Jirí Škorvaga, Deputy chief executive, Ceská sporitelna

Moving to a new, highly targeted direct marketing model has given a dramatic boost to the profitability of Ceská sporitelna's marketing campaigns, as the bank's deputy chief executive explains. Writer Michelle Price

Few banks can claim to have captured more than 50% of their domestic retail banking market, but with 5.2 million customers in a population of just 10.4 million, Ceská sporitelna (CS), the Czech Republic's largest player, is one such institution. A colossal market share, however, is only half the battle. The major challenge for institutions such as CS is transforming marketplace dominance into profitability, and this increasingly demands a laser-like focus on customer knowledge, segmentation and direct marketing.

For many institutions, CS among them, moving to an efficient and successful customer relationship management (CRM) infrastructure demands structural change. CS has embraced this challenge, rationalising its disparate customer data into a centralised data warehouse with the help of business analytics specialists SAS and consultancy firm Capgemini, explains Ji?rí Škorvaga, the bank's deputy chief executive. "We had all the client data spread over back-end systems and we felt that we had to have a more integrated view," he says. The virtual warehouse, in which information on customer product holdings and transaction behaviour is stored, served as the backbone for the bank's ambitious CRM project, he adds.

Historically, CS constructed its marketing campaigns according to the products it had to sell. By mining the data warehouse, the bank would identify customers to whom it could market a product, then contact those customers. Frequently a customer would be identified across several marketing campaigns as a legitimate target for multiple products. But there was a problem with this approach, explains Mr Škorvaga.

"We were exhausting certain clients with a lot of offerings," he says. "The success of the campaign - whereby a customer buys the product - is only one side of the coin. There were a lot of customers who were upset by our campaigns."

Concerned that bombarding customers with unwelcome marketing material might harm the bank's brand image, CS's team developed ways to score and thereby limit any potential customer irritation, explains Mr Škorvaga.

Realising, however, that this approach was not sustainable, Mr Škorvaga and the direct marketing team decided to reverse-engineer its entire marketing strategy. "We decided on a turnaround: not to find clients for a product, but to find the right product for the customer," says Mr Škorvaga. This approach, however, promised to be far more complex and demanding than the bank's prevailing strategy, both technologically and from an organisational perspective, he says.

Scalability constraints

In the first instance, the bank developed workaround tools using Microsoft Excel and purpose-built databases by which to develop a more targeted marketing approach, and through which the campaigns were managed. "This was good because it meant the staff really knew what they were doing and they really understood the whole process. But you get to a certain point in time where you have the ideas but you don't have the ability to execute on a large scale," says Mr Škorvaga.

As the time-intensive use of these tools began to limit scalability, the bank turned to the vendor community, choosing two tools from SAS that allowed the bank to fully automate and speed up the data-mining process. More importantly, the new tools enabled the bank to fully optimise its customer information to increase the profitability per product: that is, to focus less on the size of a marketing campaign and more on its quality.

Scoring suitability

Now the bank runs predictive scores using data such as where the customer travels and shops, their income, where they live and other event-based information. As before, the scores may suggest that in many instances a customer could be targeted by several campaigns. Rather than blitz the customer with multiple product offerings, however, the bank uses an SAS optimisation tool to determine the potential profitability of each product against that customer. The product likely to yield the most profit effectively wins, and the customer is subject only to that campaign.

The bank has not stopped here, however. It is now able to assess what Mr Škorvaga describes as certain "boundary" issues, including the customer's preference for specific channels and the capacity of those channels. "The campaign optimiser takes one customer after another, makes the calculations of all possible ways to treat the customer, and chooses the one that is most appropriate," says Mr Škorvaga.

The bank is also able to tweak the parameters to explore new ways of managing campaigns. For example, if there are 140,000 customers likely to respond positively to a personal loan promotion, but 90% of the expected profit can be harvested from only 60% of the targeted customers, the bank will forego 10% of the profits to save 56,000 customers for another campaign. "And what do we do with these customers? We need another unique selling proposition. So we ask the product managers... to come up with a value proposition that stimulates new activity," says Mr Škorvaga.

The new campaign management infrastructure has led to a 38% rise in the profitability of marketing campaigns, and a 20% time saving - a result that even Mr Škorvaga admits was something of a surprise.

Career history

Jirí Škorvaga

2006 - Deputy chief executive, Ceská sporitelna

2000 - Head of business management, retail business, Ceská sporitelna

1998 - Card centre head, Ceská sporitelna

1994 - Project manager, Ceská sporitelna

PLEASE ENTER YOUR DETAILS TO WATCH THIS VIDEO

All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker



For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Join our community

The Banker on Twitter