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Executive Interview – Gerd Schenkel – General Manager, Customer Strategy & Cross Marketing, NAB

Executive Interview – Gerd Schenkel – General Manager, Customer Strategy & Cross Marketing, NAB

Gerd Schenkel joined National Australia Bank as general manager, Customer Strategy & Cross Marketing in 2005 from Citigroup where he was director of Strategy & Business Development for Australia. Before this Schenkel was head of Strategy, Development & Implementation for BankWest’s Business & Corporate Bank. He is responsible for NAB’s customer relationship management (CRM) capability, where the emphasis is on "analytical CRM". Schenkel tells East & Partners senior consultant Paul Bartholomew about the role CRM plays within the Bank and how it can be leveraged to create opportunities in Australia’s competitive business banking markets. Customer Relationship Management (CRM) has been a "buzzword" for many years now but has had mixed success. Why do you think this has been the case?

I think the emphasis might have been too much on technology and installations of technology as opposed to the words ‘customer relationship management’. The word is not ‘technology installation’; as a bank, customer relationship management is our lifeblood and the National has always been a relationship bank, so therefore technology is important for us to support the business strategy but it by no means replaces it. So CRM is a positive term at National Australia Bank but the more important term is ‘customer’ and ‘relationship’ and ‘service’, which is obviously much broader.

So how does CRM really impact what goes on at the coalface?

CRM is a broad term but if I can talk about our National Leads system. It essentially looks at our customer database every night and applies a number of algorithms to that data and the objective is to find sales and service opportunities that fit with our customer offerings. These opportunities are presented to the banker the next day through Siebel which is their primary workflow tool and bankers will then pick up those opportunities and act on them. They might not necessarily do anything, or they might say ‘this is a great idea, I had no idea this happened’. For instance, a customer might make a very big deposit the day before so a banker might consider that a very big opportunity to talk to the customer about retirement planning, or about investing this money in a better way. So then they can pick up the phone and speak with the customer and the customer hopefully has a good experience. We’re very big on measurement and tracking; the banker then gives us feedback on how this conversation went and a key measure for us is the ‘positive outcome rate’, so if a banker feels the conversation was positive, this is a success event for us.

Does positive mean you’ve made a sale or that you’re close to making one?

It doesn’t mean necessarily a sale; it could simply mean the customer appreciated the call. They might tell us they already have plans for the money but that it is good to hear from us anyway. Often it can lead to other opportunities and customers appreciate us being proactive. They don’t want us to ring up and offer another credit card but they do appreciate us calling with something specific about them and their accounts, then they realise it’s not a broadcast campaign but an honest attempt to add value to their business or their lives. That’s when we get positive feedback and eventually that leads to sales; it might not be at that moment, but next time the customer thinks of a banking decision they’ll think a bit more positively about the NAB so we track the positive outcome rate more than anything. We also track sales and all these other things but I find the positive outcome is the most appropriate measure because it could be a simple service call where you might say ‘we’ve noticed that you’ve been with us 20 years today, thanks for your business’. Customers like to be recognised for the contribution they make to our business and we can use the system for that, for instance.

How do you go about turning the data captured by the Bank’s CRM system into usable insight that an RM can use to create sales?

We have a team that sifts through the overnight data, applying algorithms and looking for opportunities which create insight, but that’s only half the story. The other part of it is the banker looking at these opportunities and overlaying their knowledge and experience and understanding of how each specific customer likes to be dealt with. Together, they give insight and then action normally comes from the banker where they call the customer with a particular offer or proposal. It’s fascinating listening to people make these calls. It’s a very important skill and the way they think about learning from each other in making these phone calls attractive to customers is quite amazing. All we can do is give them the first prompt, the first bit of insight and they have to pick that up and add a human element to it. We’re not aiming to have an automated bank here, it’ll never happen, it’s a human to human business.

Are there different CRM applications for the consumer and business banking markets?

