Increasing Loyalty via Targeted Loyalty Efforts
Case Study Deutsche Bahn
Siebel User Week, Barcelona 2005
Dr. Robert Bongaerts, Partner, exeo Strategic Consulting
Siebel User Week 2005 1 AGENDA
The prevailing situation at Deutsche Bahn AG – a major mobility provider
CRM at Deutsche Bahn
Customer Status Programme bahn.comfort
Transformation Status Programme towards a Loyalty Programme
Siebel User Week 2005 2 Deutsche Bahn conveys more than 4.7 million passengers per day on about 31,000 trains per day
Introducing the Passenger Traffic Division at Deutsche Bahn AG:
Passenger Traffic Division Turnover ~10 billion¤ No. of staff ~83,000 Stations/stops ~6,000 Locomotives ~2,700 MUs and coaches ~19,500
DB Fernverkehr AG DB Regio AG Passengers/day 0.4 million 4.3 million Passengers/year 150 million 1,500 million Trains/day 1,500 30,000 No. of staff ~ 30,300 ~ 52,800 Annual turnover 2.7 billion ¤ 7.5 billion ¤ Source: Dates and Facts Deutsche Bahn
Siebel User Week 2005 3 Deutsche Bahn retains their most valuable customers with Mobility offering and through a value partnership
Roadmap „DB MobilityCard“*) • DB as the Mobility Provider Functionality • Start Value-Partnership • Elektronic tickets on Cards, Cell • Pilot Cellphone-Ticketing Phones, etc.... Payment • Billing (Creditcard)
• BC 100 with • Mobility BC City-Ticket, Soccer Carsharing World Cup 2006 Mobility • BC Corporate • bahn.comfort • ... Card
• BC 25/ 50 Bonus- Loyalty and Programme • BC 100 with Discount • BC 25/ 50 City-Ticket (BahnCard) Offering time today2005 2006 2007 2008 2009 2010 ” In the future, additional features such as the ability to pay for tickets and other travel expenses will be added to the Bahn.card, turning it into a “DB MobilityCard” Source: K.KS, 01/ 2005
Siebel User Week 2005 4 AGENDA
The prevailing situation at Deutsche Bahn AG – a major mobility provider
CRM at Deutsche Bahn
Customer Status Programme bahn.comfort
Transformation from a Status Programme into a Loyalty Programme
Siebel User Week 2005 5 Current and future market make a CRM initiative for Bahn imperative
CustomerCustomer Concentration of travels: 19% of customers are responsible for 52% Potential competition on of the long distance travel (ICE and tracks IC) Loyalty initiatives from Potential for Bahn is about 90 third parties : great amount million trips of cards; increase in multi- partner programmes Customer value varies „Competition significantly (e.g. BahnCard 100 generally forces Car driver as potential new vs. Low-User) companies to do wins CRM; is this also correct for Deutsche Bahn?“ BahnBahn CompetitionCompetition
Today: Future: CRMCRM Retain existing and profitable customers Win new customers GoalsGoals Optimize efforts Proactively defend against competition
Siebel User Week 2005 6 The “House of CRM“ is a systematic approach of Bahn to address customer relations
AA Bahn Strategy Strategy CRM guidelines
BB Transaction-Transaction- Relationship-Relationship- managementmanagement managementmanagement Customer Instru- IntegratedIntegrated Customer Customer Intelligence LoyaltyLoyalty ProgrammeProgramme ments ContactContact Handling Handling
ClaimClaim ManagementManagement DirectDirect Marketing Marketing
CC Base DatabaseDatabase ManagementManagement // DataData WarehouseWarehouse (IT)(IT) Require- ments OrganisationOrganisation
Source: exeo Strategic Consulting AG
Siebel User Week 2005 7 bahn.comfort is the starting point of customer value oriented relationship marketing at Bahn Base: Customer Value-Pyramide of CRM-Strategie at passenger rail
Amount 11 Amount IndividualsIndividuals 11 SegmentationSegmentation [Mio.[Mio. TripsTrips -- oneway] oneway]
ca. 5 Mio. ca. 150.000 Primary Target bahn.comfort Group
JahresCard Cardholder Secondary Target Group ca. 55 Mio. BahnCard Customer ca. 3 Mio.
Annonymous DB ca. 55 Mio. customer with low travel ca. 13 Mio. Tertiary Target frequency and value; no Group willingness to buy a BahnCard right now total: 115 Mio. total: ca. 16,3 Mio.
