Raiffeisen BANK Bosnia and Herzegovina takes an interest in targeted marketing

Tailoring marketing offers to individual customers

Published on 30-Aug-2013

Customer:
Raiffeisen BANK Bosnia and Herzegovina

Industry:
Banking

Deployment country:
Bosnia and Herzegovina

Solution:
BA - Business Analytics, Business Performance Transformation, Business Resiliency, Empowering People, Enabling Business Flexibility, BA - Predictive Analytics, Small & Medium Business, Smarter Marketing

IBM Business Partner:
Valicon

Overview

Raiffeisen BANK Bosnia and Herzegovina is a subsidiary of Raiffeisen Bank International AG (RBI), which is a leading universal bank in Central and Eastern Europe (CEE) and one of the foremost providers of corporate and investment banking services in Austria.

Business need:
To gain maximum value from its marketing budget, Raiffeisen BANK Bosnia and Herzegovina wanted to boost direct mail campaign response rates. But how could it match the right offers to the right customers?

Solution:
Raiffeisen BANK Bosnia and Herzegovina has used IBM® SPSS® Modeler to create predictive models that analyze the likelihood of individual customers responding to specific offers.

Results:
Reduces the average cost per direct mailing campaign by a factor of six and enhances prediction accuracy by 20 percent.

Benefits:
Contributes to better customer retention and profitability rates.

Case Study

Raiffeisen BANK Bosnia and Herzegovina is a subsidiary of Raiffeisen Bank International AG (RBI), which is a leading universal bank in Central and Eastern Europe (CEE) and one of the foremost providers of corporate and investment banking services in Austria.

Leading the way
Taking on a pioneering role in Bosnia and Herzegovina’s banking industry, Raiffeisen BANK was one of the first banks to sign a deposit insurance agreement. When payment services were transferred from the government-run Payment Transactions Authority to commercial banks, it successfully made the transition and was the most active bank during the introduction of the Euro. The bank was also a leader in launching payment cards, online banking services and SME programs in the region, and the first to negotiate and place foreign lines of credit (from the IFC, DEG and KfW) within the country. In addition, it was the first bank to operate in both entities of Bosnia and Herzegovina.

Numerous national and international awards testify to the success of Raiffeisen BANK Bosnia and Herzegovina. They include the titles: “Best bank in Bosnia and Herzegovina” from both Euromoney and EMEA Finance; “Bank of the year” from The Banker; and the national awards “Zlatni BAM” and “Kristalna prizma”.

In addition to Raiffeisen BANK Bosnia and Herzegovina, the Raiffeisen Group is represented in Bosnia and Herzegovina by Raiffeisen INVEST, Raiffeisen LEASING, Raiffeisen CAPITAL and Raiffeisen Special Assets Company.

Staying ahead of the competition
Raiffeisen BANK Bosnia and Herzegovina retains its competitive edge in the market through a range of factors. It continually invests in new technologies and an experienced and highly trained workforce that undergoes regular professional training. The bank also focuses on taking an individual approach to each customer, and introducing new distribution channels and innovative products and services.

The bank undertakes direct mailing campaigns on a regular, scheduled basis throughout the year. Previously, Raiffeisen BANK Bosnia and Herzegovina relied on basic operational data to develop mailings targeted at selected customer segments to support different campaigns.

Over time, Raiffeisen BANK Bosnia and Herzegovina began to expect more from its direct mailing campaigns. As a result, the bank set out a business goal to increase response rates and make better use of customer contacts by offering the right services to fit the right customers. By combining, preparing and analyzing data from numerous sources with predictive models, the bank realized it could achieve better results.

Choosing IBM SPSS software
To enable it to deliver more timely and effective marketing offers that could be customized to suit different customers, the bank chose to deploy IBM SPSS Modeler software.

Raiffeisen BANK Bosnia and Herzegovina embarked on a trial campaign to test this new solution, and decided to focus on direct mail campaigns that offer credit cards to customers. Because of strict business rules, the bank can only use a very specific subset of its customer contacts for credit card offers. To prevent over-use of this valuable source of customer contacts, the bank wanted to minimize the number of customers to whom credit cards were offered, but ensure it gained an equal or greater level of response than before.

The bank set out to optimize its credit card direct mailings by analyzing a range of customer data, including information from various sources on past purchasing behavior, demographics, channel activity, product holdings and more. Using IBM SPSS Modeler software, analysts in Raiffeisen BANK Bosnia and Herzegovina were able to combine different kinds of data from several locations and in various formats. These analysts were impressed with the ease of use of the solution, because it eliminated the need to write long, complex SQL queries in order to extract and prepare the data for thorough analysis.

As a next step, IBM SPSS Modeler software was used to create predictive models to study the likelihood of each customer responding to a direct mail offer. Different algorithms including CHAID decision trees, discriminant analysis and neural networks were used in order to find the most accurate predictive model.

The final stage of the project involved selecting a set of customer contacts and then applying personalized activity rules to each of them depending on their characteristics. The outcome of each model was combined with the actual results of the marketing campaign to improve the current model for future campaigns.

Throughout the phases of the project, Raiffeisen BANK Bosnia and Herzegovina tackled a range of challenges. One key challenge was to teach its analysts how best to use SPSS Modeler for applied business and predictive analysis. This was achieved by working through a real case with the analysts – from making the right initial decisions about data sources, data quality and purpose, through to achieving the final goal of gaining practical insight into customer data.

Enjoying the benefits
The final outcome of the trial campaign showed that the average cost of a campaign could be reduced by a factor of six with SPSS Modeler, while the accuracy of prediction could be enhanced by up to 20 percent compared to past campaigns.

As a result, the steps taken in the trial will be put into practice to help optimize marketing processes and improve results for future campaigns. By promoting a better understanding of customers and their needs and preferences, the SPSS Modeler solution is expected to increase customer retention, profitability, satisfaction and loyalty, as well as reducing the cost of sales for Raiffeisen BANK Bosnia and Herzegovina.

About Valicon
Valicon is a rapidly growing marketing consulting and research company, with a focus on south-eastern Europe. With more than ten years’ experience in market research, Valicon offers ad hoc research, consulting services, business analytics and syndicated research and data collection. It is also an authorized IBM Advanced Business Partner for IBM Business Analytics solutions.

To learn more about products, services and solutions from Valicon, please visit www.valicon.net

About IBM Business Analytics
IBM Business Analytics software delivers data-driven insights that help organizations work smarter and outperform their peers. This comprehensive portfolio includes solutions for business intelligence, predictive analytics and decision management, performance management, and risk management.

Business Analytics solutions enable companies to identify and visualize trends and patterns in areas, such as customer analytics, that can have a profound effect on business performance. They can compare scenarios, anticipate potential threats and opportunities, better plan, budget and forecast resources, balance risks against expected returns and work to meet regulatory requirements. By making analytics widely available, organizations can align tactical and strategic decision-making to achieve business goals.

For more information
For further information please visit ibm.com/business-analytics

Products and services used

IBM products and services that were used in this case study.

Software:
SPSS Modeler

Legal Information

© Copyright IBM Corporation 2013. IBM Corporation. Software Group. Route 100. Somers, NY 10589. Produced in Bosnia and Herzegovina. August 2013. IBM, the IBM logo, ibm.com and SPSS are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at: www.ibm.com/legal/copytrade.shtml. IBM and Valicon are separate companies and each is responsible for its own products. Neither IBM nor Valicon makes any warranties, express or implied, concerning the other’s products. This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided.