Capital One's Use of Analytics
Limit: 250 words
Estimated time: About 1 hour (after completing the readings)
Scoring: (0-100)
Deliverable: Based on your reading of all the assigned articles, especially "CRM at
Capital One", compose a response to the following questions. Proofread, and post a
reply to this discussion board. You are not required to reply to other students' posts, but
you are encouraged to read them and indicate your approval via "likes".
Capital One uses analytics in various CRM activities beyond the marketing campaigns
that they run.
1. Describe a business process other than those involving marketing campaigns
where Capital One is using data mining to improve its performance.
2. How does Capital One use analytics in this business process? Describe what
Capital One is trying to predict or understand using analytics and what decision
task(s) within the process is(are) affected.
3. Assuming that the use of analytics improves this business process, identify key
metrics that you will use to measure the improvement in the performance of this
business process specifically due to the analytics.
One common business process for Capital One would be Customer retention. According to
the article, the extensive customer data allows the company to make proactive rate or credit limit
decisions whenever appropriate. Testing is also used to help identify dormant customers
[ CITATION Kul19 \l 1033 ]. What this means is that Capital One attempts to predict when their
customers in good standing may need an extension of credit, or when the company might be able
to lower interest rates for those customers. By being proactive, customers are more likely to
stay, instead of looking for other avenues to do business. It apparently does work. As stated in a
report from Cap Gemini, the use of data on interest rates, rollover incentives, special promotions
and so on has helped Capital One increase its customer retention by 87% [ CITATION Buv14 \l
1033 ].
Given the information, some key metrics to look at would be established customer
responding positively to certain products based on the projected value (NPV) of the products to a
customer [CITATION Kul19 \p 5 \l 1033 ]. The products could be rollover incentives, or special
interest rate promotions. Another key metric could be increased usage of a credit card during
promotional campaign. A third metric would be determining how quickly debt was being paid
back, depending on the product offered.
References
Buvat, J., & Subrahmanyam, K. (2014). Doing Business The Digital Way: How Capital One
Fundamentally Disrupted the Financial Services Industry. Paris: Cap Gemini Consulting.
Kulkarni, U. (2019). Customer Relationship Management at Capital One. Tempe: Arizona State
University
[Note: The process/activity you choose should not be a BI process; rather, it should be
a business process. For example, “collection of data” or “data analysis” is a BI process;
whereas, in a university, “student retention” is a business process, which may include
identifying the students that are vulnerable (perhaps using analytics) and taking action
to retain them. Or, with an airline company, “preventive maintenance” is a business
process, which may include identifying at-risk parts and replacing/servicing them].
Scoring: (0-100)
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