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Summary
The challenges of change
The right match
The programme
The results
Summary
Campion Willcocks Associate played a key role in an initiative at Barclaycard Business' card acquisition operations, designed to analyse customer performance and provide enhanced pricing. The results will include increased profits of several million pounds.
The challenges of change
“This market has tight margins and is under heavy pressure,” explains Ruby Atwal, the Programme Senior Analyst involved. “This results from regulatory changes and increased competition from new market entrants.” The programme aimed to embed superior pricing capabilities through the delivery of a new approach, with supporting business models and robust pricing governance and policies. “It was imperative to establish a way of measuring relative customer performance,” says Atwal. “We could then create a benchmark for gauging under-performing customers, devise policies to inhibit under-pricing, and provide pricing tools for sales staff to incentivise profit maximisation. Throughout we worked alongside the client's personnel to ensure our solutions were credible and commercial. This was essential to gaining buy-in.”
The right match
Mike Vallance, Sales and Marketing Director at Barclaycard Business, says: “This was a very dynamic team so it was essential to not only match the challenging technical aspects but also ensure a fit with the high metabolic rate at which the team would work. Ruby fitted the bill perfectly, providing infectious enthusiasm and commitment to deliver. Her skills and outlook were essential in achieving success.”
The programme
The assignment ran from November 2003 to January 2005. “My role was to combine commercial solutions through business modelling, to achieve relative pricing,” says Atwal. “The programme team's approach proved successful as the solutions provided covered all angles: they were commercial, financial, easy-to-understand, and could be implemented.”
Her first task was to develop a basis for comparing ‘like for like' customers. “This involved analysing the entire customer profitability profile using various statistical analyses, and identifying a unique cost measure that defined ‘normal' versus ‘unusual' customers.” Step two was to assess the price variability of ‘like for like' customers: developing a pricing methodology that identified such people, so providing a far simpler way of segmenting customers.
Stage three saw Atwal develop policies to reduce price variability and increase book value, developing policies that could be implemented easily. This led to step four: providing sales staff with user-friendly tools to enable the policies to be carried out. Atwal adds, “We then tested price sensitivities, which involved building a scenario model to explore different policies. This was critical to ‘re-price' customers.”
The results
The programme team's recommendations will lead to an increased profit of several million pounds; a new pricing team has also been recruited to govern and further develop the new approaches.
“This was a successful outcome and the programme will deliver the financial benefits as specified,” adds Mike Vallance. “By providing a different way for us to look at customers, a unique measure that was easy to calculate, the programme also raised the profile of this part of our operations within Barclaycard Business.”
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