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This leading and highly successful gaming company realised that it needed to change. The current trading model of recruiting new customers at scale, followed by rapid value extraction, and then accepting significant churn wasn’t sustainable. Stronger organic growth and retention is needed. The leadership saw the opportunity to design, deploy, and deliver an enhanced experience to elevate betting to end-to-end entertainment, and investing in the brand as blue-chip with premium pricing. They committed to earn a reputation as a company leading on customer experience.

Project approach and customer outcomes

For this phase of the programme the focus was on acquisition, conversion, and the on-boarding journey. These were critical to get right before the summer start of a major sporting event which generates orders of magnitude higher volumes of new players and is supported by substantial ATL advertising spend.

A highly experienced team was deployed leveraging a deep repository of templates and best practice and working closely with company staff to facilitate skills transfer and capability building. Three work-streams were executed in parallel, delivering value quickly and recommendations in time to support the marketing campaigns.

The first work-stream delivered customer journey maps for the on-boarding of new players, benchmarked against best practice. It identified over 30 quick win opportunities to realise 5.5% additional revenues (Net Gaming Revenues, NGR, an industry standard measure) over the first 30 days from a new player. Not only was this money left on the table today, but with 10-100-fold increase in new players expected for the imminent sporting event it represented a significant opportunity. This was true even without accounting for the increased revenues beyond the first 30 days, which would be substantial.

The second stream established metrics and insights for the customer experience. The company had not yet established a comprehensive practice of gathering customer experience feedback, and there was considerable scepticism that the Net Promoter approach might not be appropriate for real-money gambling. We tested three customer experience questions and metrics: Net Promoter Score (NPS) and two questions aligned with brand values. We established integrated insights combining enterprise data warehouse with customer experience survey data to demonstrate the value from CX and identify the best survey questions and scores. The analysis revealed that two of the three questions should form the basis of the CX programme: the NPS question has higher correlation with revenues and provides strategic insights from the verbatim comments, while one other question provides valuable insights into the user experience and user interface.

The third stream developed the organization’s vision, strategy, and roadmap for customer experience. It demonstrated how over 20% EBITDA growth over three years was well within reach by delivering the customer experience programme. We interviewed more that 40 leaders within the organization and combined the insights with feedback from a larger base of colleagues obtained through a detailed survey. Benefiting from extensive cross-industry best practice we were able to deliver a highly customised change programme that will deliver real and measurable value early by targeting the pains and opportunities specific to the company. The programme is self-funding in the first year.

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In 2013 Bupa Global set out an ambitious new strategy to deliver substantial growth and quickly realised they needed to develop a deep understanding of their target customers, of the products and services they would value, and of the markets in which they live. To this end Allan Engelhardt was brought in from CYBAEA to join the Bupa Leadership Team and establish the global Customer Insights function in Bupa Global.

“Every major strategic decision we made was backed by robust data and deep insights in which the executive team had full confidence,” says Robert Lang, Managing Director of Bupa Global Market Unit, “and Allan was key to ensuring the quality of the insights and the trust of the organization.”

The new function had a wide remit with four core areas:

1. Primary Research, including qualitative and quantitative customer research and surveys, including the most advanced installation of the Net Promoter System (NPS) across Bupa.

2. Secondary Research covering global and local competitors with their products, pricing, and distribution, as well as mergers and acquisitions, market sizing, and regulatory environment.

3. Data and Analytics covering analysis and reporting as well as data and computing infrastructure.

4. Data Science and machine learning, including predictive modelling, pattern detection, cluster-based segmentation, and more.

Primary research of over 3,000 individuals and group decision makers in five continents defined the customer segmentation and identified value and purchase drivers to directly inform propositions design and distribution strategy. Insights from the Net Promoter System directly informed and shaped the service design of the new propositions.

Secondary research supported an aggressive programme of obtaining admitted status in priority markets with detailed but practical market analysis, including competitors, products and features, prices, regulatory environment, and distribution options.

Analytics developed a practical Customer Lifetime Value model which was adopted across the business. The model directly informed and supported a major strategic shift in the business to focus on new customer segments with new products.

Analytics also developed a completely new Opex Allocation / Activity Based Cost model to get Bupa Global much closer to managing the business by value and profitability. This was done within the Customer Insights function for the first two versions and then adopted by Finance to own the process of maintaining it going forward.

