Customer Communication Management

Customer Communications is defined as any document, whether electronically transmitted or mailed, sent by a company to a single individual and any relevant third parties. Strategies must address not only the communications policies but constantly changing technology as well.
Customer Communication Management is defined as the seamless integration of accurate data, customized documents and multi-channel delivery with other key internal business processes.

The real challenge lies in matching complex customer service expectations with the required technology.
Some of the prominent issues troubling the organizations in this regard are:
• Being excessively concerned with meeting customer service expectations
• Customers being put off by a firm’s inability to respond accurately on demand
• Senior executive agents, customer service reps, and call center managers being put off by an inability to quickly satisfy customer needs
• Technical inefficiencies frequently running rampant

To handle this, organizations need a system which should enable customer self-service with Web-based technology that creates customer communications in seconds, not days. It should also help eliminate call backs, reduce the overhead expenses necessitated by heavy call volume, and enhance cross-sell and up-sell opportunities. The system should also combine corporate transaction data with dynamic document templates to enable users to create and distribute personalized, one to-one customer communications via one or more channels including web, email, fax, print and archive. It should also provide cutting-edge technology, including low maintenance Web Services solutions, and integrate on demand customer communications with all of the line-of business applications such as CRM, ERP, claims, underwriting and customer service.
The system should also use charts, graphs, proportional fonts and color in one’s customer communications and be able to mirror his business processes allowing users to create a letter in one step, or several steps, depending on one’s needs; thereby providing greater accuracy, productivity and superior look and feel to the customer.
It is here that a Customer Communication Management system can make a difference.

CCM in Financial Services

For financial service providers, attracting and retaining customers has never been harder – or more important. In today’s increasingly competitive environment, sophisticated customers want personalized, comprehensive financial information they can use, when they want to use it and in a format that best suits their needs.

Today’s mass-affluent financial services clients want a unified view of all of their accounts and services from their financial advisors. From the customer’s point of view, this demand seems easy enough to fulfill, but it is daunting for corporations, especially when the information they need is spread across multiple disparate back-end systems.

Enabling corporations to develop effective, consolidated portfolio statements requires a highly sophisticated solution. Corporations need a desktop tool that allows them to access all of the latest data for a particular client and create a personalized, consolidated portfolio statement. The corporation needs to provide standardized templates with proper branding and regulatory languages, as well as the options and processes to support customization where needed.

The infrastructure required to support such a solution is complex. Financial services organizations need a solution that pulls customer data from the myriad back-office systems, and manages it in a format that allows rules-based decisions related to which types of personalized marketing are appropriate.

Finally, another goal of financial services organizations today is to deliver consistent data representations across multiple delivery channels, especially for their mass-affluent clients. With this in mind, printed documents delivered to clients should contain the same data that is delivered electronically through e-mail or web delivery. And documents delivered across any channel must be archived with proper version control and security.

Customer Relationship Management (CRM)

CRM is about acquiring and retaining customers, improving customer loyalty, gaining customer insight, and implementing customer-focused strategies.
It is about building strong relationship with the client and developing relationships with customers on an individual basis and along with this, learning and understanding customers better so that one is able to offer the right products/ services at the right time.
A true customer-centric enterprise helps a company drive new growth, maintain competitive agility, and attain operational excellence.

Some of the salient points of CRM common to most interpretations are:
• Customer acquisition
• Cross-selling and up-selling
• Customer retention
• Conducting all activities profitably

Converting a prospect to a customer is not only time consuming and effort intensive, but also more expensive than cross-selling another product to an existing customer. Further, it has also been found that the longer a customer stays with an organization, the more likely he is to avail of other products. This translates directly into higher profitability over the long run. In fact, the most practical and business interpretation of Customer Relationship Management is that an organization should be able to sell all its products to its customers as they progress along their life, also sometimes referred to as Life Cycle Marketing. For example in case of a bank, a customer should be able to avail of a savings account and a credit card at the start of their career, followed by equipment and automobile loans, and then graduating to buying insurance products and mortgages – all with the same bank.

However, with intense competition for the same set of customers, as well as greater customer inclination to “shop around” for the “best deal”, effective Customer Relationship Strategies are required to acquire customers, cross-sell and up-sell products, and to retain these customers over the long term – profitably.

In this dynamic scenario, there is also increasing pressure on managers to anticipate their customer’s requirements, and be ready to fulfill these at the earliest. For example, credit card customers with an unblemished repayment track record but not owning any vehicle can be cross-sold automobile loans at a concessional interest rate. Such a campaign will identify a new set of prospects and attempt to convert these at lower acquisition costs compared to a mass mailing exercise.

Yet, cultivating a relationship while building market has to be profitable. While conceiving innovative services and delivery channels is important, these are often expensive. A smarter alternative is, to strive for greater customer focus, zero in on relationship marketing and develop effective customer retention plans. This not only helps in identifying existing profitable customers, but also helps in devising new retention strategies to protect them from ‘poaching predators’.

