Fiserv Case Marketing stretegy MBA 2012-2013 -  Valentino De Girolamo -  Eleonora Stentella -  Matteo Turchetti -  Vincenzo Di Lecce -  Filippo Antonio Pisano

Introduction Goals to reach •  Make a good market segmentation to define how to

invest and to which customers •  Understand consumers perceptions and modify their

approach to e-billing •  Implement an effective communication strategy without

increasing the budget and maximizing the results. Customers definition •  Direct customers : billers and banks •  Undirect customers: end users

Market potential and prevision We estimate that the realistic market available, in USA 2009, could be 7.224.000.000 $ based on the fact that there is a direct relatinship between electronic payment systeme penetration and e-billing development. •  the population is 86M (“onliners”) •  € 60.200.000,00 (70% of “online

consumers”) use electronic bill payment

•  less then 20% use e-billing to watch bills (€ 17.200.000,00)

•  frequency (recive bill): 10 times a month

MARKET POTENTIAL è OUR FUTURE GOAL: 10.320.000.000 $

Growth scenario: comparison between electronic payment systems and e-billing

penetration. Trends assumptions according to first possible scenario after

the new customization strategy.

Identification of clusters real customers needs and main informations

Managerial evaluation of clusters range 1-5

E-Savvy Maximisers Self Improvers

Convenience Seekers

Desperates Paranoids

Attitudes 5/5 3/5 4/5 2/5 1/5 1/5

Behaviors 5/5 5/5 4/5 2/5 1/5 1/5

Demographics 4/5 5/5 4/5

4/5

4/5

4/5

Size 4/5 5/5 2/5

3/5 3/5 1/5

Score 18/20 18/20 14/20 11/20 9/20 8/20

Targeting the clusters

•  We identify 3 effective segments of market for our business: E-Savvy Planners, Maximizers, Self Improvers.

•  E-Savvy ( 19,7% market share of bank transactions )

-  Identified as possibile early adopters and pioneers

-  Already users of financial software -  Seek fast and efficient ways to manage bills -  Main Implication: less costs in switching from

paper billing to e-billing, high growth opportunities

•  Maximisers ( 27,1% market share of bank transactions )

-  Comfortable with new technology -  Highest percentage of Market Share -  Main implications: highest growth opportunities,

identified as possible market influencers. •  Self-Improvers

( 13,3% of bank transactions ) -  Do not believe they have a good system for bill

management

20,60%

27,10%

13,70%

16,90%

12,30%

8,90%

Percentage of clusters over total onliners population

Paranoids Desperates

Convenience Seekers Self Improvers

Maximisers ESavvy

Communication problems to be solved according to focus group results

QUESTIONS •  “Who sends the e-bill? The bank

or the company I have to pay?” •  “Can I sign up for e-billing through

my bank or do I have to ask alla the individual companies?”

•  “What exactly is the benefit of e-

billing?”

SOLUTIONS •  All the campaign will be driven by

banks and billers using e-mail or outbound marketing trougth call centers.

•  Customers could subscribe the service by just signing an e-mail contract with the bank.

•  Show the economic benefit of e-billing increasing also the price of paper bill in order to increase the spread between the two.

•  Create a specific price for mix end-users (change the markup) to reduce time of conversion.

COST ANALYSIS: all paper end users •  Total onliner population: 89M •  E-billing mix users (20% of tot. Onliners): 17,8M •  Paper bill cost each bill 1,25 $ Assumption: We consider just the variable cost according to the Case. We estimate the markup must be at least 15%, the minimum value at which we could cover the risk and parts of the adverstising cost (not yet defined in the case but important for future evaluation). •  Bank/billers tot unit cost per end-users a month: 12,5 $ •  Minimum monthly price for end-users with markup 15%: 14,375 $ •  Annual end-users subscription: 172,5 $ BANK/BILLERS CONVERTION COST •  Average cost to convert all paper billing consumers in exclusive e-billing consumers 4,50$ per

consumer •  Average cost to convert all paper billing consumers in e-billing consumers $2,00/customer

COST ANALYSIS: e-billing mix end users •  Tot. Onliner population: 89M •  E-billing mix users (20% of tot. Onliners): 17,8M •  Paper bill cost each bill 1,25 $ Assumption: Mix end-users receive, on average, 10 bills/month: 5 electronic ( 1 electonic è 1 view ) and 5 paper* •  E-billing service: monthly cost/customer: 0,125 $ •  Paper bill monthly cost/customer: 6,25 $ •  Bank/billers tot unit cost per end-users a month: 6,375 $ •  Minimum monthly price for end-users with markup 15%: 7,33125 $ •  Annual end-users subscription: 87,975 $ BANK/BILLERS COST SAVING General saving for consumers who no longer recived the paper bill: 45% = 2,86875 $ each consumer + call center cost saving 2-4$ (median 3$) = 0,506225** $ cost/end-user Average cost to convert both paper and e-billing consumers to turn off the paper $1,50/customer •  For customers that recive both electronic and paper bill. •  ** Compare to next slide

