, we can say that the strategy of CRM for Capital One is to gather the much information aspossible.
More than analyzing data on credit risk, Capital One set up a more personalized data base according to customer demographics and behavior by recording every personal transactions.
Serving their strategy, Capital One segmented customers in order to deal with the different level of risk according to each customer:
* Transactors: very interesting customers as the risk is very low* Revolvers
Once the data is complete, the second step of CRM at Capital One is to apply the strategy of “Test and learn”.
In this step, the company designs a sample of customers and makes them act in controlled conditions (Appendix 6). Once the test achieved, they analyse results and from it set up their personalized offer of products and services (6000 products).
The strategy of customer...
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