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Case Interview
you are being considered.complexity of the case interview will vary depending on the specific position for whichshould expect to encounter one or more along the way. Note that the mathematicalOne group, but at a minimum, all on-campus recruiting and management applicantsA case interview is not part of the interview process for all positions at the Capitalsimulate the experience for you.interviewer -- not a series of screens on your PC -- but we've done the best we can toCapital One would be a one-on-one problem solving session with you and your If so, then try out our online case interview. Keep in mind that a case interview at Interested? flexibility, as well.we're interested in your leadership experience, communication skills, creativity andthe best solution. But solid quantitative skills aren't the only thing we're looking for --and analytical reasoning skills, and usually include the use of mathematics to arrive atThese interviews will give you an opportunity to exercise your conceptual, quantitative
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you've come up with some ideas.influence your decision on whether to pursue the Phone Card cross sell. WhenTake a few moments to consider some of the most important factors that willmarket the product in a way that maximizes profit for Capital One.on the card are kept track of by the outside vendor - your only responsibility is toPIN number, and then entering the destination telephone number. The minutes lefttelephone calls. You use the card by calling in to a 0800 number, entering the card'sPrepaid Phone Card - a piece of plastic you can use to pay for long distanceOne potential cross sell opportunity that is sitting on your desk right now is thevendors who sell us products that we, in turn, can sell to our customers at a premium.customers. These cross sells usually involve building relationships with outsidewhich evaluates opportunities to market non-credit card products to our credit card You have just been appointed the manager of the Cross Sells team at Capital One,
Scenario
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before they "charge off" (i.e. default on their credit card debt).would be even MORE attractive, since it would help us to identify these customersrecently been turned off for non-payment! If this is true, then offering this cross-sellcustomers who would want to buy Phone Cards are the ones whose phones havethe customer's credit risk that we wouldn't otherwise have known? Maybe the•If a customer purchases a Phone Card, might that purchase indicate something aboutbill every month), then we can earn interest on the price of the Phone Card.fee to their Capital One credit card, and if they carry a balance (i.e. don't pay off theirprofitability as a credit card customer? If they buy the Phone Card, we will charge the•Does offering a Phone Card to a credit card customer have any impact on theirsomewhat limited.told us that they do not want to receive these offers? If so, our market size maybe•How do our customers feel about receiving cross sell offers? Are there any who haveproduct we could offer instead.considering? Maybe the product is profitable, but there's another, even more profitable •How does the Phone Card opportunity compare with other cross sells we are remainder of the case.simplicity's sake, we will not consider their implications during the Here are some other questions you might have thought of, but for
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price of £30 each. How much profit do we make on each card sold? Let's assume that Capital One has decided to sell 60-minute Phone Cards at a cross sell program, which ordinarily offers products in the £5 to £30 price range.•The vendor notes that the Phone Card could be a good addition to Capital One'smaterials, the vendor's system programming, and postage.•Capital One must pay £2.00 per card sold for account set-up, which includes card•Capital One must pay £0.20 per minute sold.•The card may be sold with any number of minutes on it.to £0.75 per minute. •The card may be sold at any price, and other companies have sold the cards for up The e-mail has several key points:provided a lot of the information you need in an introductory e-mail. Luckily, the vendor who wants to sell us the Phone Cards has already
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distance calling, for only £30!"this box if you would like to purchase a Capital One Phone Card: 60 minutes of longcustomer rips off and mails back with the check). It might say something like, ”Tick •A line or two of text typed on the remittance stub of each statement (the part a Statement Messages stubs and put them inside the envelopes.send in their payments. If they are interested in buying the product, they can rip off the •Slips of paper that are attached to the backs of the envelopes that customers use to ‘Bangtails’ us when they send us their payments. •Little slips of paper we put inside customers' monthly statements, which they return to Statement Inserts channels we could use. But how should we market this product? There are several different distribution in the equation on the previous page.customers about the Phone Card offer, but we didn't include any of that expensebiggest impact by far.) Basically, it will cost Capital One some money to tell ourhaven't considered several things, but the lack of marketing expense has the The thing that we haven't considered yet is marketing costs. (In reality, we
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of them.distribution channel - just try to think of the two main variables that apply to allpurposes of this case, you do not need to think about all the variables for everyyou need to know about each channel to decide which is best? For thechannel you should use? In other words, what additional information would What factors would be most important in determining which distribution they similar? How are they different?Please take a few moments to think about the distribution channels above. How arethem if they would like to purchase one. •We could place telephone calls to our customers describing the cards and asking Outbound Telemarketing describing the Phone Cards in detail. •We could send our customers a letter - separate from their monthly statement - Direct Mail
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here. Let's assume that you decide to use the statement insert channel.distribution channel to use is a very interesting one, but it is too lengthy to considerconsider this when formulating our marketing campaigns. The decision of which •Some customers don't like receiving telemarketing calls from us, so we need to Customer Perception and Preference also valuable to consider it separately.Although this sort of implication can be included in the "cost" consideration above, it isanother channel might require us to mobilize an entire department for a week. •Going with one channel might take a few hours of a single person's time, whereas Operational Impact near future, we might decide to use a channel that gets us to market fastest.lot of other companies were going to increase their marketing of Phone Cards in the •It takes a lot more time to use some of these channels than others. If we thought a Time to Marketdeserve consideration. A few are outlined briefly below: There are lots of other factors you might have thought of that also
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be required to break even on the insert? Assuming that we must sell 60-minute cards for £30, what response rate would this product.extremely lightweight, we won't incur any incremental postage costs from marketingour customers statements anyway, and since we are very careful to make the insertsenvelopes. And don't worry - our postage costs won't go up. We already send all ofgraphic designer's time to the cost of printing them to the cost of stuffing them in the Each insert will cost you £0.04, which includes everything - all the way from the
money.figure in business, since it tells you the point when you start making (or losing!)- your total profit is £0. The break-even point for a given variable is a very usefulHint: "Breaking even" means that you neither gain money nor lose money on a project
Break Even
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Same as Method 1, except you don't assume a certain number of customers. R = 0.25%16R = 0.04(0.04/R) = 1630 - 12 - 2 - (0.04/R) = 0£30 - [(£0.20*60) + £2 + (£0.04/R)] = 0(Revenue per card sold) - (Expense per card sold) = 0Let R = response rate
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Congratulations! You've finished Capital One's online case. Phone Card cross sell is definitely worth testing.advance what the actual response rate would be, 0.25% sounds achievable, so theDoes 0.25% sound like a reasonable expectation? Although it's impossible to tell infewer than 0.25% of customers respond, then we will lose money.receive the Phone Card offer decide to purchase a card, than we will make a profit. If Any way you look at it, the answer is the same - if more than 0.25% customers who
Method Summary
