Allice Sharon

Carine Bourgeaux
Nur Afidah
Stephanie Courtadon

Customer Relationship Management Case

ROYAL BANK OF CANADA
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Developing and Implementing CRM Strategies
Royal Bank of Canada

I. A GLANCE LOOK OF RBC (Royal Bank of Canada)

The Royal Bank of Canada is the leading financial services provider in Canada. It has a $ 165
million asset, $ 1 billion profit. The service from this company relates with a huge amount of customer,
for their customer base reach over 10 million and 1.3 million of them already use alternative banking
channel like internet or telephone as well. To deliver the service for RBC customer, they operate nearly
1400 branches and 4200 ATM.

To satisfy their customers, RBC made an approach of developing new metrics and analytical
techniques to provide one-to-one service. The approach started from 1978 when RBC decided to collect
customer data while the first step of one-to-one marketing was taken during 1992 as the IT application
was already at place.

RBC new system’s goal is to align sale, service staff and improve retention. In practice, the
system was used by both back-office and front-office functions. After having reviews from the
customer, RBC found some gap between their new systems with the customer expectation shown as
follows:

System’s Weaknesses Customer Expectation

1) Not precise enough for relationship 1) Being treated as individuals,
pricing, 2) To have their needs anticipated and
2) Not providing measure of potential use, 3) To have the value of their business
3) Unable to measure performance. reflected.

Therefore, new approach was needed in order to improve system’s ability so it will fulfill the
customer needs. To be able to deal with this issue, RBC especially Cathy Burrows was challenged on
how to change the system and make it capable enough to deliver satisfying service. The approach
should be made flexible, so it will allow profitability to be aggregated to user-defined levels as follows:
 Product and product group
 Customer segment
 Geography
 Channel

The solution would run off existing NCR Teradata warehouse which was already supporting
RBC’s management information systems and needed to be rule-based.

Group 1 – Service Marketing | Allice Sharon, Carine , Nur Afidah & Stephanie
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Developing and Implementing CRM Strategies
Royal Bank of Canada

In practice, they implement new software called Value Analyser. This application provided a
bottom-up customer value assessment based on individual account. It uses transactional data to
produce a value metric, which can be used for personal as well as for every other level of the
enterprise.
There are 5 areas of cost used as inputs into the client value metric produced by Value Analyser:
 Net interest revenue
 Even costing
 Non-interest revenues
 Risk provision
 Indirect costing allocation
All these 5 measures were purposed to allow the company to see customer profitability and what drove
it as well as return versus assumed risk, channel cost and whether channels are profitable.

II. PROBLEM IDENTIFICATION

Royal Bank of Canada started to be aware of the necessity to develop a more personalized
marketing approach. In this way, their reflection leads to develop a CRM strategy. In this case, we can
discover the first step of implementation of this strategy. The company focuses on one-to-one
marketing and started to create a customer-related database, the main tools to improve the customers'
understanding.

That's why; we will focus on the implementation of the tool used by RBC, which is Value
Analyser enabling Client Current Value Measurement. We will see on which criteria they have chosen
their tools, how they have implemented it and which is the next step in their strategy development.
Defining the functions and the technologic platform to use for the database are the main issues in this
development.

We will analyze the choices related to the new strategy: How can we go further in the
development of metric value to segment automatically the RBC customers.

III. SITUATIONAL ANALYSIS

On the case of RBC with its CRM strategy, it is shown that this company was facing a challenge
of developing, managing and using customer-related databases to their customer. As mentioned in
Customer-relationship Management (Buttle, 2009), customer-related databases are the foundation for

Group 1 – Service Marketing | Allice Sharon, Carine , Nur Afidah & Stephanie
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Developing and Implementing CRM Strategies
Royal Bank of Canada

the execution of CRM strategy. To perform well, it is required for any company to properly acquire,
enhance, store, distribute and use customer-related data.

In the current condition of RBC, it is mentioned that they already started the initial CRM
strategy. Unfortunately, the system was not sufficient to deliver RBC’s customers expectation. It was
recognized that some previous assumption done by the system were faulty. Therefore they need to do
consider further analysis; they will be maximizing value within the system itself.

Development of the CRM strategy starts with a situation analysis as follows:

 Customer/ Segments : Top three segments – some of the more significant pay-offs
 Market Offering : Ability to deliver financial statements on assets, liabilities, equity,
income & expenses, contingencies, inter-company transfers
 Channel : Direct, by using integrated system with RBC IT infrastructure
 CRM Vision : To provide behavioral-based solution focused on the customer and
account

IV. DEVELOPING, MANAGING & USING CUSTOMER – RELATED DATABASES

Define the database functions
Strategic CRM needs data about market, market offerings, customers, channels, competitors,
performance and potential to be able to identify which customers to target for customer acquisition,
retention and development, and what to offer them. Customer-related data is necessary for both
operational and analytical CRM purposes.
Analytical CRM uses customer-related data to support the marketing, sales and services
decisions that aim to enhance the value created for and from customers.
Customer-related data are typically organized into two subsets, reflecting these operational and
analytical purposes. Operational data resides in an OLTP (online transaction processing) database and
analytical data resides in an OLAP (online analytical processing) database. The information in the OLAP
database is normally a summarized, restructured, extract of the OLTP database, sufficient to perform
the analytical tasks. OLTP needs to be to be very accurate and up to date.