There are big differences in how CRM gets applied, not just between retail and business but also within business and within the customer sets. There’s a very complex hierarchy of channels, customers and types of opportunities we generate and depending on the rules we set, the opportunity is sent to a banker or it might be sent directly to the customer via mail, or it might go to the customer directly via an outbound call centre. The system mostly fits in with the sales model, so in areas where the relationship manager is at the centre of the relationship it’s geared around the RM; we don’t go around the RM or against them, all that would do would take us out of the equation; we’re here to support the relationship manager. We’re spending more and more time and effort on understanding what works for the relationship managers and how they do business with their customers and it’s different by segment. So things that don’t work, we change or turn off and things that do work we do more of. The relationship managers tell us which is fantastic so that feedback loop from them is very important and we’ve recently increased our efforts there.

NAB has very publicly been focusing on ‘cultural change’. Is it possible to use CRM to change what might be fairly ingrained and cultural sales behaviour?

From a CRM perspective we can’t drive that cultural change alone but what we can do is support that cultural change, if that’s what the business bank wants to do, we can support that. For example, if the sales managers were to say we want to sell more transaction banking products, one of the answers from a relationship manager might be ‘it’s too hard for me to find opportunities’. Then we can say, well actually we have a system here that can help you so let’s talk about this for a little while, let’s develop ways for us to give you an easier way to identify opportunities. That’s one aspect of the cultural change, to actually make it easier for them to do that. Now, we’ve got 5000 users across the different segments and channels in Australia and it’s very hard to change the behaviour of 5000 people. So, it’s a journey, it’s not going to change overnight, and the system can’t force anything on people but it’s very powerful in supporting those changes so that’s how we see it working there. We work very closely with the sales managers and marketing teams in every segment and product area.

How do you ensure the quality of the data in the Banks CRM system?

The data in our system is given to us either by the customers or is entered by the sales force, and the third category is transaction data which is very good quality obviously otherwise people’s banking wouldn’t work. Customers have an incentive for giving us good quality information I think, so do the bankers. The issue becomes one of change, of people moving house, in the consumer space for instance, where they might simply forget to tell their bank. We pick those things up at the next possible opportunity and try to make those data updates part of the relationship with the customer and part of the conversation. We’ve got over four million customers. Is every phone number in there correct? Unlikely. But the people who tend to interact with us more frequently, we will pick up earlier, so it’s very important to make this part of the interaction. If the interaction is positive they will think of us when they move house and customers will give us their new information more quickly. Now, banking has become more remote with the internet so if they’re using that as the primary channel they’re probably more interested in their log in and password as opposed to their street address, but it does get picked up sooner rather than later.

Why do you think banks have found it so hard traditionally to get a whole of customer picture?

I don’t know about other banks but we treat our customer data as important assets on many levels, most importantly the customer service side of it, so if we present offers to the customers that are inappropriate or unwanted, we’ve just destroyed a little bit of goodwill which we have to win back later. If we present an offer that they might not buy but they appreciate the relevance of the offer, then we’ve built some goodwill on the positive side. We’re quite happy with the availability of customer data for our sales people but not in every case, not in every channel and not in every interaction, but we are going to deploy a number of new things that will improve that. In particular, we believe the branch and branch personnel are going to become more important again in terms of delivering service to the customer face to face. If that’s the case then the technology supporting branch personnel is also becoming more important, so that’s one area where we can do more and there are other pockets. But we have so many channels and segments around the bank that we finish at the end of these and we can start again at the beginning. It’s a never ending cycle of evolution but we don’t think we’re deficient, we just think there are always opportunities to do a better job.

How does strategy play into the kind of information you’re presenting to relationship managers? For example, if the Bank recognised it should be selling more Trade Finance or FX, how might you go about enabling this?

In a strategy formulation process, the customer data plays a role obviously just as competitive and general market data plays a role. But that process is much less dependent on the complex algorithms, it’s more the business consultant type of skill set. There are a number of teams around the bank that do that. We have a customer strategy team and we work with those teams in identifying opportunities such as the ones you mentioned. It’s an advantage for us having the data and those skill sets next to each other. The statisticians who run these algorithms are not the people who develop the customer strategy but they work together. So the customer strategy people might say ‘I wonder whether there’s a particular link between this particular thing that customers do and that particular thing’, which requires the heavy lifting of SAS type analytical modelling. Now, rather than having to go to a different department, they sit next door to each other, they know each other, there’s a relationship there, and they can then deploy particular capabilities for their strategy project but the project would be much broader and also look at lots of other things. So the customer strategy team does use the data for those customised strategic projects as well.
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