COST ANALYSIS: e-billing only end users •  Tot. Onliner population: 89M •  E-billing mix users (20% of tot. Onliners): 17,8M •  E-billing cost for consumers which turn-off the paper: 0,40 $/month Assumption: End-users receive, on average, 10 bills/month. •  E-billing service: monthly cost/customer: 0,40 $ •  Bank/billers tot unit cost per end-users a month: 0,40 $ •  Minimum monthly price for end-users with markup 15%: 0,46 $ •  Annual end-users subscription: 5,52 $ Conclusion: •  The cost analysis show that turn-off the paper is convenient both for banks/billers (which can create

different subscriptions according to different markup ) and end-users. The strategy should be creating according to the elasticity of the market to the prices as reported into the Case.

“By 2009 electronic bill payment was gaining wider acceptations, with penetration given by

convenience over traditional payment methods, saving on postage and improved perseptions of payment secutiry”

STRATEGY Meet an important “SET OF NEEDS FOR AN IMPORTANT SET OF CUSTOMER”.

Short term 1. CUSTOMER VALUE MANAGEMENT from customers satisfaction to customer loalty Direct targeting of customer which are already using elettronics and paper bill service (mix). The conversion cost is estimated at 1,5$/customer, less then other convertion. 2. ACQUISITION: finding new clients Send e-mails to internet profiled users presenting the “Become e-billing end-users” campaign with specific benefits. 3. Present OUR offer to OUR target Specific advertising campaign : links, web site, brochure, social network, call center.

Long term 4. Operation : “REMIND ME” It’s a long term phase; we think the customization of our clients is not only regarding the short term. We suggest to invest in a new type of integrated service which could include: Payment transactions; e-billing and a memorandum. The service could be built using a simple platform for modular innovation and promoting using e-mail and outbound marketing (call center).

Fiserv Case APPENDIX

APPENDIX Answers to the professor questions

QUESTION N.1

•  Positive and negative issue judgment about segmentation We believe that the segmentation shown in the Case did not present some important points related to the market. The first is the one directly connected to the price elasticity of the market. In the case is written that the positive result obtained by Fiserv’s online payment system was due to the direct saving for customers. In this segmentation there are no informations related to this point so that we cannot understand also which type of economic risk customers will perceive when we will present the opportunity to shift from the bill paper to e-billing. We cannot understand also what is the final goal that people want to rich using internet devices to make payments and do transactions (terminal value).

APPENDIX QUESTION N.2

•  What your choice of targeting? As already shown in the cost analysis slides we decide to consider not just one segment but 3 of them. The reason is very simple to understand. The new product (e-billing) is answering to the real needs of just two simple of cluster (E-Savvy and Self improvers), which are looking for “better system” to cut time and better organize the bill, but just the first cluster doesn't have a high risk perception due to the internet security problem. There is also another problem related to this case. The bad results shown in the past make us thinking that is not correct to invest only in a specific target because we still don't know if the perceived benefits of the product are enough strong to generate a profitable buzz (world of mouth). For the new strategy it will be better to have one cluster of early adopter, one cluster as followers searching for both convenience and better bill management system and one cluster that, even if doesn't need the new system, could be involved to generate profit in the medium run. We will use the early adopter (E-Savvy) to cover the initial advertisting costs and we will use the positioning to the Maximizers (III group) to increase the buzz when the product will be ready to answer both explicit and implicit needs that are still on stage (in the text it is clear that customers are looking for mainly a reminder system bill )

APPENDIX QUESTION N.3

•  How do you think is better to convert the target? According to the informations written to the Case, we already know that the target market as high price elasticity. We decide to convert the target using different type of approaches. For customers that already use e-billing (mix customers) we will just present our best price offer using the range of possibility shown by the markup valuation (e-billing will be always more convenient even if we increase the markup). For mix users we will just use the outbound marketing and e-mail marketing. Same marketing strategy, related to price, we will do to convince the 2 targets of E-Savvy and Self Improvers. For the Maximizers we will use another approach. People inside this cluster believe that already have a good bill management system so we will have less possibility to get their attention using just the price formula. For them we will use another type of marketing strategy. Because they are financial "influencers" into the market we will crate a specific campaign to test the product and gain money to write technical and behavioral review about the product itself. To introduce the campain we will use link-building strategy and social media marketing; banners and specific landing page connected to the bank's or billers' website

APPENDIX QUESTION N.4

•  Which is the role and involvement of the merchant in a BtC through B approach?

It is a strategic rule because it base to create a sort of bridge between to difference needs. In this case Fiserv is playing the master rule because through the final customers (end-users) it could increase the banks/billers benefits and also its own revenues. We believe that in this specific Case the most important issue to take into account is the price setting. Making the right price for the service to the bank will help to find the better strategy for the end-users. If the banks or the billers could have more flexibility in changing from one markup to another (bacause they still have margin due to a competitive service price setting by Fiserv) they could create more subscriptions’ promotion strategy according to the demand elasticity.