Case Study: Online Resources Card & Credit Services Division

Phase 1: Selecting a new business strategy

PROBLEM

Incurrent, a small $10M+ company providing private-labeled self-service website to cardholders, was in a now-saturated market.

They had multiple competing plans for new growth, but not enough resources to pursue all ideas.

SOLUTION

Develop competing business models to contrast and compare revenue potential versus cost to develop, and decide which plan was best.

Build software for new business line and market the product.

Note: Incurrent was later bought by Online Resources and named Online Resources Card & Credit Services Division

Process

—Create common business plan template and spreadsheet analysis

—Use three industry experts for market and product input

•Small Business Credit Cards

•Commercial Credit Cards

•Credit Card Collections

—Analyze and organize all input

— Work with business analyst and VP Software Development to estimate costs and potential sales over a 3 – 5 year timeline

— Present recommendations to Senior Management

Results

— Online Collections product targeted for credit card industry had similar costs to Small Business Cards market, but had greater revenue potential and could ultimately be extended beyond the credit card markets

— Commercial Credit Card Market was small; costs-to-develop were very high

Selecting a new business strategy

Decision

— Develop private-labeled Online Collections product initially targeted to credit card industry

Product Plan

— Partner with credit card collections consulting firm to develop product specifications (Industry expertise was lacking within Incurrent)

— Build new application on top of existing software platform to increase time-to-market

Marketing Plan

— Online Collections software was a new product concept, so product category needed to be established

— Collections industry is very results oriented – even the small improvements in collections rates considered important – so proof of effectiveness was needed

— Marketing programs, sales literature and pricing all needed to be established

Selecting a new business strategy

Independent Research

Had research firm survey 1,000 online respondents and query them about interest in settling their debts online.

Established the fact that not only would consumers use the product but those that were most often late in paying their bills actually preferred this method over a call from an agent.

Establishing the product category

Marketing Strategy

Proving the efficacy of the product

White Paper

Used first client (top-3 bank credit card issuer) to do a “Champion-Challenger” study comparing the 10% of debtors that received the option to settle their debt online with those that did not receive this option.

Results made it clear that banks could not only significantly affect loss avoidance, but that late stage accounts were impacted positively – overcoming the assumption that this group would not go online to pay debts.

ROI Analysis

Created a spreadsheet that sales reps could use to estimate loss avoidance for prospective clients based on results from Champion-Challenger study.

Marketing Strategy

Banner Ads for Online Collections Service

LandingPage

Online advertising promoting the acceptance and efficacy of the productMarketing Strategy

Direct mail program prior to major trade showMarketing Strategy

Refining the strategy & growing the market potential

Phase 2: Refining the strategy and growing the market potential

STATUS UPDATE

Incurrent is acquired by Online Resources.

Two competitors were now in the online collections market challenging the feature set of the existing product.

Underlying technology makes product costly to install and maintain, making moving down-market in credit card industry and out to other verticals impossible.

NEXT STEPS

Do a new business plan for the product, opening it up to additional markets.

Create a product and marketing strategy to expand product both down-market in the credit card industry and out to new verticals.

Process

—Rewrote online collections business plan

—Extended market reach to:

• Both large and medium-sized banks and moved beyond just credit card portfolios to unsecured consumer loans

• Asset Receivable Management (ARM) companies: Contingency Collections, Debt Buyers, Legal Attorneys, First-Party Collectors

—Created new pricing strategy:

• For banks, pricing based on size of portfolio

• For ARM industry, contingency pricing plan

—Created product strategy imperatives:

• Reduce time and cost to install system, and reduce ongoing maintenance costs

• Provide functionality to serve new markets and address competitive weaknesses

• Provide enough flexibility for anticipated next round of new markets (auto loans, student loans, telecom, utilities, etc.)

—Revised marketing strategy to address multiple markets

Refining the strategy & growing the market potential

Product Strategy

ActionManager

StrategyManager

WebPresentation

ConfigurationManager

Pre-PackagedActions &Strategies

3rd PartyData Sources

Bureau Scores

ContentManager

Debtor-EnteredInformation

Product Strategy

1. Created product strategy based on service bureau model with 5 key product components

Concepts based on market needs

1

2

3

4

5

Real-Time Data• Bureau Scores (NEW)• Debtor-Entered Data

Account Data: Multi-tenant Input and output API (NEW)

PackagedActions &Strategies

Config MgrNEWMulti-tenant

Content Mgr

Multi-tenant

Strategy MgrNEWMulti-tenantFICO / IR

Action MgrNEWMulti-tenant

Report Mgr(Activity Reports)Multi-tenant

Case Mgr(CCW)Multi-tenantCasesProfilesInquiry Types & Templates

Access Mgr(CCW)Multi-tenantUsersGroups Roles

Client Console

Virtual Collection Agent

Other Needs•Reports By Placement•Recurring Payments•End-to-End Payments•Config Override Action Type•Email as Action Type

Note: Multi-tenant = Issuer Service Bureau

2. Created more sophisticated strategy based on input from development team

Product Strategy

Client/ Prospect

Action Manager

Strategy Manager

Config Manager

Credit Scores

Recurring Payments

Report by Placement

Bank Card Issuer

X X X X X

Bank Card Issuer

X X X X

Retail / Bank Card Issuer

X X X X

Card Issuer

X X X X

Card Issuer

X X X X X

Retail / Bank Card Issuer

X X X X X

Collection Agency

X X X X X

3. Assessed needs of existing clients and prospects to make sure that timing of new features would not jeopardize closing new deals or keeping exisitng clients.

Product Strategy

Real-Time Data• Bureau Scores (61 hr)• Debtor-Entered Data

Account Data: Multi-tenant Input (3)and output API (180 hr)

PackagedActions &Strategies

Config MgrNEWMulti-tenantSettings (1) GUI (4)

Content Mgr

Multi-tenant(1) & (2)

Strategy MgrNEWMulti-tenantFICO / IR (2)

Action MgrNEWMulti-tenant

(2)

Report Mgr(Activity Reports)Multi-tenant

(2)

Account Mgr(CCW)Multi-tenantCases (1)Profiles (1)Inquiry Types & Templates (3)

Access Mgr(CCW)Multi-tenantUsers (1)Groups (1)Roles (1)

Client Console

Virtual Collection Agent

Other Needs•Reports By Placement (24 hr)•Recurring Payments (Maint)•End-to-End Payments (eCom / PS)•Config Override Action (108 hr /partial)•Email as Action Type (278 hr)

Releases: (1) 12/1/06 (2) 12/29/06 (3) 1/29/07 (4) 3/2/07 require more resources / Add’l Hours: Unscheduled

4. Tied development schedule to market needs

Product Strategy

Development Timeline

July 312006Brandywine

October 312006

April 302007

January 312007

July 312007

2,000 Hours 2,000 Hours 2,000 Hours 2,000 Hours

All new Manager products + multi-tenant / service provider All Other

Sales Timeline

July 312007

January 312007

October 312006

April 302007

July 312006

U.S. Large Issuer / Bank

ARM Market

5. Mapped development schedule to Sales Timeline to maximize short-term revenue.Product Strategy

Marketing Strategy

1. Renamed product: Virtual Collection Agent

The concept of a “Virtual Collection Agent” was more effective than “Online Collections” at making prospects understand both what the product did and its benefits over live agents in terms of cost-savings and adhering to regulatory requirements.

Marketing Strategy

2. Created 2 versions of sales materials to support the credit card & ARM industries

Credit Card Industry

ARMIndustry