The New Campaign
By late 1992, Consumer Credit was ready to begin the process of attracting new, quality loans. A significant challenge lay ahead. Branch staff, who was once empowered to make credit decisions, had that authority reduced during the restructuring process. Now the Consumer Credit wanted to convince branch staff that the appropriate systems, policies, and controls were in place to actively meet customers' credit needs. Three things were needed: to disseminate the new approach throughout the organization, to explain the new software, and to find ways to differentiate CIBC products from the competition.
The first step was to communicate to branch staff (Personal Banking Representatives, Managers, etc.) what had happened and to share with lending staff that CIBC wanted to write new personal loans. To accomplish this, two senior executives from the Consumer Credit group (Brian Cassidy and Pat Skene) set out in November 1992 to travel across Canada meeting with front-line bankers in every district. Their message was clear: "We are changing the loan experience." A second step was to share with branch staff how the new enhancements to the software system would help them better serve their customers. Training and education seminars on the new credit scoring system were held across the country.
The last step was to find ways to differentiate CIBC loan products from competitors' products. This was important because loans were a commodity. Unless CIBC loan products had value-added features that somehow distinguished them from those of the competition, CIBC bankers would have difficulty attracting customers away from the other sources of credit that they had discovered during the previous year and a half.
The Consumer Credit team met in 1992 to brainstorm ideas that would add value to the personal credit products, and that would help differentiate CIBC loans from those offered by other banks. Many innovative ideas emerged from these sessions. Six of these ideas were implemented as a part of a campaign targeted at branch staff called "We're Changing the Loan Experience." The six main elements of this campaign were as follows.
1. Roadside assistance. Lenders were able to offer one year of roadside automobile assistance (at no cost) to customers taking out a new loan. This was a great selling feature for car loans, although
Roadside Assistance could be offered as a premium with a loan taken out for any purpose.
2. Discount coupon for loans. Bankers were provided with a promotional tool designed to thank customers and reward them for their business. After making the last payment on a loan, customers would receive a thank-you note from a personal banking representative. A coupon for a 1/2 percent discount on the customer's next loan with CIBC was included with the note. There was also a place for the banker to include two copies of his or her card. One card could be kept by the customer, and the customer was encouraged to pass the second card along to a friend.
This promotional item was well received by both lenders and customers. Bankers liked how they could formally thank customers for their business with a small token of their appreciation (the discount coupon) and, in the process, possibly attract new business in the future. Customers liked the fact that the bank had rewarded them for their business with a coupon that could save them hundreds of dollars on their next loan.
3. Bankware. A software diskette was developed containing information about products and services offered by the bank. The diskette also included credit planning tools such as a mortgage payment calculator and a budgeting template. Customers could even use the diskette to learn how much credit their income and current lifestyle could support.
4. An informational booklet. A well-written, informative booklet, "Credit Smart," was developed that answered questions people commonly ask about credit and how credit is granted. Much of the contents of the booklet could also be found in the Bankware software. However, unlike the software, the booklet did not have automated scenario calculation capabilities.
5. Free VISA Classic card for a year or Free CIBC LinkUp for a year. For customers applying for a CIBC consumer credit product, bankers could provide vouchers waiving the normal fee for a
CIBC Classic VISA card for a year, or they could provide one year's free CIBC LinkUp service. 6. The 'Valued customer" portfolio. A burgundy slipcase with a gold elastic binding was introduced that branch staff could provide to customers when a loan was approved. The slipcase contained slots to store loan documents, informational brochures, a copy of the Bankware disk, and the banker's business card. While this seemed like a value-added idea, branch staff never warmed to the concept. Thousands of the burgundy slipcases languished in the Toronto warehouse.
In March 1993, an additional promotion was introduced called Last Payment on Us. The Last Payment on Us program offered customers the opportunity to have the bank make the final payment on their personal loan (up to $500), provided that the loan was kept up to date with regular payments during its amortization period. This program was enthusiastically received by branch staff and customers appeared to respond positively.
