Tales from an MDM Roadtrip
Canadian Tire Financial Services
Ed Unrau, Information Management
ed.unrau@ctfs.com
Canadian Tire Financial Services
Network of 5 Distinct, Yet Interrelated Businesses…
Canadian Tire offers a range of products and
services that meet life’s everyday needs for
people of all ages
CTR
Petroleum
Financial
Services
PartSource
Mark’s
Ultimate goal of Customer Centric and Customer Data Integration
is to enable better customer experiences across all businesses
Canadian Tire Interrelated Businesses
Canadian Tire Retail
• 477 Store Locations – Canada’s most shopped retailer; offering automotive parts, service and
accessories, sports and leisure, and garden and home products
• Over 80% of Canadians have shopped at Canadian Tire in the last year
PartSource
 71 Locations – Automotive parts specialty chain
Petroleum
• 266 Locations – Canada’s largest independent gasoline retailer
Mark’s Work Warehouse
• 358 Store Locations – Men’s and Women’s specialty clothing retailer
Canadian Tire Bank
• Approx $4 billion (CDN) in managed receivables
• Approx 2 million active credit cards with variety features – discount on retail purchases, gas, cash
rebates, vacation, low rate etc
• Line of credit, loans, high interest savings, mortgages
• Insurances – credit protection, extended warranty, life, accident, auto club
Customer Centric at Financial Services
Canadian Tire Financial Services was ready for Customer Centricity.
•
•
•
•
Growth slowed.
Customer satisfaction was not being met.
Losing customers across stages of the life cycle.
Out of alignment with our customers.
•
Multiple systems.
•
Mixed messages.
Credit Risk was ready for Customer Centricity.
•
•
•
•
•
•
•
A new credit card is opened without considering all information available.
Two collection calls to same person on same day for different accounts.
One collection call uses a light approach while the other account is being sent to an agency.
Unable to monitor total unsecured credit for a single customer .
Customer request for a credit limit increase does not consider all information available.
Inconsistent decisions; e.g. Increase interest rate on one card, credit limit increase on another.
Models of risk, revenue and propensity to buy built on information from one product.
More Products = More Platforms = More Problems
CTFS Statement of Purpose
We are committed to building lifetime relationships with Canadian Tire customers.
From a customers perspective there is only one Canadian Tire, so we will work as partners
with Canadian Tire Retail, Canadian Tire Petroleum, PartSource, Mark’s Work Warehouse
and the Dealers to deliver what our shared customers value most. Within this partnership,
we will become a world-class provider of customer-focused services.
We will differ from the competition by providing a higher standard of service, quality, value and
brand inter-relatedness. We will grow by increasing the number of services we offer and the
number of customers using our services.
“Customers for Life”
Grow Number of
Customers and Use
of our Services
Provide World
Class Customer
Service & Risk
Management
Deliver Customer Value
through Competitive
Operations
Systems and Processes that Deliver Quality Results
Employee Commitment and Performance Culture
Outstanding Leaders
Customer Centric Benefits
Benefits calculations were estimated after conducting brainstorming sessions with key business units.
“What would you do differently if you had a more complete view of the customer?”
“What was considered in that view that you don’t have today?”
