Why BofA Put Its Money on Optimization


Old habits die hard.

I bet many of you know this all too well, especially those of you who are battling organizational mindsets or processes stuck in the stone age or trying hard to transition to new ones. Matt Cappio, senior vice president of marketing strategies at Bank of America, can feel your pain. He told us so during a session at this week's DMA2013 conference about how the bank is shifting its marketing focus from products to customers.

Bank of America, like so many of its competitors, is pouring a lot of effort into creating a customer-centric model. The goal is to present a holistic view of a customer, not slice him or her up as a mortgage holder in one interaction, a checking account user in another, and a savings depositor in yet a third. That customer, whether reaching out via a smartphone app, firing off a question online, dialing into a call center, or standing in a branch, needs to know the bank understands all of his or her needs, not just the one of that moment.

From marketing's perspective, the asking seems simple, Cappio said: "How do we maximize the value of customer-initiated interactions?" The answer, however, isn't that easy -- despite Bank of America's best efforts.

The Tower of Babel
(Artist: Pieter Brueghel the Elder on Wikipedia)
(Artist: Pieter Brueghel the Elder on Wikipedia)

"We've taken great strides in transforming our business model to a more customer-centric one, but old habits die hard and we still get our old product-centric vertical silos," he said. "Sprinkle in all the different channels, and we end up with what I like to call the marketing Tower of Babel."

In other words, customers are apt to hear different marketing spiels depending on the channel they're using. "This is frustrating for our reps and for our customers, who are getting mixed messages."

Of course, you can't apply the same one best answer to every customer interaction -- and that makes the challenge all the more complicated. Nothing can be considered in isolation, every option has tradeoffs, and the right answer often depends on what strategy you're applying. What's needed, Cappio said, is a deliberate decision-making framework to weigh the variables.

At the most basic level of business intelligence, you can run a standard report that tells you what needs to happen. But you can also add in more details, getting more complex and discerning, and create ad-hoc reports with even better answers. "As the spectrum continues, you get more and more sophisticated in your approach to determining the best answer," he said.

It's about optimization -- "that big, scary word that people are often intimidated by" but shouldn't be, he explained. "We, as humans, are really pretty good at optimization. We do it in everyday life," like when we decide whether we're going to drive, take the train, or hop on the bus. Each option comes with the comparative metrics of, say, speed, flexibility, comfort, cost, and constraints to consider. Not only do you have to get to work, but you have to get to work on time, for example.

The same principles apply when managing customer interactions, said Cappio, noting that Bank of America is using SAS Marketing Optimization software. "An optimization software solution generates potential courses of action. These scenarios represent different ways of quantifying and balancing tradeoffs."

The key is balancing the constraints for each channel. In making customer-interaction decisions, the marketing team might consider associate capacity as a constraint within a call center. Bank of America only licenses a certain number of service reps to sell mortgages, for example, and it wants to be sure it can roll out the red carpet for high-end customers calling in. So it needs to balance associate capacity against customer experience.

Using the optimization software allows Cappio's team to pull all sorts of levers, see the tradeoffs, and determine the best interaction possible -- and, yes, knock down that Tower of Babel.

"Ultimately, this software and the conversation and the thinking it enables gets us to a world where we're deliberate, customer-centric, and making mutually beneficial decisions," Cappio said. And yes, he added, it's a world in which all the product silos work together and the "right hand knows what the left hand is doing."

Marketing babble or cohesive story? Which do your customers hear?

Beth Schultz, Editor in Chief

Beth Schultz has more than two decades of experience as an IT writer and editor.  Most recently, she brought her expertise to bear writing thought-provoking editorial and marketing materials on a variety of technology topics for leading IT publications and industry players.  Previously, she oversaw multimedia content development, writing and editing for special feature packages at Network World. In particular, she focused on advanced IT technology and its impact on business users and in so doing became a thought leader on the revolutionary changes remaking the corporate datacenter and enterprise IT architecture. Beth has a keen ability to identify business and technology trends, developing expertise through in-depth analysis and early adopter case studies. Over the years, she has earned more than a dozen national and regional editorial excellence awards for special issues from American Business Media, American Society of Business Press Editors, Folio.net, and others.