Claims analytics project lasting four months showed Bupa Global could cut 1.8% off the Claims line, and the project delivered much improved claims management and -forecasting through new dashboards and tools.

Data infrastructure was substantially improved with completely new analytics platform (based on MS SQL Server, R, and Tableau) which was built despite IT constraints and created the first single view of the customer in the business. Allan led the Compliance process to allow the organization for the first time to hold global customer and medical data in a single repository.

Data science developed descriptive and predictive models for preventable churn, enabling the business to optimize the Loyalty and Win-Back processes and to put in place differentiated retention offers.

“The savings from a single project to improve our Claims process would pay for our entire Customer Insights function,” notes Robert Lang, “but more important is the growth of the business and our robust insights gave us the confidence to make the right choices and stick with them.”

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The good news is that advanced analytical capabilities are now available for the taking. The latest machine learning techniques are easy to access through modern analytical tools like R and large scale computing is readily available through private and public clouds.

Even better, you do not have to “boil the ocean” to get started. With the right commercial focus you will deliver value immediately even from small, easy-to-implement changes, and you will have started your journey.

You do not need to abandon well-established practices but can supplement them and validate them against best-in-class processes to deliver commercial value right now. We outline a simple example below.

Quest for profit: Advanced analytics and the processes around it deliver immediate profits while at the same time establishing the foundation for delivering a sustained competitive advantage. We discuss below an example where one company was able to achieve a 14% drop in loss ratio by validating a GLM pricing model for Personal Lines against a modern ensemble model.

“Tesco-fication” of the industry: The best companies use more data and advanced models and are at a competitive advantage as a result. Traditional insurers have to respond or go the way of the small local supermarket.

Regulatory changes: New regulatory demands require companies to demonstrate that they are aware of the latest analytical techniques and that they have incorporated these into their workflow and business processes. While many quick wins are outside the regulatory scope (e.g. personal lines pricing) the working practices recommended by the draft regulations represent sensible best-practice that should be incorporated into the workflow as a matter of course. Implementing these changes first outside the regulatory regime may in fact be a good opportunity to learn about the organizational impact in an area that can easily be controlled for exposure.

In practice

One leading insurance company was concerned with the performance of their property book and decided to apply advanced analytics. Their existing pricing model was an industry standard GLM (generalized linear model) which was, it quickly turned out, inadequate for the risk profiles the company faced. After a focused data visualization exercise, modern ensemble models were applied to the pricing problem. They demonstrated a much better fit with the observed losses and showed that the 5% most mis-priced policies contributed 14% of the loss ratio.

Approach to business change and results

Faced with this situation there are at least two options for the actions that we can take.

First, we can decide that this is risk we do not understand and therefore will not insure. In this case we may simply let the 5% policies lapse without offering to renew them for a 14% improvement in loss ratio. This response can be very appropriate in the short term, and may be the right response where we decide that the business opportunity is small or not strategic to our organization.

Second, we can decide that this is an attractive business opportunity and focus our efforts on understanding complex risk represented by the mispriced policies. In this case will use the modern models to understand the reasons for the poor performance of the existing model. We can use this understanding to create new rating factors incorporating complex interactions or non-linearity with which the classical model can deliver acceptable performance.

We stress that we do not advocate the wholesale abandonment of classical models for modern techniques. Rather, we propose to make use of both: continuity and understanding tempered with the results from the latest up-to-date methods.

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This case study was presented at the inaugural R in Insurance conference¹ on 15 July 2013 at the Cass Business School².

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They called on CYBAEA and its partners to deliver this project as the recognized experts in delivering and exploiting commercial customer insights across industries, giving them the ability to benchmark current practice and build robust business case for change, and for their profound marketing expertise and deep insurance knowledge, combined with Nordic resources possessing local language skills and market understanding.

This review, benchmark, and business analysis identified new revenues worth over £33 million annually that could be delivered within 12 months, corresponding to over 5.5% additional gross written premium (GWP) with normal or below-normal risk that could be acquired at low cost.

Project approach

The entire customer journey was mapped across brands, geographies, carriers, channels, and all customer trigger points.

First, all the channel processes were documented with every customer interaction and a specific focus on leakage points in the process such as lack of follow-up.

Second, every customer journey was mapped with emphasis on cross-channel hand-overs to identify customer leakage points and value lost.

Third, all the opportunities for closing these leakage points were documented and sized for value lost and complexity to change.

Fourth, all customer journeys were benchmarked against within and outside the industry to identify substandard commercial performance and associated opportunities.