Benefits
 Applied to many areas
 In many categories
 Start small, grow over time
 Require assumptions to
estimate
Sample benefits calculation
Out of 1000 decisions
 10% have additional info = 100
(eg have another card)
 5% additional info results in
different decision or action = 5
 60% better result = 3
 .3% improvement overall
Benefits
Year 1
Year 2
Year 3
Year 4
Total
Credit Risk Net Write Off Reduction
Credit Card Account Mgt
Credit Card Account Acq
Collections Strategy
Recoveries
Fraud Strategy
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
3.4%
4.2%
2.4%
0.6%
0.4%
11.0%
5.0%
8.4%
3.6%
0.8%
0.7%
18.5%
6.7%
12.5%
4.8%
1.1%
0.9%
26.1%
15.1%
25.1%
10.9%
2.5%
2.0%
55.6%
0.8%
0.0%
0.0%
0.8%
1.5%
0.4%
0.9%
2.9%
2.3%
0.7%
1.4%
4.3%
3.0%
0.9%
1.8%
5.7%
7.6%
2.0%
4.1%
13.7%
0.5%
0.1%
0.1%
0.0%
0.1%
0.8%
1.0%
0.4%
0.6%
1.2%
0.2%
3.3%
1.4%
0.7%
0.9%
1.8%
0.3%
5.0%
1.9%
0.9%
1.2%
2.3%
0.4%
6.7%
4.8%
2.1%
2.8%
5.3%
0.9%
15.8%
0.2%
0.0%
0.5%
0.7%
0.4%
0.2%
0.3%
0.9%
0.7%
0.3%
0.4%
1.3%
0.9%
0.4%
0.5%
1.8%
2.2%
0.9%
1.7%
4.7%
Compliance (lower development costs)
Lower costs for analytics
0.7%
0.9%
1.5%
1.9%
1.5%
1.9%
0.0%
1.9%
3.6%
6.6%
Total Benefits
4.0%
21.4%
32.5%
42.1%
100.0%
Credit Risk - Other
Lower Collections Operating Costs
Lower Attrition / Higher Activation
Higher Utilization
Customer Services
Lower Operating Costs
Lower Attrition / Higher Activation
Higher Utilization
Statements
Returned Mail
Marketing
Lower Attrition / Higher Activation
Higher Utilization
Insurance
Product Evaluation
Selected InfoSphere MDM Server* software from IBM to form the foundation of our customer
hub
• DWL was top choice from previous evaluations
• Proven data model for Financial Services business
• Service Oriented Architecture
• Market leader
• IBM had retained individuals with product knowledge
InfoSphere MDM Server* selected top Customer Data Integration software by Gartner and Forester.
* Previously named WebSphere Customer Center
The Business Case
Breakeven with initial implementation and create scalable platform for the future
 Spend $2 to save $3 in bad debt expense over 4 years
Create infrastructure that will enable customer centricity to become competitive advantage
 Improve our customer risk and marketing strategies
 Lower operating costs, reduce compliance risk, lower development costs
 Provide improved standard of customer service and quality
 Create more value for customers
• Increase the number of customers who highly value our services
• Higher utilization, higher satisfaction, more customers with multiple products
Deeper more complete customer data
Improved customer segmentation, strategies, predictive models
etc
Bi Directional
Event Triggers
Marketing
Operations
Compliance
Customer Service
Credit Risk
Improved
Analytics
Phase 2
Phase 3
Phase 1
2007
Credit Card
New
Personal Loan Cards
Banking
Insurance
Retail
Businesses
New Products, New Systems, New Customers
Loyalty
Management
Customer Centric Information Flow
Primary components are an Operational Customer View and Analytical View
Add and Update
Daily batch updates
Daily
Update
Extract Transform and Load
Data Stage
#1
1priority
Integration layer retrieves detailed info real time as required
Integration Layer
Customer
Service
New
Accounts
Duplicate Suspect
Processing
Complete view of
customer
4
2
Analytics
Party ID identifies customer to
product relationship
3
Integration Layer
Daily
Update
Consuming SOR’s use their own
customer or account ID to inquire
Better adjudication
decision
WCC
Customer / Account
Cross Reference
Better decisions knowing
worst risk score, total
credit limit and balance
etc
Customer View for
Analytics
Account
Management
5
Credit Risk Index
Better credit limit
decision
Better decisions knowing other
accounts are delinquent, total
balance or credit limit >
threshold amounts
Integration layer plays a critical role - Get additional information to provide
complete view of customer to requesting system
Timeline
CUSTOMER CENTRIC - PROJECT TIMELINE
DATE
2006
2007
2008
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Business Case
Statement of Work
Business Requirements
Detailed Requirements or Design
Load and update - Code and implement
Load and update - Moch Run
Load and update - Fix
Load and update - Production
Customer View for Analytics
Customer Service
Credit Limit Strategy
Account Acquisition
Collections
ON BUDGET … but a little late
