Case Studies – Cheltenham & Gloucester, SAGA Good Hospitals

Felix Thomson

Content Executive

The Financial Services Forum

We begin our coverage of the best of the case histories from the 2005 Financial Service Forum Awards for Marketing Effectiveness with the winning entries from Cheltenham & Gloucester and from Saga Services.
The business challenge
Fixed-rate bonds are a popular choice amongst C&G’s traditional customer base. The company has had considerable success in attracting savers seeking a guaranteed return over terms of one, two or three years. The challenge faced by C&G came as each tranche of bond funds reached maturity. Before the introduction of the enhanced fixed-rate bond maturity mailing, customer balance retention was disappointing. Two key factors were identified:
• Mailing positioning: as the maturity date approached, customers received a mailing pack outlining the options available to them. It explained that, if no action was taken by the customer, the funds would default into an instant-access account.
• Customer reaction: customers purchasing bonds are known to be heavily influenced by the rate offered, but this was not adequately addressed in the mailing pack. Retention of savings business, including fixed-rate bonds, had already been identified as a key priority. With bond maturities leading to lost customer balances each month, C&G needed a solution – and quickly. To address this, the following objectives were set:
1. Enhance customers’ lifetime value.                                                                                                                                                                                                                                                                                   • Increase customer balance retention to a minimum of 60%.
2. Control operating costs.
• Maintain profitable margins.
• Contain mailing and fulfilment costs.
3. Improve customer feedback.
• Counter negative customer feedback about a cumbersome bond re-investment process and improve customer satisfaction significantly.
4. Increase staff engagement.
• Involve and enthuse branch staff to build stronger relationships with customers.
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