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• Customer Relationship Management at Capital One :
• Capital One is an American financial services company, which
have about 45 millions of clients worldwide.
• The group is also present in the UK.
• Capital One proposes its customers opening accounts with
credit cards, and other financial products like insurance.
• The company also proposes loans.
• How would you define CRM as implemented at Capital
• At Capital One, CRM is present in all the company’s activities
and services. The goal is to develop valued relationships with
the customers and handle the risk, understanding intimately
• The company is able to propose customized products which
ideally correspond to needs and to the customer’s risk profile.
Over view of CRM at Capital One
Capital One, a credit card company, has built its business
on a strategy with a clear customer focus:
• The company systematically gathers and analyses
information on its customers in order to correctly assess
their individual credit risk and to offer products and
services tailored to their individual needs.
• The case is designed to illustrate how the concept of
customer relationship management (CRM) can be
translated into strategy, organizational design, hiring,
marketing processes, and IT infrastructure of a company.
CRM Practices at
• Segmentation Strategy
– Targeting all types of risk profiles, offering different prices
– Customer database distinguishes high-risk ‘revolvers’ and
---The company uses segmentation strategies in its business
practices. This function divides the potential client base into
high risk and low risk categories.
---The higher risk clients will pay a higher interest rate and the
lower risk clients will be rewarded for their low risk status by
being awarded a lower interest rate.
---With high risk comes profits in the form of higher interest
payments and with low risk come lower interest payments
but potentially a high profit from the monthly interest
payments that are practically guaranteed from the low risk
---The company tries to maintain its dormant customers through
an alert system.
• Operations aligned with customer requirements
– Personalized and flexible handling of customers
– Calculation of profitability on an individual basis to
improve product offer to customer
– IT infrastructure
– Payment assistance, recoveries and fraud
• Retention Strategy
– Help retain customers when introductory rate expires or
risk of ‘dormancy’ exists
– Sales system (SALSA) enables targeting cross-sell offers to
– Uses accumulated data on customers to suggest how to
react to specific customer requests
• Co-operation between Marketing and Analysis (M & A) and
– Partnership to review risk perspective of present and
future strategies enabled through IT
• Information Technology
– Interaction with company in terms of prospect pool
management and solicitation, account acquisition, account
servicing and call-center technologies, core systems
• Human Resources
– Managing associate selection and development of
IBS for creating competitive advantage for Capital One..
• IBS creates a competitive advantage by narrowing sectors for
Capital One to use in its marketing of its various credit card
• The system is complex but also simple at the same time.
• IBS assists Capital One on sending the right products to the
• The products and/or promotions are sent out and tracked.
• The tracking allows the company to know which demographic
is responding and which demographic is not. This helps the
business with its competitive advantage.
Capital One: Systems
Different systems working together
Screen of front end associates
Use of Data
Customer data Segmentation
Online decision of
•Static customer data
Expected NPV = Expected
response X product NPV
For every customer
For all sales activities
Rank order of what to Offer/
Value per product
Products already offered
= (barred from sale)
Decision captured and fed into data warehouse
Growth of Capital One’s Revenues
1996 1997 1998 1999 2000 2001 2002
63% 40% 33% 39% 29% 36% 41%
Capital One: Summary
• Illustrates successful implementation of a CRM strategy
• Business model founded on the crucial premise that each
customer requires a different product and service from a
credit card provider
• Adopted an Information Based Strategy (IBS), to collect
information on customers
• “Test & Learn” tests customer related activity in a controlled
condition before it is introduced in the market
• CRM is viewed as a key strategic process in Capital One;
different depts. work in an integrated fashion towards
understanding and satisfying customers
• 2001 - Capital One was named 3rd ‘Best Place to Work in the
UK’ by The Sunday Times. Capital One named in Forbes 400
list -Best Big Companies in America