10 months elapsed time to complete and approve business case
•
Exploring optimal requirements/design/price combinations was part of developing the business case
Original target was 2007 completion
•
No contingency to reflect degree of unknown
•
Misunderstandings and revisiting design on hand offs
•
Resource and data flow conflicts with higher priority projects
Optimized our use of resources by holding cost steady, adjusting scope and date
Customer Centric Roadtrip
Success Factors
One Business owner
•
Credit Risk with a clear focus on delivering business benefits within budget
•
Detailed benefits calculations helped to manage scope
Project Management
•
Phased approach trying to keep it simple and focused
•
Iterative development of requirements and design with IT partners
•
Overall accountability for optimizing trade offs between scope, cost, quality and timing
•
Get into the detail to help negotiate and find the 80/20
•
Help IT say NO to the business by being able to say NO on behalf of the business
Key Decisions
•
Registry style with an integration layer
•
Use of Party ID limited to establishing the cross reference between products
•
Consuming SOR’s reference customer hub using their own customer or account ID
•
Batch instead of real time update
•
Customer Risk Index first, more complex interfaces later
IBM used as system integrator
•
Product knowledge
•
Stake in our success
•
Working in partnership
Other factors
Other factors to consider when evaluating relevance of our approach to other situations
Executive Support
•
High strategic priority, lower tactical priority
Data Quality
•
Relatively clean
Who owns the customer?
•
Didn’t have to address this
Data definitions
•
Limited structured knowledge
•
Extensive subject matter experience
Data Stewardship and Data Governance
•
Basic data stewardship process was in place
•
Data quality fairly good
Problem Complexity
•
Relatively low
Level of Resources
•
Relatively low
•
Shelley, Cindy, Arnold, Mark, Alex and John
Organizational Support
• People at all levels wanted this to work
• Believed there will be more phases, which made it
easier to hold back requirements, keep it simple
Modeling and Analytics
• Analytically driven approach in place
• Good internal modeling capability
Strategy and Execution
• Analytically driven approach and tools in place
• Ability to track results
Support for customer interaction
• Desktop UI or CRM interface to guide customer
interaction
Organizational Design
• Minimum change required
• Created the Manager Customer Centric role
Approach to Data Quality
Focus on solving problems that are impacting benefits
•
Manage the customer / product cross reference in the Customer Hub
•
Fix data issues at source and let them work there way through the system
•
Track type of error and volumes to justify fixes to limit or eliminate at source
•
Ensure good monitoring and control of data interfaces
•
Process to gather feedback from Customer Service Reps and Collectors
•
Be aware of under or over investing
•
What is the impact of bad data on business benefits?
Customer Centric Phase 1
We achieved our objectives!
High potential to exceed the business case. Approach and platform are scalable.
“CTFS in partnership with IBM has built a sound system with a good technical design.”
confirmed with two external sources
Plans for 2009
•
Improve customer treatment at more touch points
•
Implement supporting infrastructure enhancements that are low cost and quick payback
•
Build the more detailed roadmap for the future
“Extending the reach of customer centricity significantly beyond credit risk requires detailed planning,
enhancements to technical infrastructure, new roles and responsibilities, addressing data quality”
Reinventing the CTFS Business Model
The Customer Centric/Value Business Model
In order to ...
… CTFS must be able to ...
Manage Quality Customer Data
Deepen Customer Insight
Predict Customer Behavior
Profile and Segment Customers
Improve Customer Treatment
Engage High Potential Customers
Manage and Optimize Strategies
Measure, Report, Learn
Improve Organizational
Performance
Expand Skills
Adjust Org Design
Organizational Approach
Introduce more and better customer information into more decisions through analytics
CTFS organization design will remain product centric.
Customer Centric oversight will be addressed at the executive committee level.