Midmarket Companies: Bring on the Big Data

The "big" in big data is no reflection of the size of the organization embracing its potential.

Push Yourself to New Analytical Discoveries

Take inspiration from Christopher Columbus as you pursue your analytical journeys.


Re: Cohesive messages
  • 10/21/2013 9:53:04 PM
NO RATINGS

@CandidoNick ah, the irony. I recently interviewed someone who said that it really is amazing what banks get away with in impeding people from freely using their own money. He said the service is so bad that it makes airlines look good.

Re: Cohesive messages
  • 10/21/2013 9:41:31 PM
NO RATINGS

I was actually surprised when I got the letter in the mail telling me about the feature, haha. I hope you've got banklocations/ATMs galore to utilize, because you really shouldn't be charged to use your own money.

Re: Cohesive messages
  • 10/21/2013 11:24:14 AM
NO RATINGS

@CandidoNick you've had banks with better service than mine. The one I use doesn't reimburse ATM charges and even adds on its own for using other banks'.

Re: Cohesive messages
  • 10/20/2013 1:23:02 PM
NO RATINGS

From my experience with HSBC, I know that BoA doesn't play well with others. I get those service charges at ATMs reimbursed at every other big time bank, just not BoA. I'm unfamiliar with their loan policies and the like, but from this little isntance, my time with them has been lackluster.

Re: Cohesive messages
  • 10/18/2013 9:42:40 AM
NO RATINGS

SaneIT, I think that one may be hard to top. That's abysmal.

Re: Cohesive messages
  • 10/18/2013 7:17:46 AM
NO RATINGS

I'll give a quick example, I have a friend who purchased a home about 4 years ago.  With the rate drop last year they went to re-finance.  Apparently BofA bought their original loan so the refi would end up paying off BofA and would move to another bank.  Keep in mind this is about a year ago.  Last month they got notification from BofA that they were starting the foreclosure process on their home.  When my friend called to clear things up they were told that the issue would have to go to another department for review but if they wanted to stop the process they would need to start making payments again.  Poor training, poor internal communication or poor understanding of what's going on I've heard several first hand stories like this one.  

Re: Cohesive messages
  • 10/17/2013 2:05:35 PM
NO RATINGS

Hi Tom, so I take it you're a B of A customer? Do you have an example of an interaction with you as a customer that's been less than optimal?

Re: Cohesive messages
  • 10/17/2013 9:55:20 AM
NO RATINGS

I agree. BoA does a TERRIBLE job today. I wonder if these efforts will really help or if they will be used to to a "hard sell"? They have some of the worst customer service of any bank.

Re: Cohesive messages
  • 10/17/2013 8:38:12 AM
NO RATINGS

@SaneIT, this sounds to me less a problem of automation and analytics-fueled customer segmentation than poor training. Or maybe the tails we hear come from customers in low-priority buckets, frankly not worth the bank (or any other company) investing much effort in? I don't bank with BofA personally either, so have no firsthand account of how good or bad its customer interactions are. I think it's clear from what I heard Cappio say at DMA2013, though, that this is a  work in progress for the bank.

Cohesive messages
  • 10/17/2013 7:27:26 AM
NO RATINGS

While I'm all for companies delivering a consistant message I find that when this happens it typically means robotic answers and no empathy, no ability to make decisions and everything gets dragged out.  I don't know about the companies represented here but BofA for example probably doesn't need that image added to the one they already have.  I've never dealt with them but from the stories I've heard they are incredibly hard to deal with already.  Mix in that automaton method of delivering a message and people are just going to get more frustrated. 

Page 1 / 2   >   >>
INFORMATION RESOURCES
ANALYTICS IN ACTION
CARTERTOONS
VIEW ALL +
QUICK POLL
VIEW ALL +