A Data-Driven Approach to Customer Relationships A Case Study of Nedbank’s Data Practices in South Africa 10-19

South Africa’s Nedbank is a leader in its market — but to stay in that position, it needed to identify new ways to serve its existing business clientele as well as attract new customers. Its solution: Use the extensive transaction data the bank collects to help customers improve their service.

Introduction

In 2015, store managers at BUCO, a hardware retailer with 46 locations across South Africa, had an intuitive feel for whether men or women were their most frequent customers, which locations had the most loyal customers, and from what suburbs the most valuable customers to a given store were coming. That all changed shortly after Judy Gounden, a group marketing executive at BUCO’s parent company, Iliad Africa Ltd., began using Market Edge, a commercial data service provided by Nedbank Group Ltd., South Africa’s fourth-largest bank by market value.

According to Gounden, Market Edge — which packages credit and debit card information with geolocation, demographic, and other transactional data — enabled new insights into customers’ behaviors that would have been difficult to identify without the new tool. These insights in turn have changed the way the company operates, says Gounden:

We can now look at card transaction data and say, “On a Wednesday at 9:00 a.m., we had the most card transactions versus any other day in the week, and most of these people are 50 and 60 years old.” That’s our pensioner day. In some geographical regions, we’ve got very high loyalty, and in others, we get new customers constantly, so the tool helps us think about how we market in each region. What’s more, when I told a store manager who believed that most of his business was derived from local residents that, in fact, half of his business was coming from residents that lived in a town 10 kilometers away, his eyes went wide and he said, “How do you know that?” So we shared the data with him. At BUCO’s location in Nelspruit, which is on the Crocodile River in the northeast near Kruger National Park, we learned through the data that a large portion of our clientele was female, so we introduced a Saturday craft workshop featuring chalk paint. It’s the latest craze in do-it-yourself painting. The workshop was a huge hit; it just accelerated the craft area of that business. After that, department sales just skyrocketed. Many stores have replicated this example.

Chris Wood, head of emerging payments, strategy, and regulation at Nedbank, counts Iliad Africa and BUCO as one of the many success stories for Market Edge since its public launch in July 2015. Wood’s team sold or gave away the tool to 1,500 of Nedbank’s merchant locations. Several large companies, such as Burger King and McDonald’s, were either involved in co-creating the product with Nedbank as part of the pilot or had purchased the tool, demonstrating that it could make a significant business contribution to the bank’s credit and debit card line of business as well as to retail and business banking (RBB), the largest business division within Nedbank Group. The value of Market Edge to Nedbank may derive less from sales of the tool — the typical price is a flat fee of 500 rand per location a month (about $35) — and more from expanding relationships with existing merchant clients and acquiring new customers. (See “Market Edge: Use Cases.”) 

Nedbank’s Market Edge clients, like Burger King and BUCO, use the tool to analyze potential store locations and drive business into their stores.

A year after its launch, Wood was convinced that he could build a team to place Market Edge in 90,000 merchants. But there was one big challenge: The current sales force in the card and payments line of business was not yet effective at selling Market Edge, despite concerted training efforts. Nedbank had plans to expand the sales force, but there were many competing priorities and it was unclear whether the bank would support a sales force dedicated to Market Edge.

Nevertheless, the tool has shown Nedbank the promise of data and analytics as a commercial offering. It is also just one of several ways that the RBB business cluster is using data and analytics to build an edge in its market. “The strategic challenges that we’ve set for ourselves highlight the need to ramp up all of that [data] capability,” says Ciko Thomas, group managing executive of RBB. “We have momentum, but we need to build institutional and organizational capability.”



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