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Profitability is Trending

How important would it be to know which of your customers/members are highly profitable and which ones cost you money? What would it mean to your bottom line if you could move some of them from unprofitable to profitable?

Many of our new client conversations start with a discussion about goals and what the financial institution is looking to accomplish. Sometimes it’s all about attracting new retail checking customers, other times it’s mortgage acquisition, or perhaps they want to communicate to businesses of a certain size. Yes, we can help you attract more customers and we can engage the ones already doing business with you…and we believe there is another important goal to talk about…

Which customers do you absolutely need to retain and grow? Which ones have the potential to become profitable, and what do you do with the ones that will never be profitable? You have the power to choose.

The first step is to learn as much as you can about your existing retail banking customers. People want their financial institution to be like Amazon. Amazon knows what they like, dislike, their buying patterns, and it makes recommendations based on these behaviors. To get a better picture of your customers, invest in doing a data append with demographic and psychographic information on your current customers.

When you apply the data append and predictive modeling, you can see…

  • Who are your most profitable customers
  • Which customers have the potential to be highly profitable
  • What balances they have with your institution and what they have elsewhere that they can bring over
  • What product or service will they need next
  • What “life stage” they are in.

Now that we have this information, we can apply rank scoring based on profitability potential and tenure to determine…

  • High value/high LTV potential
  • Low value/high LTV potential
  • High value/low LTV potential
  • Low value/low LTV potential

The next step is to implement a multichannel communication program with messages that are timely, relevant, and personalized. If they don’t have a need for a next-most-likely product, send them a thank you or a “feel good” message about what your institution is doing for the community.

Your customers want to feel heard and appreciated. It’s important to make sure you are communicating with them throughout the year, especially your high value customers. These are the ones your competitors are trying to attract, so make sure you have a program in place to keep them.