Financial firms’ CRM evolves

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Consumer financial companies have enjoyed the benefits of customer relationship management technology for several years. They’ve been able to gather detailed customer data and use the information to make decisions. Until recently, many b-to-b financial services companies lagged behind their consumer counterparts in terms of using CRM programs. B-to-b financial relationships traditionally have had a higher level of person-to-person contact to begin with, so, theoretically, there’s less opportunity to automate the process.

"Consumer financial services [companies] and banks have thousands or millions of customers and a lot of data that can be analyzed to figure out how to target the most profitable ones," said Kim Collins, research director at research firm Gartner Inc., which recently released a report on the evolution of CRM in the financial services sector. "B-to-b financial services typically have far fewer customers and manage them using relationship managers who have a total view of each account and territory."

But the Gartner study, coupled with anecdotal evidence, points to the fact that this paradigm may be changing. B-to-b financial services companies are not only using CRM, they’re helping vendors create new CRM applications designed specifically for the vertical marketplace.

Financial companies mature

One of the main reasons is maturity: The growth of financial companies in the b-to-b sector is slower now than it was even five years ago, prompting normally cautious companies to consider new options for lead generation and management, Gartner’s Collins said. These companies are making CRM a companywide project, empowering sales representatives and independent distributors to better target customers.

Toronto-based AGF Management Ltd. is a good example. The independent company distributes its mutual funds to stockbrokers, insurance brokers and financial planners, which then sell the products to individuals. AGF runs PeopleSoft Support and PeopleSoft Enterprise Portal in its call center. Until recently, the customer relationship was managed autonomously, depending on which department the customer called.

This created a problem, said Steve Elioff, the company’s VP-CRM program director. "It was like they [customers] were dealing with two different companies," he said.

So AGF Management is in the process of linking its entire CRM strategy so the company has better visibility of its leads, and its customers get a single experience no matter which department they are dealing with. The company is rolling out the complete PeopleSoft CRM application suite across marketing, sales and service, as well as PeopleSoft analytics, architecture and portal solutions.

Using a CRM program with scenario planning, companies can handle details and make decisions about activities such as on-the-fly pricing changes. Gartner’s Collins pointed out that by using an automated CRM program, decisions can be based on risk and profit.

"If a customer calls in and asks for a lower price or an adjustment, the decisions in the past were sometimes based on the quality of the relationship between a relationship manager and a client," Collins said. "By adding CRM to the mix, the relationship manager can do scenario planning and make the decision based on how much the financial services company will profit or lose."

Enabling fluid change

With a complete CRM suite, AGF Management is seeing new marketing opportunities and can change its direction more fluidly, Elioff said.

"If I’ve established John Smith as someone who needs a lot of our time and resources, but he’s no longer buying mutual funds, I need to pull back my time and effort," Elioff said. "If he’s not selling mutual funds [to his clients], he doesn’t want to hear from me."

And there’s another benefit for b-to-b financial companies. Some financial companies are able to use b-to-b CRM—or partner relationship management, PRM—to push business-to-consumer growth. Investment company Quick & Reilly, a Siebel customer, is one such example.

The company, like AGF Management, is using event-triggering and profiling tools, which monitor incoming transaction and contact data in near real time and then trigger actions or alerts based on that information. The company is also using CRM software to help it set goals and make promises to its customers.

"We use CRM to make sure events are completed in a specific amount of time," said Ed Garry, VP-CRM solutions at Quick & Reilly, a FleetBoston Financial company that sells investment products such as stocks, bonds, retirement accounts and money market funds to business customers and individuals. For instance, if the company agrees to roll over a 401K account within four to six weeks, the CRM system notifies Quick & Reilly if the transfer has not taken place.

"We’re setting a level of expectation by streamlining the b-to-b relationship," Garry said.

AGF Management and Quick & Reilly may not be the norm right now, but Garter’s Collins said early adopters such as these companies can reap big benefits as long as they remember one thing: Working with CRM vendors this early in the game means they’re working as a team rather than as supplier and customer.

"There’s always risk because it’s a niche, and most vendors don’t even understand how to make this a success," she said. "You’re going to have to be a reference and help [vendors] get traction in the industry. It’s going to be a learning opportunity for everyone involved."

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