Define the information requirements

When elaborating a database, you have to have a practical approach and define the criteria that
you are looking for serving your strategy. First, customer information fields refer to a different use of
database, for example you can create a field with specific information for sales or marketing

Group 1 – Service Marketing | Allice Sharon, Carine , Nur Afidah & Stephanie
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Developing and Implementing CRM Strategies
Royal Bank of Canada

departments. Second is about contact data is the point to start: people involved in the buying decision
have to be involved and their roles, for example decision maker, influencer… and how to contact them
(phone, mail, postal address). After, information has to be related to contact history, transactional
history and current pipeline to get all the data between the customers and the company (start and
evolution). After you have to go to the current situation by analyzing products they have and the king of
communication they prefer, and then anticipate their needs by proposing opportunities.

Identify the information sources

Then you have to identify how to get information about the customers by choosing the solution which
will give you better results: internal and/or external sources. The main issue is to start with the good
audit to correctly evaluate the internal resources to be more performing. In this way, you can cross all
of the information that you can find in each departments of the company, customer-related databases
require different points of view and approach of the customers to deduce a global company profile use
for each one.

Select the database technology and hardware platform

Considering the kind of information you want to have and the implementation of your CRM strategy,
you have to define the best tools: it can be global, specialized, and analytical. Database is only the first
step of your implementation, so you can want the best, or you could already think to the next
expansion to some departments or to a specific use. We can quote SAP for example, which is a global
software solution; it's a different approach than RBC implementation software: Value Analiser.

Populate the database

Once you have chosen your tool, you have to fill it with the information concerning the customers. You
have to validate five steps:

- Source
- Verify
- Validate
- De-duplicate
- Merge and purge from 2 or more sources

Maintain the database

When having a database, you have to check the information concerning the customers and to update it.
Group 1 – Service Marketing | Allice Sharon, Carine , Nur Afidah & Stephanie
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Developing and Implementing CRM Strategies
Royal Bank of Canada

Implementation of a customer related database in the RBC case:

Customer Related Database of RBC

Define the database function
Define the information
requirements
Identify the information
sources
Select the database
technology and hardware
platform
Populate the database
Maintain the database
Customer needs and business evaluation: strategy to develop
individual treatments and evaluate the value of the business of the
customers
Behavioral information: RBC develops a solution based on behavioral
criteria to respond to the customization products and services needs
Internal sources: RBC uses transactional data coming from the use of
company's products and account information
CCVM and value analyser software: Value oriented database to give
a metric and objective value to each customer and develop
analytical performance and system integration
Fill in the database and mix of all the information to obtain a
performing result
Not yet done

V. RECOMMENDATION

CCVM and particularly Value Analyser software give metric value to each customer of RBC.
Considering five financial aspects of each customer Value Analyser compile the information and obtain
a metric value that the Bank can compare and classify objectively.

We can perceive four advantages:

- A new way to get information from customer to company: bottom-up circulation of the
information
- Improvement of the segmentation process: more precise and fitting more the expectations
of the company
- Reducing gap with reality: the information on customers is based on particular data and not
only on averages. It means a more real approach of the customer’s acts.
- Establishment of analytical models: with CCVM, we can use previous information we got
from customers and use it with current ones.

However, we can see limits in the use of CCVM because of the systematic approach:

Group 1 – Service Marketing | Allice Sharon, Carine , Nur Afidah & Stephanie
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Developing and Implementing CRM Strategies
Royal Bank of Canada

- Automatic profile: CCVM match each customer to an established profile which does not
allow him to have a particular single one.
- Limited number of criteria: the service uses Value Analyser, which means for the company
choosing only 5 criteria and maybe misses some critical information. It can be a narrow
analysis because every situation can have indirect influence on criteria.
- No behavioral approach: the system focuses on financial data but does not include
behavioral information. Maybe the behavioral-based solution is not completely developed.

We can notice that an objective approach of bank customer’s profiles is relevant. In this case,
the main issue is to develop the CRM strategy enough to achieve an automatic consideration of CCVM
generated data. For example, with this kind of precise segmentation you can improve your direct
marketing with e-mail personalization about the way that you communicate, the services you propose
to go further in the customers contact. But we have to be aware that marketing and communication
depend on social sciences, which means you have to include human characteristics in the analysis level.

To the implementation of the "Becoming customer-focused" vision of Royal Bank of Canada,

CCVM is a considerable and necessary first tool but has to be completed by an additional application
analyzer which considers behaviors.

Moreover, this tool implementation proves that RBC is now involved in the process to
implement CRM strategy. The first reached, that we can see in Figure 1 is:

1) Develop CRM strategy

- Situation analysis
- Commence CRM education
- Develop the CRM vision
- Set priorities
- Establish goals and objectives
- Identify people, process and technology requirements
- Develop the business case

Now RBC starts to build CRM project foundations, which means:

- Identify stakeholders
- Establish governance structure
- Identify change Management needs

Group 1 – Service Marketing | Allice Sharon, Carine , Nur Afidah & Stephanie
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Developing and Implementing CRM Strategies
Royal Bank of Canada

- Identify project management needs

- Identify critical success factors
- Develop risk management plan

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Figure 1
CRM Project design and planning process

The core of the evolution for RBC is in its second step, so we can conclude that they have to
integrate stakeholders and identify different needs to go further in the implementation. They have to
think of external influence and internal misunderstandings. The implementation of a customer-related
database is the first confirmation of the awareness of the company to search a better understanding of
its customers. But if the company never validates the next step, all of this change would be inefficient.

***

Group 1 – Service Marketing | Allice Sharon, Carine , Nur Afidah & Stephanie