From this, a high-level opportunity map was created for the executive teams identifying 12 opportunity areas, ten of which could be quantified with available data as new revenues totalling over GBP 33 million (USD 52m, SEK 350m) gross written premium in a single country from opportunities already in the organization’s systems and processes with existing customers and leads.

The executive team had full confidence in the results and all bought into and committed to delivering the opportunities identified. There was a clear recognition of the need for organizational change to include a Customer Value Management function, which at the time was a new concept for the Insurance industry (though well-established in Telecommunications).

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The client, which is part of a large retail giant, has about €750m revenues from importing, selling, and servicing four automotive brands. For this phase of the project we looked at two of the car brands, high- and mid-tier, in a single Nordic country, and the client’s own service centres only (excluding their dealers).

Initially sceptical that they would not have enough quality data, the client was astounded by the level of insights and commercial actions that even this first phase delivered in only four weeks.

Project approach

First phase was an accelerated effort to deliver quick commercial value on the problem at hand and to identify additional opportunities.

The project was divided into two parts: investigation, to understand the data, the processes, and the commercial drivers, and analysis to deliver the models, identify the commercial opportunities, and propose the next steps.

Regular workshops ensured constant alignment with the business and ultimately rapid implementation of the changes to deliver on the commercial opportunities.

Business results

Churn is very predictable from service data, and this gives deep insights into why customers are not coming back. Based on these insights a clear list of immediate action was developed in three broad areas: Commercial changes, data opportunities, and improvements in execution capabilities. Selected examples of these quick wins are included below.

Commercial action examples:

• Trial a BTL communication to at-risk customers around the time of the next service, using the prediction model to select the targets and the descriptive model to select the messages.

• Trial service programmes focusing on paid-for convenience options such as express service, collect and return service, courtesy car, Sunday openings, and more. The options depend on the capabilities and spare capacity of each service centre and they target specific pain points in the customer experience as identified by the analysis.

Data action examples:

• Instigate qualitative and quantitative research to understand churn reasons and customer experience for (only) one very specific group, namely the customers who churn after the first visit and for whom the data available from the systems is therefore limited.

• Deep dive into the Net Promoter programme and ways of increasing responses. It turned out that the Net Promoter Score was an important predictor of churn and while the client overall had a world-class score there were gaps in the programme and the data was under-utilized.

Execution action examples:

• Put in place robust campaign management with consistent use of test and control groups and rigorous capture of campaign outcomes to ensure future learnings. This was primarily a process and training change and thus easily implemented.

• Ensure customer-facing staff capture accurate data. This project clearly demonstrated the commercial value of data but the challenge is to ensure that the front line staff sees it as their job to capture accurate information. This would be done by incentives, education, or cultural change, or, more likely, a combination of these. While it may not be a quick change, it is one with no particular constraints on execution and so can be readily started.

All of these actions could be implemented immediately to deliver quick commercial value to the organisation and an improved experience for the customers.

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Vodafone Romania, the premier Romanian mobile phone operator, had taken the decision to follow industry best practice and implement a robust Customer Value Management organization. A search was commissioned for an interim Director of CVM who could both shape the organisation and enhance the capabilities while a permanent selection was made.

The initial task was twofold

1. Development of vision for Customer Value Management within Vodafone Romania, and a roadmap for the component projects that would deliver it.
2. Managing Customer Value Management related activities within the organisation and instituting best practice processes and disciplines.

It emerged that Vodafone Romania would benefit from enhancement of its Outbound Marketing capabilities as well as implementation of Inbound Marketing, both based around the Chordiant product suite. Both projects were initiated and successfully completed. In addition, customer base reporting and segmentation was enhanced to a level which allowed CYBAEA’s “Insights Driven Campaign Creation” technique to be deployed. This method uses data mining and visualisation techniques to stimulate ideas for innovative revenue generating campaigns for the organisation. Campaigns for usage stimulation were rapidly identified and tested, and several of these are now in production generating significant profits.

“As well as shaping our Customer Value Management organisation, we were impressed by the way that the team instituted new revenue generating disciplines and individually developed the key skills of our staff,” says Tony Nolan, Senior Director, Commercial Strategy & Development.

CYBAEA’s experience of Customer Value Management in previous organizations had indicated that significant opportunities for cost savings and incremental revenue generation lay in improving the efficiency of the retention processes. An assessment within Vodafone Romania revealed an innovative opportunity to enhance the contractual process for retention resulting in both increased customer satisfaction and rates of retention whilst reducing operational costs.

