Monthly Archives: May 2013

The Implications of the “Perpetual Campaign” of Customer Success Management

In the political world, there’s lots of talk of the “perpetual campaign”—the unceasing cycle of fundraising, speech giving, and vote soliciting. The reality is that for SaaS companies, the state of being should likewise be understood as a perpetual campaign. This is because with SaaS, every moment using the application represents a customer touchpoint that influences customer decisions—about whether to expand utilization, about whether to upgrade to a more advanced version, about whether to invest in additional services.

For this reason, it is vital that a marketing mindset and marketing capabilities be an organic part of the CSM organization. Specifically, successful CSM needs to:

  • Understand Customer Behavior. It is vital to the success of a CSM organization to understand customer behavior and attitudes. Market research into customer satisfaction, customer decision-making, propensity to recommend, and segmentation can all contribute significantly to building a CSM team that delivers measurable value to the organization.
  • Influence Customer Behavior. Core to the CSM function is influencing customer behavior towards activities that result in successful utilization of the application. To execute this successfully requires customer data analytics skills and the ability to draw conclusions, make predictions, and act to compel the desired activity—all of which should already be part of the marketing function.
  • Test and Learn. Because understanding and then influencing customer behavior is an iterative process, a systematic testing and learning approach to CSM activity is important to optimize efficiency and effectiveness. Whether pre-contract, during onboarding, over the course of ramp-up and utilization, or triggered by specific milestones or activities, the opportunities for communications to boost CLV (Customer Lifetime Value delivered through conversion, retention, up/cross-sell)—and therefore, the opportunities for testing and improving communications—are limited only by resource availability.

To distinguish itself from traditional customer service, the CSM team needs to take a proactive approach to customer communications, rather than being reactive to customer problems. As the organizational function most responsible for proactive customer communications, marketing (whether in the form of shared resources or in the form of dedicated CSM staff with marketing training) needs to be a part of the CSM effort.

U.S. Banks Maintain Commercial Lending Momentum in 1Q13

EMI analysis of recently-published financial results for 14 leading U.S. banks revealed that that strong growth in commercial and industrial (C&I) loan portfolios continued in the most recent quarter. These banks grew their C&I loan portfolios by an average of 12% y/y, which was the same growth rate as in 4Q12, and up from an 11% portfolio growth rate in 1Q12.

Strongest growth was reported by regional banks like PNC (boosted by the acquisition of RBC Bank), KeyBank, Fifth Third and Huntington, as well as Capital One. However, it is worth noting that 9 of the 14 banks reported lower C&I loan y/y growth rates in 1Q13 vs. 1Q12. The overall growth rate increased from 11% to 12% during this period, as Bank of America (which has the largest C&I loan portfolio) increased its C&I loan y/y growth from a paltry 2% in 1Q12 to a more robust 8% in 1Q13.

The bar chart below shows that gap between C&I and overall average loan portfolio growth rates, with 12 of the 14 banks reporting higher C&I loan growth. The bank with the largest gap was Chase, which grew average commercial banking loans by 13.7% y/y, while its overall loan portfolio only grew by 1.3%. The two exceptions were Capital One (whose non-C&I growth was boosted by some recent acquisitions) and BB&T. In fact, three banks (Regions, SunTrust and Bank of America) reported declines in their total loan portfolios between 1Q12 and 1Q13, even though C&I loan portfolios rose by high single-digit rates.

C&I loan charge-off rates continue to improve, with an average rate of 0.22% in 1Q13, down 19 basis points (bps) y/y and a reduction of 7 bps from the previous quarter. However, there is evidence that competition for C&I loans continues to increase, with an average yield of 3.63% in 1Q13, which represents declines of 40 bps y/y and 9 bps q/q. A recent EMI blog identified a number of banks that are leveraging innovative marketing approaches to differentiate from competitors in this increasingly competitive space.