Return on Rupees
India-based HDFC Bank is on a growth path, adding about 100,000 customers per month--a 30 percent growth rate each year--and today has a base of more than 8 million customers. Executives attribute this success to a focused acquisition strategy, led by a rapidly expanding branch network across a wide geographical area and a strong sales force.
The bank is among the top players in just about all the business segments it participates in, and its performance and use of IT have been acknowledged through awards by publications in India and overseas, says Ajay Kelkar, HDFC Bank's vice president of marketing. Although the bank was succeeding at acquiring new customers through its branch and sales channels, it was just as important to strengthen relationships with existing customers. "We believed that the traditional ways of identifying customers and reaching out to them were not effective enough. The bank also realized that it was more cost-effective to sell to its existing base of customers instead of going out to attract new customers. Cross-selling would also help the bank control attrition levels."
The biggest challenge when HDFC Bank started on this journey was leveraging its internal customer base by segmenting it and improving returns on campaigns, according to Kelkar. "The [idea] was to begin analytical marketing with a focused effort toward launching campaigns at greater velocity," he says. What this meant was the solution had to be easy for the marketing team to learn on the job and it had to be scalable across marketing goals, technology, and users.
Minimal coding was one of the most important criteria, so the bank selected Unica's Affinium Model and Affinium Campaign tools, which allow users to employ the Universal Dynamic Interconnect technology and drag-drop facilities of the system to manipulate content from multiple databases. The tools also allow simultaneous build-and-launch campaigns. The entire implementation took about three months, including system integration tests. "The Unica model provided the edge to create robust models in the initial stages of launch as the data knowledge aided the building of models."
Within the first three months, the bank saw a 60 percent reduction in the customer acquisition costs on the cross-sell of products to existing customers. Then the company employed life cycle--based campaigns for credit cards using a scorecard built in Affinium along with a multiwave campaign and achieved a 30 percent incremental activation increase. About 10 days after a new cardholder is approved, inactive members are identified. They are segmented into distinct groups and sent targeted offers via their preferred channel--email, direct mail, or SMS (short message service). HDFC Bank increased campaign volume by more than 200 percent in the first six months and by 500 percent in FY 2005.
The bank was able to increase its campaign volume through the automation process and its ability to leverage the template and reuse all the pieces. Giving customers something relevant will help differentiate the company's campaign from the countless other ones they receive on a daily basis. The bank knows the customers want this particular card and is leveraging this knowledge to the benefit of both parties, says Kelly Fiedler, Unica's director of solutions and customer marketing. "Customers recognize [that the bank understands] them and their needs, and provides the right solution for them at the right point in time. What's really impressive is its vision, its goal of increasing profits through deeper, stronger customer relationships."
By using Unica's Affinium products HDFC Bank:
achieved an incremental credit card activation rate of 30 percent;
boosted incremental customer retention by 4 percent;
increased campaign volume by more than 200 percent in the first six months of deployment and by 500 percent in FY 2005.