“In a single initiative designed to improve our retention processes, the team generated annual savings which were an order of magnitude greater than their fees for the whole assignment,” stated Liliana Solomon, Chief Executive of Vodafone Romania.

Key business benefits from the new organization include:

• Insights Driven Campaign Creation (IDCC): allowing new revenue streams to be identified through mining of customer base data.
• Retention Process Improvement: leading to increased retention rates, improved customer satisfaction and cost reduction.
• Campaign Process Improvement: leading to improved campaign selection, performance assessment and profitability reporting.

The organization delivered multimillion euro new revenues in the first year and multimillion euro cost savings.

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Vodafone Netherlands, the Dutch mobile phone operator, was suffering from a fragmented approach to understanding and managing its customer base. As the Dutch market moved from an acquisition to retention focus they identified that significant incremental revenue opportunities could be realised by adopting a customer management approach centred around fact based decisioning and focused direct customer contact. Vodafone rapidly recognised that for the delivery of the required marketing, analytic and reporting capabilities it would need external expertise.

CYBAEA was retained to fulfil five main roles;

1. Organization design to set-up, staff, and run the Customer Value Management organization on an interim basis until the permanent CVM Director was hired.
2. Change management of the entire implementation of the capabilities and the smooth transitioning of the business.
3. Design CVM capabilities to industry best practice, including Reporting, Analytics, Outbound Marketing, and Inbound Marketing.
4. Interim management to run the Insights and Reporting part of the organization while recruiting staff and establishing the processes and commercial deliverables.
5. Deliver key complex elements of the capabilities which would rapidly make a material difference to Vodafone’s performance, including new KPIs across the company and advanced analytical models for rapid commercial success.

The proven methodology for marketing capabilities from CYBAEA clearly defines the work required across strategic, organizational, process, technical and data domains to develop a cohesive project plan and produce a predictable high quality result. The methodology, also known as the “Box Model”, was used as the cornerstone of the programme’s design and delivery – facilitating the co-ordination of the multiple parties required; vendors, solutions integrators, outsourcers, and local and international Vodafone resources.

“We selected them for their unique combination of mobile telecommunications experience, advanced marketing skills, and reputation for the highest quality delivery”, says Graeme Millar, Director of Consumer Business at Vodafone Netherlands, about the team from CYBAEA. “We weren’t disappointed on any count.”

The overall programme, with a multimillion euro budget and a timescale of 15 months was delivered to time and budget.

A foundation task in the proprietary delivery methodology from CYBAEA is the development of a business case for each capability element to ensure true value for money. These business cases are tracked against actuals during both implementation and operating phases through Customer Value Management Profit and Loss reporting. Vodafone Netherlands is meeting or exceeding performance targets across its CVM function and has been recognised as best practice by Vodafone Group, being used as a model for other operators and a pilot for new techniques.

“Base Management is now making a significant contribution to the business performance of Vodafone Netherlands”, says Martin Dixon-Tyrer, Director of Consumer Base Management at Vodafone Netherlands. “Thanks to the team’s vision, design and implementation skills we have deployed a very significant revenue generating programme with the minimum of pain.”

The organization generated €90 million incremental revenues in the first year alone while supporting over 3 million customers, and it provides insights and for fact-based decisioning across the entire company.

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Vodafone UK, a member of the world’s largest mobile community, wanted to ensure that every contact with a customer was treated as an opportunity to make an appropriate and relevant offer to them. However, on the assisted channels (call centre and retail stores), Vodafone UK was relying on the quick thinking of the agents to identify cross- and up-sell opportunities. This was simply not sustainable given the increasing complexity of the product portfolio and a customer’s individual situation at any point in time.

CYBAEA demonstrated how Real Time Marketing could identify the optimum service offering for an individual customer at any point in time by combining the current customer data with dynamic offers and offer rules, and were subsequently retained to define, design and programme-manage a pilot on the Vodafone UK consumer base, operating through both Call Centres and Retail Stores.

How was this done? The solution prompts the agent in real-time with the best offers for the customer, based on a combination of probability of take-up, value to the customer, and value to the organization. The offers are accompanied by scripts detailing the content of the offer and the rationale for mentioning it. The Real Time Marketing Pilot was developed to support 1,000 simultaneous users and achieved 10 recommendations per second.