Bankware I and Bankware II
While the idea for Bankware came out of the brain-storming sessions at Consumer Credit, the seed for the idea had been planted in Brian Cassidy's mind when he saw a similar, but simpler, product from Wells Fargo, a large U.S. bank, at a U.S. trade show. The Wells Fargo diskette had been developed by Interactive Media from San Francisco. CIBC contacted Interactive Media to see if they could produce an enhanced diskette for the Canadian market. The resulting software, Bankware, allowed users to explore features of CIBC loan, mortgage, and other credit products. Consumer Credit paid for the software development and distribution costs from its own operating budget. Total cost for Bankware was US$250,000.
Bankware was introduced to the Canadian public in early 1993. Using Bankware, customers could calculate a budget, determine their net worth, apply for a mortgage or loan, and learn how to save on interest costs. The software, was distributed to branch managers, who, in turn, gave copies to interested customers. A full-page advertisement was run in Globe & Mail, Canada's national newspaper, encouraging people to mail in a coupon in response to which the bank would send out a copy of Bankware. Over 144,000 copies of the software were produced and distributed. Customers (and potential customers) could now explore the various options open to them before entering a branch to apply for a loan, mortgage, or line of credit.
As Brian Cassidy observed:
Bankware was a great idea. As an advertising and promotional tool, consider its staying power. You give away a brochure and it gets thrown out. You give away a diskette and it gets copied.
Bankware was well received, but many people, including customers, had ideas for additional features that should be incorporated into the software. The Consumer Credit division decided to commit resources to develop an improved version, Bankware II.
While Bankware concentrated on services and products offered primarily by the Consumer Credit group, Bankware II showcased the much wider range of products and services available from CIBC. Features of deposit accounts, investments, VISA, mutual funds, mortgages, and loans were all to be added to the software to present a comprehensive overview of products offered by CIBC. A section targeted at introducing children to the world of banking was planned. The new version was to have a strong customer focus.
Other divisions of the bank (such as VISA, CIBC Wood Gundy, etc. were invited to participate in the development of Bankware II. Although coordinated by Consumer Credit, the division looked forward to being able to include promotional materials submitted by the other divisions. However, most divisions chose to have Consumer Credit staff prepare the marketing material to describe their products. As Consumer Credit prepared materials, they were sent to the other divi sions for their review and approval. Despite the fact that Bankware II would promote products from many other divisions and entities within CIBC, the full cost of the software's development was sponsored by Consumer Credit.
Consumer Credit had initially planned to contract out Bankware II's development (as had been done with Bankware), but soon found it necessary to produce the script for the disk themselves, and then work with an outside programmer to complete the disk. Working as a team, Consumer Credit's product staff created the diskette's content, while Consumer Credit's marketing staff handled packaging and distribution. From start to finish, Bankware II cost $250,000 to produce. The direct production costs were as follows:
Software development $100,000.00 Disk duplication
(including virus scanning) 88,000.00
Jacket printing 19,000.00 Assembly
(insert disk into jacket, collate, wrap) 23,000.00
French translation 20,000.00
The indirect costs were 462 person days of effort from Consumer Credit staff time committed to meetings, product brainstorming, developing scripts, testing, etc.
Bankware II was launched in September 1994. Among other features, the new version offered users the ability to print personalized mortgage amortization tables and to compare cash back car offers with discounted loan interest rate offers. There was even a section designed so that children could explore the services offered by a major bank. Bankware II allowed customers to learn, explore, compute, make decisions, and print out information on virtually any of CIBC's products and services. A total of 150,000 English and 25,000 French copies of Bankware II were produced.
Competition for Bankware II was minor. The Toronto Dominion Bank and the Bank of Montreal had information diskettes, and the Royal Bank had a small business diskette. As far as anyone knew, no other bank had a promotional product similar to Bankware II.
Two focus groups were held to gain insight into customer perceptions of the original Bankware. Results from the focus groups suggested that customers might be undervaluing the true value of Bankware because it was being given to them for free. The groups suggested that the bank charge a $15 fee for the disk in order to increase the perceived value of Bankware II to the customer. Bank officials disagreed. They thought that Bankware II was a promotional tool to help the customer and should not be seen as a way to generate revenue.
