CRM AT CAPITAL ONE (UK): CASE STUDY

Introduction:
Capital One is a US based financial corporation founded in November 1994.
In 1998 Capital One opened its first overseas service at Nottingham, UK.
Within a span of 6 years of its inception, its stock price increased by 1000
percent with an average annual growth of 40 percent.
Success behind such a phenomenal growth is through the vision of its leader
Richard Fairbank and Nigel Forris.
Vision that transcends myopia: To develop a information-based
company rather than a financial company.
Core strategy: To tailor their service and product as per individual
customer requirement so that the right product (credit card) can be
provided to customers at right time and right price. Such an offer was a
unique proposition in a market which lacked customisation and one to
one marketing.
Marketing &
Analysis
Segmentation
Proposal

Testing
Analysing data

KEY DIVISION
Operations
Information
Human Resources
Technology
Processing
Supports Business Managing
Customer
issues and decision
associate
through application
Relations
selection
Sales
Supporting and
& software
Collections
engineering
developing
culture

Drivers of success:
CRM is viewed as a key strategic process in Capital One. Capital One show
cased that CRM can be translated into strategy, organizational design, hiring,
marketing processes, and IT infrastructure of a company .Different depts.
work in an integrated fashion towards understanding and satisfying
customer.

Intensive Primary research:

Pre purchase: Information based strategy (IBS) facilitated collecting
information and utilising it to understand customers need and risk
profile for tailoring the offering.
Post Purchase:
It facilitates to reactivate dormant customer
through customised benefits or incentives design. This provide base
to frame retention strategies.
Proper Segmentation:
Clearly categorised each customer under Low Risk Transactor or
High Risk Revolver groups.
Targeting all types of risk profiles and offering different prices and
products.

CRM CASE STUDY

(UEMF15027)

EMBA 2015-2016

SOHAM PRADHAN

Beta testing: Full proofing the offer before launch by test running it on
36000 -40000 odd customer. This further helps in fine tuning the offer
for better acceptability (Test and Learn).
Aggressive pricing: Offered lowered interest rate, low fees and lowcost balance transfer deals.
Effective upward communication: Inputs from front end associates
are given due importance in crafting strategy for customers.
Efficient Associate Man-power management: Providing training to
associates (not linked to customer interface) inorder to handle customer
during peak time (flexibility). This negates the inefficiencies during
exigencies.
Assuring associate satisfaction: It is done through weekly review and
feedback, rewards recognition and highlight for good performance,
personal development action plan (DAP) coaching and mentoring. This
instils motivation and sense of responsibility.
IT enabling cohesion: In house IT provision provided the competitive
edge for quick customisation and sustain data secrecy. It is an enabling
departments to improve their efficiencies like
Maintaining real time data of each customer so that each employee
can deal with customer at any time without any repeat propositions.
Provide immediate statistics of customer transaction for facilitating
cross selling or re-structuring the offer without wasting time. (Known
as SALSA system).
Automated decision algorithms has helped in making quick and
decision and alarming future fraud probability.
Capital One as Adviser during adversities: A fraudulent customer is
also treated with sensitivity. It analyses the root cause and support
through revised terms, patching them with recruiting agency etc.

Potential Threats:

Individual based customisation is a hurdle for revenue forecasting and

sustenance.
Entering new markets will be time taking as most of the activities selfdriven and developing same type of infrastructure for each market will
not be economically viable.
With increasing consumer base, also demands for higher capital
investments in IT in managing the data. This will affect the profitability in
the risk driven market.
Customer may get confused if somebody starts comparing offering with
other customers. A feeling of differentiation may arise which may lead to
distraction.

Recommendations:

CRM CASE STUDY

(UEMF15027)

EMBA 2015-2016

SOHAM PRADHAN

 Should try to avoid customisation for low profitable customer, otherwise

it leads to over expenditure on manpower and technology cost in
handling such customers.
Must outsource few of the activities related to fraudulent customers
which consumes more time with least return.
Should to look for new avenues for attracting customers other than just
revising plans, incentives and rewards.
Must refrain from regular mailings about new products which usually
leads to customer irritation.
Should look for a set of standardised products that will be applicable to a
cluster, which indeed could reduce their transaction cost. Attending all
may not be sustainable.

CRM CASE STUDY

(UEMF15027)

EMBA 2015-2016

SOHAM PRADHAN