CRM and Data Warehousing Strategy at First American Corporation

Introduction

The transformation of First American Corporation (FAC) from a $60M loss in 1990 to $211M in profit in 1998 can be attributed to the greater levels of effort and high priority placed on putting the customer and their needs at the center of the business. The many investments in Customer Relationship Management (CRM) systems, analytics platforms, and the integration of marketing, sales, and financial reporting systems — which combined to form the VISION data warehouse — are pivotal to the ongoing efforts at attaining profitability and performance. As FAC has been able to achieve significant results using the Tailored Client Solutions (TCS) strategy, the most critical success factors of this framework can all be attributed to how they unified customer experiences across all segments First American serves.

The initial results have been impressive, yet there is much more work to be done in order to gain even greater profitability and customer loyalty. The intent of this assessment is to illustrate how FAC can continually gain greater market share while increasing customer loyalty and profitability in the process. The formidable investment in analytics, business intelligence (BI), and CRM systems is paying off, yet there are additional initiatives FAC can take to further grow beyond its current constraints and become a dominant force in the industry.

How CRM Can Transform First American Corporation

The Tailored Client Solutions (TCS) strategy — which includes client information, flexible product lines that can be customized to customers' specific needs, support for distribution management, and consistent service — is also proving to be a scalable, highly effective platform for serving the three dominant customer segments. What needs to be included is more of a focus on how to transform these customer experiences into a foundation of ongoing trust. With the series of insights and recommendations gained from this analysis, FAC will be able to become a trusted advisor to its most valuable clients while also using the pervasive analytical platform to better understand their needs, preferences, wants, and requirements. All of these efforts are unified by deliberately choosing to deliver a superior customer experience on every interaction.

Prior to the development of the Tailored Client Solutions (TCS) strategy, FAC's direction was leading the company toward a fragmented strategy that would have eventually alienated its best customers and led to lower levels of satisfaction over the long term. With the many analytics, Business Intelligence (BI), CRM, distribution management, and integration software and IT infrastructure investments the company has made, results are improving because the necessary data now exists to unify strategies. One of the most critical best practices of any CRM strategy is to create a unified, 360-degree view of the customer (Chan, 2005). FAC has begun to see the benefits of its IT and process investments in this direction. Troubling, however, are the many problems and issues that remain after these extensive projects. One of the most significant continues to be the lack of focus on change management in general, with a few departments experiencing 100% turnover and many others experiencing rates between 25 and 30%. This is symptomatic of a deficient change management process that needs to be addressed. The lack of focus on change management programs in the context of a CRM system project can seriously reduce its overall effectiveness and lead to substantially lower levels of performance over the long term (Fay & Zahay, 2005). Change management programs are clearly needed to better align the expectations and experience of the direct and indirect users of the CRM systems, and must receive greater attention in the existing series of internal initiatives if long-term success is to be achieved.

FAC has also made significant strides in defining the metrics and Key Performance Indicators (KPIs) needed to understand the composition of each customer segment, gaining insights into lifetime customer value, the relative levels of profitability by distribution channel, and greater precision in defining the unique value propositions for each customer segment. With such a wealth of customer data, there is significantly more the company can do. Skilled in conjoint analysis and advanced forms of analytics, FAC can quickly gain insights into how prospective customers trade off one financial institution for another (Stone & Mason, 2000). The company currently has little understanding of the relative price elasticity of its services relative to competitors, let alone substitutes in the market. These are considerations that need to be taken into account given the massive amount of data available. Also concerning is the lack of planning around CRM innovations including smartphones, tablets, and other mobile devices — all critical aspects of the company's future direction that are not being monitored today.

Furthermore, the distribution management system, which is extremely adept at defining channel optimization and sensing new revenue opportunities, must over time be modified to reflect the new, innovative approaches customers are relying on to gain greater access to information. Nothing stands still in a customer relationship, which is why constant vigilance toward emerging trends is so critical (Dver, 2003). An aspect of this that FAC's management teams have not taken into account is the role of social media platforms and their highly disruptive potential effects on customer loyalty and overall CRM strategy performance. The rise of social media has created a more level playing field in which customers are in charge, compelling companies to drastically redefine their strategies and unique value propositions to stay in step (Bernoff & Li, 2008). Web 2.0 technologies and their effects on organizations — driven by the increased voice of customers — are predicated on a more egalitarian understanding of how channels are used in business, especially social ones (O'Reilly, 2006).

These changes taken together will serve as catalysts for completely rewiring the processes and performance approaches all companies rely on, with specific focus on core processes through business process management (BPM) and business process re-engineering (BPR) to unify diverse company segments around a common goal (Power, 2009). It is this aspect of unifying the company's overall architecture and structure toward a common goal that is changing its culture for the better, making it more customer-centric. One of the most critical takeaways from monitoring the social media impacts on the banking and finance industries is the inevitable shift in channels that customers rely on to gain useful insights and intelligence (Bernoff & Li, 2008). By continually scanning these nascent and emerging trends, it is possible to gain a competitive advantage quickly, integrating core concepts into the overall design of next-generation CRM systems. The study of the integration of social media and CRM — or Social CRM — is predicated on getting a very clear sense of the voice of the customer and embedding it into the overall strategic focus of the enterprise (Bernoff & Li, 2008). In order to set the stage for future growth, FAC will need to begin investing in these emerging technologies now while also planning for their integration into its significant data warehousing investments, including the VISION platform.