GROUP ASSIGNMENT MKT 101

Sunstone
Business School
Post Graduate Program in Management
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GREAT DAKOTA BANK CASE



Chanchal Jha
Rajesh Kumar
Sachin Goyal
Surinder Sood
Redefined Marketing Campaign
1. A media campaign explaining the benefit of Online Banking

Customer Segment High earning Businessman and Working professional who
have scarcity of time to visit bank

Why This customer segment have less time to visit banks and if they get the
services online which will avoid a visit to bank , they are more likely to
buy it.


2. A media campaign emphasizing the Security feature of Online Banking

Customer Segment For all probable Banking Customers

Why 40% of offline customers were worried about security of online banking.
Most of the customers were not using Bill Payment because of Security
issues. They believe that Bank will snoop in their personal life.



3. Referral Program

Program Description : This will start when the media campaign will end. In this
campaign existing online customers will get free services if
they introduce a new customer.

Customer Segment Existing Online Customers

Why After the campaign ended in Dec , there was a huge drop in new customer.
Referral program will encourage existing customers to convince new
customer to use Online banking


4. Bonus Point Scheme

Program Description : This will start when the media campaign will end. In this
campaign existing online customers will get bones points
on using some specific services on online banking like Fund
transfer and Bill Payment. At the end of year these points
can be redeemed for benefits.

Customer Segment : Existing Online Customers


Why : This will encourage existing customers to continue with online banking.


Note: These campaigns are along with the marketing campaign mentioned in
Case Study

1. Services Value
1. Account Access
2. Money Transfer
3. Bill Payment

2. Personnel Value
1. Support
2. Self Services

Values Derived by the customer ( Question #1)


1. Services too slow / Breakdowns
In these cases customer is not able to get a satisfied service value.

2. Difficult to use
GUI is not very intuitive for customers. Its difficult for customers to
understand the whole process. Its linked to service value.

3. Security Concerns
Customers are not sure that these services are safe. Many customers
believe that bank will snoop in their private life.

4. Price
Many customers believe that they are getting all these services for free
and they have to go bank anyhow for many services so whats the benefit of
paying for this online service.

Dissatisfaction linked to the Customer value ( Question #1)

CUSTOMER ACQUISITION COST (QUESTION #2)
Parameters for CAC

1. Total Number of Customers acquired during the campaign
2. Cost of Marketing Campaign
3. Cost of Freebies


1. Total Number of Customers acquired during the campaign
24000

- 4000 Customers were acquired monthly during campaign of 6 months
-11750 New Customers
-12250 Customers migrated to Online from Offline
(Source : Data Provided in case Study )


2. Cost of Marketing Campaign
$2000000
(Source : Data Provided in case Study )

3. Cost of Freebies
$10 Per Customer

- Bank is giving $50 Credit towards bank fees for new migrated customers
- Free Checking for new customers

Cost of freebies i.e. $10
Source: Assumption


Customer Acquisition Cost = 2000000+ 240000/ 24000= 93.33

AC = $ 93.33
CUSTOMER LIFETIME VALUE


Customer Lifetime Value = m*L-AC

m = Annual Margin contribution of a Customer

L = Number of expected years of purchasing life of the customer

AC = Customer Acquisition Cost

1. Margin = Revenue Variable Cost

margin for migrated customer/month = 42.05 10.05 = $32

m = 32*12 = $384

margin for new online customer/month = 42.05 15.05 = $27

m = 27*12 = $324


Assumptions
1. Revenue is from Jan 2002 after the campaign.
2. Variable cost per month for migrated customer is $10.05
3. Variable cost per month for new customer is $15.05. It is more than migrated
customer because online customer have free monthly checking until they
have online services activated.
4. Monthly Revenue is $42.05 (Revenue as per before campaign, From Table B)
5. In revenue Time Value of money is not considered. Discount Rate is 0.


2. L = 1/CR = 1/.2 = 5 Yrs

Where CR = Churn Rate
Churn Rate = 20 % (Note: Same churn rate as last FY )
Source : (Data provided in Exhibit 10)

3. AC = $ 93.33

Source: Calculated earlier
CLV for migrated Customer = 384 * 5 - 93.33 = $ 1826.67

CLV for new Online Customer = 324 * 5 93.33 = $ 1526.67