Deliberate Decision-MakingMaximizing the value of customer-initiated interactions

Matt Cappio

Business Problem

• How do we maximize the value of customer-initiated interactions?

Call Center Branch Online/Mobile

OfferOffer

Offer

Direct Mail

BC

Agent, IVR

Online, Email

ATM

Mobile, SMS

Chat

OfferOffer

Offer

OfferOffer

Offer

OfferOffer

Offer

OfferOffer

Offer

OfferOffer

Offer

OfferOffer

Offer

OfferOffer

Offer

DEPOSITS

INVESTMENTS

MORTGAGE

CARD

“I have an offer – let me find a customer”1“I have an offer – let me find a customer”“I have an offer – let me find a customer”

“I have an offer – let me find a customer”

“You do not know me & ask me multiple times about the same thing.”

“I am not offered solutions based on my multiple relationships.”

“I use Bank of America for convenience but primarily use another bank.”

“The Bank’s associates can’t address all of my business needs.”

A seemingly simple question…with many different answers

But what is the “best” answer?

• No one option can be considered in isolation

• Every option involves “tradeoffs”

• The answer often depends…

• Being deliberate requires a decision-making framework

• Drive Car– Speed: Low– Flexibility: High– Comfort: High– Cost: High

• Ride Metro– Speed: High– Flexibility: Med– Comfort: Low– Cost: Med

• Take Bus– Speed: Med– Flexibility: Low– Comfort: Med– Cost: Low

Optimization in your daily life – How do I get to work on time?

What about customer interaction management?

• The same principles apply

• An optimization software solution generates potential courses of action

• These “scenarios” represent different ways of quantifying and balancing trade-offs

This balancing act is too complicated for a binary, criteria-based approach

Call Center Branch Online/Mobile

Associate Capacity

Relationship Deepening

Credit Quality

Account Production

Customer Engagement

Quality Relationships

Customer Experience Profitability

“Shelf Space”

Scenario BAU Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5

Objective Function N/A Maximize Profit Maximize Accounts Maximize Profit Maximize Profit Maximize Profit

Risk Constraint N/A Max 6.00% Max BAU 6.85% Max 6.00% Max BAU 6.85% Max BAU 6.85%

Profit Constraint N/A No Constraint Min BAU Profit No Constraint No Constraint No Constraint

Investment Constraint N/A No Constraint Max BAU Investment No Constraint Max BAU Investment No Constraint

Risk Eligibility Criteria BAU 15% BAU 15% BAU 15% None BAU 15% BAU 15%

Volume 186,869,244 183,368,592 162,532,177 196,363,693 162,529,046 238,314,147

Projected Response 0.29% 0.26% 0.38% 0.25% 0.32% 0.26%

Projected Accounts 534,420 473,256 620,088 486,850 514,911 626,511

Projected Loss Rate 6.85% 6.00% 6.85% 6.00% 6.85% 6.85%

Projected Profit $154,640,991 $189,136,155 $157,970,870 $199,255,575 $226,459,449 $226,127,652

Marketing Investment $78,485,082 $77,014,809 $68,263,514 $82,472,751 $68,262,199 $100,091,942

Projected Cost to Acquire $147 $163 $110 $169 $133 $160

Projected Profit per Account $289 $400 $255 $409 $440 $361

Data above is for presentation only and does not reflect actual Bank of America marketing plans, performance or targeting

Decrease from BAU

No Change from BAU

Improvement over BAU

Optimization provides the framework for the strategic tradeoff discussion

Direct Mail

BC

Agent, IVR

Online, Email

ATM

Mobile, SMS

Chat

DEPOSITS

INVESTMENTS

MORTGAGE

CARD

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& S

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Customer Experience &

Treatment Strategies

“I have a customer – what is most relevant to him/her and beneficial to his/her long-term relationship with the bank?”

“The bank knows me and values my relationship“

“They seem to know what I need and when I need it.”

“The bank isn’t always selling something.”

“There is real value to me in getting all my needs met by one bank.”

• Business Priorities• Segment Priorities• Shifting Customer Needs• Changing Regulatory

Environment

• Product Innovations• Competitive Pressure• Shareholder Return• Strategic Direction• Re-Branding

Deliberate, Customer-Centric, and Mutually Beneficial

Questions?