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Capital one case study

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by

YUAN HUANG

on 14 April 2015

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Transcript of Capital one case study

How can Capital One increase their revenue through advanced analytics?
Sharing customer information to third parties
Strategy: Increase revenue through a diversified portfolio
Interchange
Interest charged
Annual card fees
Late or over-limit fees
Use of Analytics
Identifying customers who are willing to enroll in this program.
Identifying the competitors of a participating vendor.
Identifying customer's favorite stores.
Identifying customer's overall spending in an industry.
Segment customer spending based on industry and stores.
Approximate the customer's wallet for certain industries.
Capital one case study
Stephanie Swartz
Yuan Huang
Yu-Cheng Lin
Ankur Raina
Yuya Hirami

Sharing customer information to third parties


Capital One Customers

Third Party Companies (i.e. Starbucks, Target)

Capital One Analytics Team
Participants
How does it work?
Customers elect to enroll in a point rewards program where they earn points by shopping at their favorite stores. These points can be redeemed for gift cards at the same stores.

By enrolling in this program, customers are agreeing to allow
Capital One
to collect and to share data about their shopping habits.

Third Parties pay a premium to
Capital One
to access this information. This data includes the shopping habits of their customers at their stores and at their competitors. This will help third parties calculate their share of each customer's wallet.

Thank you!


Capital One Customers

Capital One
Participants
Strategy: Offering customized products to benefit customers
and Capital One
Cards with no annual fees
Cards with low APR
Cards with different designs
Cards with different limit amounts
Dynamic APR
Dynamic APR
How does it work?
Filter customers who are eligible for the program based on certain criteria.

Based on their spending patterns offer them dynamic APR.

Dynamic APR: APR depends on customers' spending habits and balance payments (i.e. customer whose spending exceeds certain amount and balance is paid on time will have a lower APR).

Use of Analytics
Identifying customers who are eligible for the program (using clustering, segmentation etc.).
Testing market with variable APRs.
Collecting data based on testing market result.
Predicting customers' future spending based on certain APR.
Maximizing Capital One's margin by appropriately setting APR to individual customers.
Example
Full transcript