Branch managers had been given 100 free copies of the first version of Bankware, after which they were able to obtain additional copies from Head Office for $0.50 each. This charge was debited to the branch's marketing budget, just as the branch paid for posters and other promotional items such as certain brochures and CIBC crested pens. Branches were encouraged to load Bankware on their personal computers so that staff could familiarize themselves with the product and be able to demonstrate it to clients. No free copies of Bankware II were given to branches. Given the penetration of the first version of Bankware, it was thought that branch staff would know the product well enough to order copies of Bankware II from Head Office with their regular promotional items order. Over 85,000 copies of Bankware II were ordered by branches, but it became clear by early 1995 that branches were shying away from ordering Bankware II. Head Office then removed the nominal fee ($0.50), and almost overnight the branches requested another 41,650 copies. Clearly, there was a pent-up demand for the diskette. It was estimated that 80 percent of the Bankware II diskettes distributed to branches were passed along to customers. As with the first version of Bankware, many of these diskettes were copied by customers and passed along to friends.
Bankware II was available free of charge to CIBC customers. Unfortunately, many of the bank's customers were unaware that the product existed. Branch managers often kept copies of Bankware II
in their desk drawer, and only distributed the diskette to customers upon request. This might have been a hold-over from the days of the We're Changing the Loan Experience campaign when the diskette was considered to be a premium to be offered to customers to thank them for their business. Other than at one Toronto branch, the diskettes had never been left out on a table for customers to pick up as they passed by. The reason for this given by one banker was, "If you were to leave huge piles of diskettes on a table some people might scoop up a whole bunch to take home and reformat as blank floppies!
Many bank managers and personal banking representatives were enthusiastic about Bankware II. One Montreal bank manager raved:
Bankware II is one of the best promotional tools the bank has developed____ It helps the customer help themselves. Customers can see what they, qualify for and become a better educated consumer by exploring the various options available to them. This knowledge reduces the customer's feelings that the bank works in mysterious and unpredictable ways. Designing a loan to meet the needs of a customer is hard. Bankware II makes it easier for me to serve my customers because the customer is already aware of his or her options.
An Edmonton branch manager agreed:
Bankware II is great! A good customer is an informed customer, and Bankware II helps to show customers what their best options are. For ourselves, Bankware II not only provides control, but has the potential to lower the cost of dealing with a transaction in the future. Right now all inquiries generated in response to fax-back screens in Bankware II8 go through CIBC Contact, but in the future I could see the customer bringing me an electronic file all ready for processing. This would reduce paperwork and data capture time
8 One of the features added to Bankware II was the ability for customers to automatically fax their completed loan applications to CIBC Contact. Customers whose computers did not have built-in fax capabilities could print a copy of their loan application and either mail it to CIBC Contact or take it into a local branch. Bankware II did not include the ability to directly connect via modem with CIBC's information system.
at my end, freeing me up to spend more time with the customer on other financial planning issues.
At other branches, few disks were distributed. One problem was that CIBC's Information System Division had changed the operating system at the branches from DOS to OS/2 just before the release of Bankware II. For integrity and security reasons, only software developed or supported by the Information System Division was loaded on the network servers. This meant that Bankware II could not be loaded at the branch level and customers could not be shown how to use it at the branches.
Within the Consumer Credit division, the staff felt that the need for Bankware was apparent. In the opinion of one Consumer Credit employee:
Sometimes bankers don't realize that some customers feel incredibly intimidated when seeking a loan. Approval of a loan is an everyday occurrence from the bank's perspective while it is a rare occurrence for the customer. Furthermore, bankers often feel that customers are aware of the various financial options while customers themselves feel that they have no other options. The bank's offer is often seen as a "take it or leave it" situation. With Bankware II, the borrowing transaction is not such a ordeal for the typical customer.
Pat Skene had her own interest in promoting Bankware II. She knew first-hand the tremendous job that her staff had done in developing and putting Bankware II together. She was, moreover, a true believer in Bankware II's advantages:
Customers really need Bankware II. If the bank wants to build strong, binding relationships with customers, it must look to customer needs. Bankware II helps the bank address these needs, allowing customers to make informed decisions about their finances.
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