However, the effective harnessing of technology remains a prerequisite to managing customer relationships effectively. These effective techniques involve the use of sophisticated models to predict customer propensity to buy and stay loyal to an institution. At the core of this technology resides the customer database, which helps integrate statistical modeling, campaign management, contact history, as well as response tracking components of various marketing campaigns. The management of this customer database in turn is known as “Database Marketing”. This system also enables managers to source data from the customer database and other transaction processing systems to identify and analyze transaction and customer level trends.

A Data Warehouse for Customer Relationship Management must include the following key features to support the marketing lifecycle:
• Prospect and customer focus
• Record all relevant facts of the relationship over time
• Integrate external prospect lists
• Score the customer database many times for subsequent periods.
• Predict future behavior of a customer based on past behavior
• Analyze different campaigns and treatment strategies over time and across a large number of transactions and customers

Business Process Management (BPM)

All processes have an impact on the success of an organization and it is these processes which are unique to an organization that have the biggest impact on competitive advantage and market leadership. At least a couple of processes can be identified as being unique to an organization, which differentiate it from its peers and gives it an advantage above others.
Business Process Management (BPM) is all about modelling, automating, managing and optimising business processes to increase profitability of an organization.

The Business Processes link enterprise systems together for true connectivity. Processes must be designed to enhance productivity and competitiveness in a way that works within their environment. That means adjusting and redefining such processes as how employees interact within each functional area, across geographic boundaries, and, most importantly, with partners and customers.
BPM executes and manages processes from their initial creation throughout their continuous improvement across the entire enterprise. Organizations worldwide use BPM to coordinate work between people and systems, with the ultimate goal of improving organizational efficiency, responsiveness and reliability.

The opportunity to improve process execution through the application of BPM technology is significant:
• Modeling processes creates greater understanding of the work activities and often exposes immediate opportunities for improvement.
• Automating processes reduces errors, accelerates cycle times and improves visibility.
• Managing processes ensures that all processes are being executed efficiently and can help identify further improvement possibilities.
• Optimizing processes enables continuous improvement to become a reality for organizations.

Although BPM encompasses all aspects of process, (i.e. definition, execution, automation, management, etc.) much of the attention on BPM is focused solely on automation. Organizations frequently overlook the key starting point of BPM- process analysis – in favor of quickly defining and automating their processes. These organizations are then often disappointed with their BPM implementation, and in many cases, are forced to go back to the drawing board.

BPM must start with a clear understanding of enterprises processes.
A process can be described as all the inter-related activities needed to produce something of value within the organization. In addition processes always have a definite start and stop, transforming inputs to outputs. Consider an online purchase for a book. It begins with a receipt of the order and ends with delivery of the goods. All of the activities performed in between, such as processing the payment and pulling the item from inventory, are components of the process required to transform input to output.

Since the processes are inter-related, its critical that they remain seamless, with no gaps in between. If an organization doesn’t fully understand the depth and breadth of their processes, it becomes extremely difficult to identify process inefficiencies and develop effective improvements to address those inefficiencies.
This is why Business Process Analysis (BPA) is the logical and necessary first step for BPM projects. BPA enables organizations to document, analyze and streamline complex processes. Fundamentally BPA tools focus on modeling business processes.
A Business Process Analyst discovers, validates, documents and communicates business-process related knowledge through modeling, simulating and analyzing current and future states, as well as as-is and to-be processes.

BPA solutions are extremely sophisticated and offer several benefits. Through the use of process modeling tools, businesses can graphically illustrate key activities and processes linked to their overall strategies and goals. Sophisticated process modeling allows organizations to focus on fundamental business dimensions, such as how work is accomplished, who is responsible, how work supports organizational goals and the complexity of the process. By creating business process models, organizations are essentially forced to define what the process is aiming to achieve and how it aligns with other processes and goals.

The activities which constitute BPM are grouped under three categories:
1) Process Design: It encompasses the design and capture of existing business processes, as well as the simulation of new ones. This is done through graphical editors that document process, repositories that store process models and business process simulation tools to run a process a large number of times in order to measure performance parameters such as average time and cost.
Good design reduces the number of problems over the lifetime of the system.
2) Process Execution: The traditional way to automate processes is to develop or purchase an application that executes the required steps of the process. However in practice, these applications rarely execute all the steps of the process accurately or completely. Another approach is to use a federation of software and human intervention, however due to the complexity of the federated approach changing or improving the process becomes difficult.
Hence, there is software that enables the full business process to be defined in a computer language which can be directly executed by the computer. The system will either use services in connected applications to perform business operations or when a step is too complex to automate would message human requesting input.
In this case, directly executing a process definition is much more straightforward and easier to improve.
3) Process Monitoring: This monitoring encompasses tracking of individual processes so that information on their state can be easily seen.
Example of tracking is being able to determine the state of customer order (e.g. order arrived, awaiting delivery, invoice paid) so that problems in its operation can be identified and corrected. In addition, this information can be used to work with customers and suppliers to improve their connected processes. Examples of the statistics are the generation of measures on how quickly a customer order is processed, how many orders were processed in the last month etc.