1) Quelle: P.VMB/CRM-System, Mobility 2003
Siebel User Week 2005 8 AGENDA
The prevailing situation at Deutsche Bahn AG – a major mobility provider
CRM at Deutsche Bahn
Customer Status Programme bahn.comfort
Transformation from a Status Programme into a Loyalty Programme
Siebel User Week 2005 9 bahn.comfort has 3 main business goals
1 2 3 Superior customer support (without additional discounting) aims Revenue protection and for customer loyalty for the most profitable customer base extension A significant amount of additional trips that could be sold can be identified also in the top customer segment
The customer segmentation of the new price system Supporting new price proves the customer desire for comfort with minor price system sensitivity.
Tracking travel, revenue and personal preferences in the Getting marketing collection process allows DB to establish a targeted and efficient information database,… thus enabling campaign information management optimization
Siebel User Week 2005 10 Exclusive Services of bahn.comfort
Extra Reservation - bahn .comfort Exclusive seats Lounge Possibility parking reservation
Offer of reservation Seats are marked as Free entrance for Reservation offer for capacity exclusively for top especially marked customer follows: for bahn.comfort bahn.comfort-customer customers - on request +1 accompaning person parking area
Services at Services at online- Partner Hotels Partner Car Rentals Portal Extra Counter
Free offer newspaper, Business Serv.; Upgra- With offers exclusively bottle of water, fruit plate; de + navigation system for bahn.comfort- at main stations Upgrade upon availability upon availability customers
Siebel User Week 2005 11 Measuring the success of the customer loyalty programme
Measures Description
Quantative Profitability , sum of Measures Benefits (more travel, more Challenges of Measuring BahnCard revenue, Churn retention, cost reduction e.g. sales Selection of relevant channel controlling, market research) measures Cost (IT, Communication, service Restricted assignment of provisioning, Personal, Controlling) cost- and efficiency-effects # of Programme members Period under consideration Activity of Programme members Data availability: - Programme internal data Qualitative Image/Customer Satisfaction - company internal data Measures of the Programme (attractiveness, - market research data (e.g. usefulness) customer satisfaction measure) loyalty Programme might have effects on other areas of the company
Siebel User Week 2005 12 Results bahn.comfort (1): Constant high # of members indicates high programme attractiveness
4,0 100% bln. BahnCard-Customers 3,5 3,1 80% • 150.000 qualified 3,0 BahnCard total bahn.comfort 2,5 60% customers 2,0 Earn-Quota 43% • Increase in qualified 40% 1,5 bahn.comfort 1,0 bahn.comfort-Members (collectors) 1,4 customers 20% 0,5 • Although points are 0 0% valid 1 year only and point expiration has k Qualified bahn.comfort-customers 154 already started, 150 134 accrual activity is still 109 going strong (ca. 45K 100 99 100 accruals per day)
50
Jan F eb M rz A p r M ai Ju n Jul A ug S e p O k t N o v D ez Jan F eb M rz A pr M a i Ju n Jul A u g S e p O k t N ov D e z Ja n F e b 03 0 3 0 3 03 0 3 0 3 0 3 0 3 03 03 0 3 0 3 0 4 0 4 04 04 04 0 4 04 04 04 0 4 0 4 04 0 5 05
Siebel User Week 2005 13 Results bahn.comfort (2): bahn.comfort is a step towards an improved customer orientation and image for Deutsche Bahn
bahn.comfort is a right step towards more customer orientation of DB [%, Top 2-Boxes] 60 bahn.comfort leads to better 53,0 54,0 ranking of DB with regard to 47,0 50 customer orientation and image 39,0 39,0 40 32,0 An increase in both measures of 30 roughly 10% was achieved 2003 20 bahn.comfort- Customers not All BahnCard- 2004 customers qualified customers Customer perception towards DB bahn.comfort enhances DB‘s Image especially increased within non- [%, Top 2 - Boxes] qualified bahn.comfort customers 45 43,0 39,0 40 38,0 34,0 As expected, qualified 35 bahn.comfort customers rank the 30,0 30 programme higher than non- 26,0 qualified customers 25 Source: 20 Research bahn.comfort- Customers not All BahnCard- International customers qualified customers
Source: CRM-System
Siebel User Week 2005 14 Results bahn.comfort (3): bahn.comfort incents increased travel and the re-purchase of the BahnCard
Is bahn.comfort an incentive for more travel with DB? [bahn.comfort customers only, %, Top 2-Boxes]
50 bahn.comfort leads to higher 40 profitability through…. 30 22,0 23,0 20 Readiness for more travel with ca. 10 23% of qualified bahn.comfort customers 0 2003 2004 Readiness to re-purchase BahnCard or non-cancellation of Is bahn.comfort an incentive to re-purchase BahnCard? BahnCard with ca. 30% of [bahn.comfort customers only, %, Top 2 - Boxes] qualified bahn.comfort customers
