A Rose By Any Other Name

A Rose By Any Other Name
MCIF and CRM are most definitely not the same

February 25, 2005

By Alyssa Dver

This is bonus coverage from "Pin Down the Right System" from the March issue of Credit Union Management magazine.

Customer relationship management happens every day at a credit union -- in the back-office executive suite, in the strategic plans of the marketing department, and at the mercy of the front-line tellers and customer service representatives. Whether the credit union is small or large, it is rare that the institution cannot benefit by improving communication and information flow throughout the organization in its efforts to best service and reach out to members. To achieve this, it is common to look to technology as the principal way to integrate and distribute data, automate and track processes, and connect and coordinate people. However, determining which technology -- MCIF or CRM -- is the right one to use is often a "thorny" issue.

Marketing customer information file systems have been around for over 15 years. These systems are well adopted and on the latter end of their technology life cycle. Yet, even today many institutions are buying MCIF systems to help them better understand their businesses. They want these systems to primarily aggregate member information into a central, back-office accessible data repository with tools to analyze the data.

However, MCIFs don't allow front-line personnel to access this valuable data. This is like having an airline where only the marketing department knows which customers are frequent flyers! Relying only on an MCIF, it is practically impossible for credit union employees to be able to make timely, member-driven decisions.

CRM systems are fundamentally different from MCIF systems for three significant reasons:

1) CRM systems allow everyone in the organization to participate in the organization's marketing, sales and service objectives.

2) Because front-line employees require timely information, CRM systems should provide real-time or near real-time support of critical business functions and information.

3) CRM systems typically use more current technologies that allow for better integration and extensibility with other systems including your core processing and related financial services systems.

Many CRM systems are, in fact, supersets of traditional MCIF systems. They include out-of-the-box integration with one or more core processors to extract data into a data mart or data warehouse. Query tools are used to analyze the information. Some systems also provide campaign management capabilities that capture and track selected segments of members (or prospects) over a period of time to see changes in product purchases and/or overall account portfolios.

Profit management, as well as such built-in or custom analytics as member retention and next best product, are also popular features in both MCIF and MRM systems today. Top systems also provide customerization and householding. Customerization ensures that if there are multiple (and possibly inconsistent) instances of an individual's records coming from one or more systems, they are identified and aggregated as a single member. Householding is a set of algorithms that helps to aggregate people who are a family unit. The two together help make sure individual accounts and people are properly aggregated, in the long run providing for more accurate analysis and cost savings for mailings that can be sent to a household rather than every account holder.

However, where CRM systems really begin to depart from MCIF implementations is in the area of automation of the processes in a credit union, such as lead and referral management, member service and support, which require the involvement and coordination of credit union employees both in the back and front offices.

Take for example this scenario: The CRM system suggests a likely and profitable cross-sell opportunity to promote HELOCs to a specific segment of single-service households. Therefore, the marketing department creates the campaign, including paper mailings, phone scripts and newspaper ads. Marketing then pushes out the segment of these member leads to internal or external telemarketing staff via the CRM system. This allows marketing to track the actual results of the campaign and call progress at any time.

Information about the campaign can be provided to the front lines via the system so they are fully prepared to handle any member inquiries as they arise -- or even be proactive by making offers as they are interacting with a member in the branch, over the phone or via the Internet (e-mail, chat, etc.). Using a CRM system, the front-line staff can see that a particular member is a target for the HELOC campaign, and this allows that employee to participate in the sale of the HELOC. The CRM system allows the front-line employee to note the member's response, trigger the appropriate next step(s), or capture information about other opportunities and issues.

It sounds very rosy but, in reality, bringing the front line into the CRM picture isn't that easy. It takes management support, training, new compensation incentives and CRM software to help track and manage the entire process. Once implemented, CRM allows the credit union to take advantage of valuable member interactions and build institutional knowledge so the entire organization can work together to sell to and support loyal, profitable members.

Steve Kelly, EVP/marketing for Central Bank of Kentucky, has implemented a bank-wide CRM system. He executed a HELOC promotion similar to the one described above. Within 10 months, new equity lines were up 79 percent and the balances for those customer accounts were up 50 percent. Kelly attributes this to the availability of customer information at the branch level.

His corporate team did the analysis as to what to sell and to which customers. He then pushed a list of approximately 200 high-potential leads out to each branch for them to call and follow up with.

Throughout the promotion, staff were able to track and sustain all their leads, looking to see areas where they could replicate success or where in the process things were getting stuck.

Many financial institutions like Central Bank of Kentucky are finding that fully integrated CRM systems provide the best of what MCIFs do, and allow them to extend that rich data to the front lines where real-time customer sales and service are happening.

Alyssa Dver is VP/Chief Marketing Officer for SEDONA Corporation, King of Prussia, Pa., and an expert in financial services CRM. She speaks on the topic frequently and is a special section contributor for BusinessWeek on both CRM and The Real Time Enterprise. Dver regularly works with small and mid-sized banks and credit unions to assess and improve their customer relationship strategies and implementations. Reach her at e-mail info@sedonacorp.com.