With take-up rates of over 30% and high customer satisfaction with receiving the offers, the Real Time Marketing solution is markedly different from the traditional outbound marketing approach.

“Outbound marketing will not go away but it clearly faces challenges in the form of customer fatigue and increasing regulation,” explains Martin Dixon-Tyrer, Director of Customer Relationship Marketing at Vodafone UK. “The Real-Time Marketing solution gives us a different way of getting our message across to our customers in a way that benefits both them and us. We have seen phenomenal results already, and the Real Time Marketing Pilot has clearly demonstrated the huge potential for selling through the service channels.”

“Real time marketing is critical to sustaining Vodafone’s leadership position in the UK market,” says Dixon-Tyrer. “It is by treating each customer contact as an opportunity to deliberately engage with the customer in a meaningful dialogue that we are able to build true relationships and lasting customer loyalty.”

A meaningful dialogue is one that is relevant to the individual customer and to the customer’s current situation. The Real Time Marketing solution is able to take into account a comprehensive profile of the customer in order to present to the customer service agents or retail store advisors a short list of highly relevant offers to the customer in front of them.

“We find that both our customers and our staff greatly appreciate the Real Time Marketing solution,” comments Dixon-Tyrer. “Customers feel uniquely valued because the interaction is not simply a hard sell but an informed discussion about them and their situation. This in turn inspires our staff to use the system.”

The agents and advisors remain in control throughout the interaction, but the system ensures that the time is spent on activities that are relevant to both the business and the customer, and it provides structure and guidance for the interaction. The cross-sell offers covers multiple products as well as offers for retention, customer survey, and data validation.

“The Real Time Marketing solution delivers impressive results,” says Dixon-Tyrer, “clearly demonstrating the potential for increased sales and satisfaction through service channels.”

“CYBAEA were instrumental in helping us to achieve this success,” adds Dixon-Tyrer. “We would not be this far today without them.”

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Morse, the pan-European technology integrator, wanted to grow those of its customers who did not have a dedicated field sales manager by providing a high-quality of service and building an intimate customer relationship while keeping costs firmly under control. Primarily using the telephone and email for contacts, it was important to provide a single point of contact for each customer transaction and a true “one-and-done” experience. Furthermore, Morse wanted to provide a single point of customer contact for marketing activities to act both as outbound execution engine and as the inbound contact handling organization.

The project demonstrated how this could be achieved by implementing a single organizational unit across all Morse products and services. This represented a new approach for a company that has traditionally been structured in divisions aligned with a single vendor. However, it was seen as essential in order to truly build a customer-centric relationship, grow the customers to higher spending segments, and to keep the cost of sales low.

CYBAEA was engaged to implement the solution based on its proven delivery methodology and deep understanding of relationship marketing. The new organization providing for relationship marketing and sales across multiple channels was built and operational in five weeks.

“We could not have delivered this change programme in five weeks without the support,” says Douglas Myhill, implementation manager at Morse, about CYBAEA.

“Their methodology is robust and produces results on time, and the experience of the team was invaluable in ensuring the completeness of the solution.

The cost of the operation was kept firmly under control by focusing on providing service through telephone and email. However, customer satisfaction is paramount, and the organization includes dedicated field sales managers as an escalation point for complex sales. With a clear focus on and responsibility for developing the customer relationship across all products and services, the team is able to increase the immediate revenues and develop the accounts to higher spending segments. Deep integration with marketing provides a single execution engine, enabling lower costs, ensuring a consistent message, and preventing campaign duplication.

The organization is an aspirational place to work within Morse, both in its own right with a £15 million target in its first year, and as a training ground for sales people wanting to take on bigger individual targets and field responsibilities.

“This organization is a key element for us as we develop Morse,” says Keith Taylor, Managing Director of Morse T&I. “Not only does it provide significant revenues in it own right, but it is a clear model for developing and growing accounts. It provides focus for our growth plans and a model we want to extend across the business.”

The benefits from the new organization include:

• Reduced cost of sale: a focus on direct sales with streamlined processes.
• Increased revenues: through relationship building and cross-product focus, the organization is able to increase immediate revenues.
• Account development: with a clear focus and explicit targets, accounts are developed to higher-spending segments.
• Streamlined and consistent marketing: a single point for executing marketing campaigns means lower costs, consistent messages, and no campaign duplications.
• Employee development: an aspirational place to work and a training ground in sales and relationship building.

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