1

CBR in the real world

a practitioner's pov

john.wittenbraker@gfk.com

Copyright, GfK Custom Research North America, 2011

2

There is nothing so

practical as a

good theory

- Kurt Lewin

Lewin, K. (1951) Field theory in social science; selected theoretical papers. D. Cartwright (ed.). New York: Harper &

Row.

3

Some good theories

• Exit, Voice & Loyalty

– Albert O. Hirschman, 1970

• Commitment and satisfaction in

romantic relationships: A test of

the investment model

– Caryl Rusbult, 1980 & ff

Hirschman, A.. (1970) Exit, voice & loyalty: Responses to decline in firms, organizations and states. Cambridge, MA:

Harvard University Press.

Rusbult, C. (1980) Commitment and satisfaction in romantic relationships: A test of the investment model. Journal of

Experimental Social Psychology. 3

4

Responses to decline in firms,

organizations and states

Destructive Constructive

Active Exit Voice

Passive Neglect Loyalty

commitment higherlower

alts

better

worse

5

Rusbult

investment model

COM = f(SAT + INV – ALTs)

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Investments

Intrinsic Extrinsic

Material

• Unique/proprietary

channel paths or ways

of interacting

• Rewards programs

• Supplies/gear

• Property (shared)

• Contracts

Psychological/

Social

• Time/tenure

• Predictability

• Emotional involvement/

participation

• Identification with

the brand

• Mutual friends/

acquaintances or co-

worker relationships

• Normative/social/

moral pressures

• Community ties

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Brand commitment

Performance

Alternatives

Investment

Persistence

Pro-Relationship

Behaviors

> Devaluing alternatives

> Positive illusions

> Accommodation behaviors

> Willingness to sacrifice

> Forgiveness

> Cognitive interdependence

Trust

Commitment

8

GfK relationship model

Trapped Committed

Exit/

InertSwitchable

A>altsalt>A

High

Low

Competitive Performance

Investment

9

39%54%

39%

30%

12%8%

11% 8%

0%

25%

50%

75%

100%

Low Profit High Profit

Model validation

63%

24%

7% 6%

0%

25%

50%

75%

100%

Committed Switchable Trapped Exit

Share of Deposits/Investments

Trapped

Committed

Exit

Switchable

0%

25%

50%

75%

100%

1 2 3 4 5 6 7 8

DDA Price Sensitivity

Trapped

Committed

Exit

Switchable

Account Price Difference ($)

8.0

4.73.3

-1.7

-20

-15

-10

-5

0

5

10

15

20

Committed Switchable Trapped Exit

Business With Bank In Next 12 Mos.

Incre

ase

Decre

ase

SOW $ sensitivity

∆ SOW profitability

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Time series validation

99% 99% 99% 99% 99% 99% 98% 98% 98% 98% 98% 98%

95%96%96%96%96%

97%97%97%98%98%

95%

100%

93%94%94%94%95%

95%96%

96%97%

97%

98%

86%

87%88%

88%89%

90%

91%

92%93%

93%

97%

95%

84%

86%

88%

90%

92%

94%

96%

98%

100%

102%

0 1 2 3 4 5 6 7 8 9 10 11 12

Months

Ho

us

eh

old

Re

ten

tio

n

Committed

Exit

Switchable

Trapped

Average Modeled Customer

Retention for a 12 Month Period

0.000.00

0.02

0.03

0.05

0.06

0.08

0.100.11

0.13

0.14

0.16

0.18

0.19

0.100.09

0.080.07

0.060.06

0.050.04

0.030.02

0.11

0.040.040.040.030.030.020.020.020.010.01

0.01

-0.04-0.04-0.03-0.03-0.03-0.02-0.02

-0.02-0.01-0.010.00 -0.01

-0.10

-0.05

0.00

0.05

0.10

0.15

0.20

0.25

0 1 2 3 4 5 6 7 8 9 10 11 12

Months

To

tal

Se

rvic

es

Qu

an

tity

Gro

wth Committed

Exit

Switchable

Trapped

Average Modeled Growth

In Total Services for a 12 Month Period

attrition growth

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Practical application

• Size & Trend

• Stimulators & Simulators

Trapped Committed

Exit/

InertSwitchable

A>altsalt>A

High

Low

Competitive Performance

Investment

12

Size & trend

3 5 % 3 4 %3 9 % 4 1%

3 8 %3 3 %

3 9 % 3 8 % 3 9 % 3 6 %3 3 %

4 3 %3 9 % 3 9 % 3 8 %

4 2 %3 7 % 3 9 % 4 1%

4 5 %4 0 % 4 1%

4 7 %4 3 %

4 6 % 4 4 %

3 3 %

4 4 %3 8 % 3 8 %

4 1%3 8 %

3 0 %3 4 % 3 6 %

29% 29%

29%28% 31%

27%

26%33% 31%

32%

25%

26% 31% 31% 32% 27%

29% 26%29%

33%35%

37%23%

35% 31%

28% 47%

39%

41% 40% 36%

22%34%

30% 29%

13% 15%

15% 10% 12%

12%

11%

12% 12% 14%

9%

6%10% 11%

14%14%

15%12%

11%

7% 12%9%

11%

6%9%

3%7%

6% 8% 8%

12%

24% 23%17%

21% 19%

28%24%

17% 18% 18%

33%

25%20%

16% 18% 20%23%

19% 16%13% 13%

20%13%

19% 16%

26% 24%28%

10%16%7%

9%

19% 24%16%11%

14%17%

15%

0%

20%

40%

60%

80%

100%

1 2 3 4 1 1 1 1 1 1 1

C*

S

T

E

Brand A Brand B Brand ZBrand DBrand C Brand YBrand X

Favorability/Intention

Target>AltAlt>Target

High

Low

Psychological

Investment

*Committed (C)

Switchable (S)

Trapped (T)

Exit/Inert (E)

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Stimulators & simulators

Exit Switchable Committed TrappedCustomer Care Makes cust feel valued

Will be there when need them

Reps make cust feel cared for

Reps resolve problems quickly

Confidence best interest rate

Is flexible

Is caring

Is innovative

Practical/Usability Is for people like me

Takes hassle out of cc use

Is practical

Good for big ticket purchases

Acceptance Incr accepted at places want to use

Good for everyday purchases

Accepted at upscale places I go

(Not) will. make primary cc/not accepted

Rewards Offer rewards I value most

Offer best rewards in mkt

Protection Cares about protect my privacy

Proactive against id theft

Late Fees Doesn't charge many fees when late

Primary Secondary Tertiary

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New directions

• Pro-relationship behaviors

• CBR in social networks

• CBR metaphors