Customer Analytics to provide the customer insights and coordinate activities across
product, channel, function
CTFS Executive
Customer Value
Management Council
AVP CVM Steering
Committee
Channels
Product
Marketing
Collections
Product
Mgt
Customer
Insight &
Analytics
Customer Service
Customer Level
Marketing
Business
Council
Credit Risk
Marketing Analytics
Modeling & Analytics
Customer
Operational Analytics
Financial Analytics
Compliance & Governance
17
Customer Segmentation
Customer Segmentation provides a single lens focused on customer value relevant across all business
relationships
May 2008 Customer Value Index Benchmark
Segment 1
Segment 2
Segment 3
Segment 4
Segment 5
Segment 6
Total
Distribution by Customer
14%
18%
17%
12%
19%
21%
100%
Revenue
Credit Charges
Interchange
Insurance
AutoClub
Other Fees
Total Revenue
55%
16%
41%
20%
28%
46%
22%
12%
26%
17%
22%
21%
15%
9%
21%
18%
17%
15%
5%
1%
5%
4%
3%
5%
1%
46%
4%
22%
23%
9%
1%
15%
4%
18%
7%
4%
100%
100%
100%
100%
100%
100%
Expense
Interest
Net Write-Offs
Incremental Allowance
Loyalty
Variable Expenses
48%
16%
284%
16%
34%
18%
3%
93%
11%
11%
13%
3%
71%
9%
9%
5%
78%
-348%
1%
34%
11%
0%
-1%
48%
10%
4%
0%
1%
15%
3%
100%
100%
100%
100%
100%
60.77%
31.28%
22.56%
(28.50%)
9.15%
4.74%
100.00%
Profit Contribution
• 40 performance metrics used to differentiate customers based on value
• eg % and type of credit card spend at CTire retail stores helps differentiate total contribution
• The objective is to consider impact on value in more decisions.
• CTFS perspective to start with focus is on service capabilities that target high value opportunities.
• Learn and grow with intent to look beyond card related products to the customer’s whole experience.
Customer Steering Committee
Customer steering committee role is to manage the balance between
customer and product, or customer and functional objectives, short term vs long
If we balance customer and product well
Maximize Portfolio Value
`By
1.
2.
3.
understanding customer
Customer feels
known and valued
Right offer, right
channel, right time
Better response
Higher margins
By organizing by product
1.
2.
3.
Customer
Product
Overemphasize product at
expense of customer
1.
2.
Focused marketing
Clear, measurable
accountability
In depth expertise
Products not fully
developed
Confused
accountability
and organization
Overemphasize product at
expense of customer
1.
2.
3.
Conflict for leads
Confuse, even
alienate customers
Missed
opportunities
If we don’t balance well
Lower Growth and Margins
• Add customer information to product or functional
decisions
• Steering committee required when scope and
complexity of issues exceed business owners authority
or view to solve; eg tradeoffs between products
• Tradeoffs between product sold vs activity vs handle
time vs customer value vs risk
• Good escalation – Describe the conflict and possible
solutions, just neither authorized to make that decision
• Conflict revolves around objectives or
accountabilities, not style, personality
Customer Centricity
Prioritizing the Roadmap
We are only as strong as the weakest link
Data
Analysis
Goal
Reliable, Integrated, Available
Create useful information
Strategy
Decide what to do differently
Execution
Do it, change existing actions
Learning
Measure, understand, improve
Considerations
Data Strategy, Data Governance
Tools, skills, culture
BI, Modelling, Reporting
Tools, skills, culture
Decision making process
Tools, skills, culture
Desktop or front line support
Hiring practices, pay systems, decision
making authorities
Champion/Challenger
Cross product, function evaluation
Organizational effectiveness is critical success factor
Crossing divisional boundaries adds benefit and complexity at every level
Customer Centricity
Prioritizing the Roadmap
Only as strong as the weakest link
Customer Centric Summary
Objective – Create a more valuable, defendable, expandable customer portfolio
Approach – Improve capability to focus on the customer, differentiate customer treatment
and create exceptional customer experiences
•
2008
•
Delivered quantifiable benefits on a scalable infrastructure
•
2009
•
•
•
•
•
Continuous improvement in Credit Risk
Deliver quick wins for Customer Service, Marketing, Operations, Compliance
Increase influence of Customer Segmentation Value
Develop detailed roadmap
Strengthen overall infrastructure
Expand Customer Centricity to truly exploit the potential of the 5 distinct yet interrelated businesses