50 Reassurance of 2003 numbers 40 30,0 30,0 through second wave of market 30 research in 2004 20
Source: 10 Research International 0 2003 2004 Source: CRM-System
Siebel User Week 2005 15 Results bahn.comfort (4): on average, every 5th bahn.comfort customer submits a service request each month
Service Requests* of bahn.comfort- customers (per month) • On average, every Amount customer has 0,21 service 0,25 requests per month 0,24 0,23 • Though there is an increase 0,22 0,21 for approx. 50% of 0,20 customers 0,19 0,18 • Bahn.comfort fits to the 0,17 0,16 needs of customers – they 0,15 ask for help Jan Feb Mrz Apr Mai Jun Jul Aug Sep Okt Nov Dez Jan Feb 04 04 04 04 04 04 04 04 04 04 04 04 05 05
* Calls (inbound), outbound calls, correspondends, without complaints
Siebel User Week 2005 16 Results bahn.comfort (5): the reason for those positive results is that BC does an excellent job of satisfying its target group‘s needs
Satisfaction with service offerings [only bahn.comfort customers, %] Almost two thirds of qualified bahn.comfort customers are satisfied with current service offerings (the two left columns) 75 56 Singular services are even ranked 50 better 29 Recognizing customer 25 requirements is a key success 5 5 factor 1 0 0 completely just about completely satisfied unsatisfied satisfied satisfied very unsatisfied unsatisfied
Source: Research International
Siebel User Week 2005 17 Results bahn.comfort (6): Schematic presentation of project success/profitability
Project success bahn.comfort
Ausgaben Einnahmenzuwachs Gesamteffekt Positive effects surpass programme costs More travel Customer retention effect: more BC Behaviour guidance: shift to more cost effective channels Internet and NTA Savings in market research costs through
Customer IT/Betrieb Kommuni- Personal Mehrver- BahnCard Einsparung Einsparung targeted address Service sführung kationsmit- kehr - Vertriebs- Mafo- selection and direct (Call- (Anteilige tel Mehrsatz kanalsteu- Kosten center) Kosten (Welcome erung analysis within CRM CRM- Package, (Incenti- System) Punkte- vierung system übersicht) NTA, bahn.de)
Source: P.VMB
Siebel User Week 2005 18 AGENDA
The prevailing situation at Deutsche Bahn AG – a major mobility provider
CRM at Deutsche Bahn
Customer Status Programme bahn.comfort
Transformation from a Status Programme into a Loyalty Programme
Siebel User Week 2005 19 Introduction of a bonus component is the next logical step for bahn.comfort
ImpactImpact ofof bonus-componentbonus-component within within single single DetailedDetailed impact impact customercustomer segmentssegments based based on on thethe „CRM„CRM Pyramid“ Pyramid“
Reduction in fluctuation: 11 bahn.comfort Qualified and non-qualified accrual 1 comfort
. customers customers are incentivised to continue to collect points bahn Accrual bonus . 2 Customers Revenue increase: 22 bahn Bonus as an incentive for customers BahnCardcustomers BahnCardcustomers above & below the 2000 points barrier () 3 (incentive for more travel ↑↑↑; frustration
CustomerValue 4 potential ↓↓↓)
Base New accrual customers: Customers 33 This new attractive offer leads to new BahnCard
Customersw/o accrual customers and more customer data Existing BahnCard customers New BahnCard customers: 4 BahnCard customers that start collecting because of bonus 4 Bonus component influences customers‘ buying decision
Siebel User Week 2005 20 Siebel supports in Deutsche Bahn Customer retention goals
Goals Deutsche Bahn Siebel Support
11 CRM-Strategy: further implementation Medium-term IT cost reduction through CRM-Strategy consolidation of systems Use of standard software with broad functionality 22 Cost reduction: email-Marketing As little customizing as possible
Reduce costs (and increase quality at 33 Increase in quality: Easy & transparent processes (from DB- as well as from the same time) through shifting customer-view) with implementation of processes to the customer Internet: Consequently shifting processes to service-level online-monitoring SelfService Callcenter: IVR for customer self-identification by entering the BahnCard-number 44 IT-Architecture: Implementation of a unified, future-proof system landscape in Use of OCR technology CRM: cost effective, flexible, expandable, Market Leader in CRM software scalable, vendor-independent Siebel already in use @ DB 55 Migration: risk-free migration to new existing Know how architecture Users know the product
Siebel User Week 2005 21 „Die Bahn macht mobil“
„we rail the people towards mobilty“
Deutsche Bahn AG, Lennéstr. 5, 10785 Berlin exeo AG, Wittelsbacherring 24, 53115 Bonn Marc Fleischhauer Dr. Robert Bongaerts, mailto: [email protected] mailto: [email protected]
Siebel User Week 2005 22