Marketing Insights Newsletter

Special Issue: Finance

ProFuturo Keeps a Short-Term Connection with Long-Term Customers

Source: 1to1 Magazine Jan/Feb 2006, article by Jason Compton

ProFuturo AFP offers retirement investment products as part of Peru's Private Pension System. Just as U.S. purveyors of IRA and 401(k) products felt their way through new markets a decade earlier, ProFuturo and its peers have faced significant pressure to quickly stand above the crowd in a fast-growing investment service area. By the turn of the millennium, the major pension fund management companies (AFPs) had merged to a field of just four—but ProFuturo and its largest shareholder, Citibank Overseas Investment, had no intention of being satisfied with a one-quarter share of the market.

Because pensions have a distant payoff and have numerous legal entanglements and regulatory requirements, differentiating the service was a challenge, but one the company's management felt it must overcome. As early as 1997 ProFuturo undertook a plan to boost customer value as well as satisfaction with aggressive marketing and customer development. While the initiatives worked well, the company became dissatisfied by what it perceived to be parallel and overlapping endeavors in data and process management. So, between, 1999 and 2000 ProFuturo set out to integrate its customer strategy and manage relationships cohesively. ProFuturo identified its three key constituents—the retired and future retirees, employers, and affiliated financial consultants—and set out to secure a better relationship with each group.

ProFuturo began defining customer segments for each constituent group, and identifying the proper service levels for each on five dimensions—providing advice, addressing requirements, offering training, providing information, and involving them in "social responsibility" efforts ranging from driver safety to youth volunteerism. Affiliates are actively engaged in high-profile marketing and social programs, and are in turn strongly incented to keep customer contacts fresh and contact information current with ProFuturo and its Pivotal-based CRM system. "We have implemented a mechanism to measure individual profitability of each affiliate and affiliate segment," says José Castañeda, technology services manager. ProFuturo also measures the short- and long-term profitability of its affiliates, and uses that information to guide investment in its affiliate community while keeping a close eye on channel development.

The organization uses its CRM data to create personalized and relevant messages to customers and prospects. Among the employer community, ProFuturo's marketing group works closely with human resource managers and keeps detailed loyalty scoring on each. ProFuturo's strategy is long term—by its own reckoning, less than one third of Peru's workforce is formally organized in employment relationships, and currently that audience is the only group targeted for the private pension products. "Since informal independent workers are not immersed into the economy, they do not trust informal systems and usually are not registered in the financial system," says Ricardo Pacheco, ProFuturo marketing manager. As those workers are gradually brought into formal employment and retirement structures, however, the company wants to have its outreach programs perfected and sustain its market share growth.

ProFuturo's payback has come not only in the form of boosted sales (up more than 50 percent from 2001 to 2004) but in greatly improved customer attrition. Attrition rates declined sharply in 2000 due to the introduction of the CRM strategy, then fell sharply again in 2004 owing to refined campaign management. Castañeda says that the key to avoiding further price wars is to give customers the feeling of short- and medium-term benefits. "Our customers need to feel well treated at all times, and that is why we try to generate value in each contact—we motivate them to participate in our social responsibility program, and we help them to develop social value."

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Reprinted with permission from Peppers & Rogers Group, a Carlson Marketing Group company. Copyright (c) Carlson Marketing Group. All Rights Reserved.