BPM includes all aspects of the process, as opposed to a more narrow focus on the movement of documents and data.
The human role in the process is to make decisions using the information identified, and these decisions result in execution of a business function. BPM methodology allows for the clear capture of key business functions that need to be executed in the process

Successful execution of business essentials such as product delivery, operational efficiency, corporate governance, profitability, and market leadership all are dependent on business processes. However due to the degree of flexibility and human intervention required in these processes, its become difficult to automate and control- forcing the most critical processes in the organization to remain inflexible, slow and susceptible to error and risk.
BPM is uniquely structured to support the design, integration and deployment of complex, human-centric business processes without requiring new technology or systems, or skills.

BPM in Financial Services

Complex business issues are facing the financial services industry today. Organizations must continuously and rapidly fine-tune their operations to respond to changing business conditions, whether their business is securities, insurance or banking. Improving customer service, regulatory compliance and the on-going industry consolidation all make it seem as if complexity is growing at an overwhelming pace, especially as staff spends untold amounts of time and money trying to manage information, create unified processes, and obtain approvals for the fundamentals of their job.

BPM is emerging as an important concept for the capital markets industry because a large part of industry revenue is closely tied to processing activities. The speed, efficiency, and cost effectiveness of a capital market firms infrastructure often determines its competitive advantage in providing such services.

BPM initiatives, properly designed and deployed, can reduce process time and related expenses dramatically while supporting compliance with the myriad laws and regulation that govern the capital markets industry.
Organizations such as banks and insurance companies are process centric. For instance, in a bank, the loan processing exercise is streamlined due to minimal manual intervention. This leads to a quick and immediate return on investment as the process lifecycle gets shortened.

Financial institutions today combine a wide range of product and service offerings, across banking, insurance and asset management. They operate in global markets and have increasingly sophisticated and mobile customer bases. Increased regulatory vigilance and new corporate governance rules have the potential to add new layers of complexity and cost and there continues to be consolidation, merger and acquisition in the sector.
For all these reason those organizations who automate and streamline their operations most effectively will gain significant advantage.
Integration is now more than ever the key to efficiency, enabling lower transaction costs and increased sales volumes. This is true for capital markets, for retail financial services, and for the corporate sector.
An integrated approach to business processes allows products, processes, systems, data and the applications that support them to evolve quickly. Whether it’s providing a loan, setting up an insurance policy, or executing an investment instruction, optimizing the sale-to-fulfillment process will always win new business, cement customer loyalty, and reduce costs. Lack of integration across lending, payments and trading, on the other hand, simply presents competitors who are more efficient with a huge profit opportunity.

Integration and process optimization not only has to extend across the enterprise, but must also embrace third parties who often supply key components of today’s complex, multi-instrument financial products. A mortgage offer for example will typically involve underwriters, insurers, the customer’s bank, credit reference agencies and others, as well as internal approval, accounting, collections, credit control, risk management, commission payment, incentive management, and business intelligence processes. Improving all the connections between all the elements of a transaction, automatically improves the performance.

Enterprises that are setting up new processes want to automate their existing processes with BPM, helping them establish a paperless office with minimal manual intervention and process errors, thereby reduce the number of steps in different processes.

Capital market firms have a number of reasons for embracing automated workflow initiatives. These reasons include:
• BPM focuses on enhancing operational infrastructure, which is a crucial issue for capital market firms because an efficient operations environment can not only be a competitive advantage but also result in a lower operational cost base.
• BPM reduces product cycle time by bringing in more flexibility and removing redundancies in a process
• Need to comply with a fast growing number of complex regulations governing every aspect of the business.
• In order to survive, capital market firms must maintain profit margins by delivering more comprehensive products and higher value services to their clients. As they have limited ability to spend more money on people to deliver these products and services, they need to focus on automated workflow.
• Capital Market firms have spent immense amounts of money in the 90s on enterprise application integration and data integration. They are now looking at leveraging on these investments, and BPM, which is about effective process integration across applications, is the logical extension of the same. As an example, in the life cycle of a US equity trade, the various sub processes – order management, trade execution, trade confirmation, clearing and settlement – must be integrated.
• The move to T + 1 (trade date + 1) in the US is forcing capital market firms to speed up major trade processing activities which can only be achieved by focusing on the processing infrastructure.
• Exception based processes used by legacy applications, which identify breaks but do not support resolution or track the effort to research and resolve, in turn spawning additional processes and adding complexity.
BPM would help in improving exception resolution to minimize bottlenecks and inefficiencies and also integrate new processes with legacy systems.
• BPM is also relevant for enabling Straight Through Processing (STP). To achieve STP, process integration is a must.
• Compliance with regulatory norms by helping organizations which are going in for automation and digitization of records in order to electronically archive information to meet regulatory norms such as the Sarbanes Oxley Act (which stresses on data archival) and RBI guidelines for Indian banks. In this context it needs to be observed that having a steady archival system is possible only when the processes in an organization are streamlined—something that BPM facilitates. Efficient processes reduce the turnaround of an enterprise back office, thereby easing the task of archiving information
• Improving customer service levels by providing a Single Point of Contact
• Accelerating new customer acquisition
• Gaining insight into lowest level of business operations for greater risk management