How Banks And MCA Businesses Are Using CRM To Reduce Cost And Decrease Churn
In the recent times, many financial businesses such as insurance companies, banks, and other alternative financing services like Merchant Cash Advance businesses understand the importance of easy to use CRM (Customer Relationship Management) and the potential of this software application in helping them to acquire new customers and retain the existing ones while maximizing on their customer lifetime value.
Today, like others in the business, financial institutions have also recognized that close relationship with customers will require strong coordination between the marketing departments and IT to provide an opportunity for long-term retention of selected customers in the banking and alternative financing industry.
CRM according to [Couldwell 1998] “is a combination of business process and technology that seeks to understand a company's customers from the perspective of who they are, what they do, and what they are like”.
Hence, easy to use CRM in the banking sector helps in developing a sound business strategy for the banks to identify their most profitable customers and prospects, and expand account relationship with these individuals through individualized marketing, discretionary decision-making, repricing and customized service, all delivered through various sales channels used in the financial world.
The campaign management in a bank when performed with the help of a easy to use CRM uses data-mining tasks such as cluster profile analysis, dependency analysis, deviation detection, concept description, and data visualization for extraction of valid, previously unknown and ultimately comprehensive and actionable knowledge from a large database for crucial business decision-making processes.
Here are a few notable points how banks and alternative financing businesses can use Customer Relationship Management to increase their customer value by using easy to use CRM for actively collecting, and analyzing data gathered about the customers and their interactions with financial business.
Widen Relationship With Customers
Customer acquisition is the number one objective for all banks and alternative financing institutions. Therefore, when banks increase their budgets to attract new customers, data mining of an easy to use CRM becomes a critical tool for identifying performing markets, profiling good customer and thereby help boost the results of direct marketing campaigns. Easy to use CRM also helps the marketers to be more responsive in creating new campaigns, as it is capable of implementing a direct feedback loop to improve the efforts of the marketers on a regular basis.
For widening relationship with the customer, data mining function in an easy to use CRM can answer questions like:
- Which kind of customers would the bank and cash advance businesses like to acquire?
- Which kind of customers will drive the bank’s and cash advance businesses’ plans for its future growth?
- Which new customers are likely to be interested in the bank’s and cash advance businesses’ products?
Customer retention is also another major issue for all banks and alternative financing industries. Given the high cost that is incurred for finding new customers, one Harvard study on the banking industry states that “Reducing customer attrition by 5 percent can double a financing institution’s profits”.
Often referred to as ‘churn’, customer turnover is one of the most difficult problems faced by financial institutes. Firstly, because it usually occurs without warning and next once the customers are predisposed to leave, it is unlikely that the customers can be convinced to stay once more.
Data mining functionality of easy to use CRM introduced a major shift to the management of customer churn by adding predictive analysis capabilities to the software. Modern CRM’s data mining tools use model patterns of past customers that have churned by examining their demographic information, billing histories and other customer data stored in the CRM database to transform minor customers to highly profitable ones.
Data mining tools of an easy to use CRM helps in answering the following essential question, such as:
- With which customers can the financial institution increase its share of wallet?
- Which product or service of the financial institution interest a particular customer?
- Which of the financial institution’s products are frequently bought together for boosting cross-selling opportunities?
Building And Exploring The Marketing Database
Data may reside in several data sources such as customer, usage, and product database.
CRM helps in data cleaning to build a marketing database integrating and consolidating the data by reconciling differences in data values from heterogeneous sources. This helps in uncovering inconsistencies like different addresses for the same customer or customers having different names along with multiple customer identification numbers.
Apart from this easy to use CRM also provides graphical visualization tools, which are of vital aid in effective data analysis for building good predictive models needed for bring new and retaining old customers or explore alternative models to find the one that is most useful in solving problems in the financing and banking industries.
Cost-saving opportunities by adopting an easy to use CRM for increasing operational efficiency is another more tangible reason, as to why banks and other financial service firms are adopting custom-made modern CRM solutions or Merchant Cash Advance businesses are using MCA CRM software solutions to address their specific needs.
Some of the most common key issues addressed by easy to use CRM in cost-saving are:
- Reduction in campaign expenses: When the prospective targets are selected more effectively, both campaign volume and expense-to-revenue ratio decrease over time.
- Improvement in internal processes: Shorter sales time, less rework and the increase in the percentage of customer orders that can be handled automatically helps in improving the bottom line.
- Efficiency is support services: When problem resolution calls are shorter, it translates directly into lower headcounts, which results in profits for the financial organization.
To conclude in a nutshell, as financial businesses have to build their businesses around their customer’s ever-evolving needs, easy to use CRM is one software which enables banks and alternative financing businesses to integrate their legacy data source and helps in creating a business model that will protect and grow their existing customer base.
Hence, rather than being left behind in the race, banks and all financial institutions must now embrace modernization and use CRM technology as a potential tool to improve their customer experience and subsequently reduce cost that can help in ushering rapid business growth.
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