Case study on CRM of RBC.

Prithvi raj
Joe Sundar Kishore J
1. Evaluate RBC’s strategy and organizational structure. Is
RBC well equipped to compete with niche operators such as
Internet-only banks with focused product offerings?
• Product focused to customer focused.
• Shift of powers from product managers to customer managers.
• Product based costing to customer account based costing.
• Structure paved way for a healthy competition.
Segment managers vs Product managers vs functional area managers.
• Electronic storage of customer data helped in better lead generation.
• Customized product offerings- Products are better matched with
customer segment requirements. – an advantage over internet only
banks which failed to provide customized offerings.
2.) a.)What additional insights are likely to come from lifetime
value computations for customers as opposed to annual
customer profitability numbers?
Following are the advantages of new lifetime value based customer
valuation:
• Accurate information, Customer specific risk assessment, transaction
based fee, better costing model.
• Inclusion of the potential to be profitable along with the current
profitability. Insights on potential segments like Nexus (youth).
• Customised marketing campaigns, alignment of pricing discretion and
level of service and other strategies.
b. Should RBC compute lifetime values at the segment level or
the individual customer level for strategy formulation? How
about strategy execution?

• Actually the RBC should form segments, sub segments and Micro
segments by applying the lifetime valuation among the individuals.
This will further help in customizing its strategies and subsequent
action plans in accordance with those segments.
• This will also help in identifying potential of segments and cost
related factors with it. Further the marketing campaigns, levels of
service and pricing discretion can also be designed.
3. Do you agree with RBC’s decision to withhold profitability,
potential, and segment information from its front-line
employees?
• Yes we agree that the banks decision of not passing the segment
related profitability and potential related information. Because, this
would create un necessary confusion. And the bank was very clear
that it wanted it employee to treat its customers as individuals and
not as segments.
• For that they passed on the useful customer account related
information like personal details, products target towards that
customer, risk related details etc. This approach made sure the loss of
potential customers due to generalization out of segmentation.
4.)Should Reich make the car loan to “Niece” and if so at what
interest rate?
• The value of the account of aunt should be taken into consideration before
declining the loan. Declining the loan might bring bad reputation among
the aunt.
• The niece is also a better potential earner though currently she doesn’t
hold many products and unemployed too.
• While looking at the credit card sale, it might be hard to sell as the
customer already has one.
• The difference between the expectation and the reality is 2.5%. While
there is a possibility for one percent discount as suggested by the system.
• Answer----So,
5. What should RBC do about customers who are unprofitable
because they use the retail branches and ABM machines for
bill payments?
• According to the case the above given people are mostly composed of
Nexus/Key holders. They also play an important in brand image of the
bank. Now they might be a retail user but they are potential high value
customers.
• May be at the current situation these people might be unprofitable or high
cost demanding but in future they are a more potential for more fin
products. And most of the cost is attributed to the distribution system. May
be revising the current system with something simple, efficient and cheap
like internet based systems might prove to be helpful.
• So considering their lifetime value and other benefits linked with these
people, the bank should focus on leveraging these positives.