|
Find the opportunity for
enhancing profitability.
|
| |
|
A bank with 3 million customers.
| Annual
revenue per customer: |
$492 |
| Cost
of customer acquisition: |
$180 |
| Gross
margin: |
35% |
|
|
|
A targeted opportunity emerges
once this bank contrasts and compares key performance
indicators with "best in class" performance
for the banking industry. Based on the information in
the following chart, this bank should be focusing its
attention on retention of high value customers.
| Metric |
Bank |
Industry Average |
Variance (Points) |
| Attrition
Rate |
24% |
15% |
+
9 |
Cross-Sell
Conversion% |
3% |
1 to 2% |
+2
to +1 |
Acquisition
Conversion% |
1% |
1% |
0 |
|
|
|
Look at what a 24% attrition
rate means to this bank…
| Customers |
3
million |
| Attrition
Rate |
24% |
| Actual
Defections |
720,000
customers/year |
| Average
Revenue |
$492/per
customer/year |
| Revenue Lost |
$354 million per
year |
|
|
|
The bank could leverage detailed
customer data through analytical CRM (Customer Relationship
Management)… the kind of solution offered by Teradata.
This would give the bank the opportunity to:
 |
Utilize effective customer
segmentation: Find and emphasize the bank's
most valuable customers |
 |
Leverage predictive modeling:
Provide insight on who is likely to discontinue
the use of the bank's products or services |
 |
Take action: Use a personalized
offer designed to retain profitable customers |
 |
Focus: Marshal resources
for effective retention and maximum impact |
|
|
|
Suppose this bank focuses its
retention efforts on its highest value customers. It
would be reasonable to say that the projected impact
could be a 1.2 percentage point reduction in the overall
attrition rate.
Assuming the bank made an investment
of $4 million in a Teradata solution to address retention,
the following chart answers the question
"What
does a 1.2% reduction in customer attrition mean?"

|
|
|
The bank could conservatively
expect an immediate increase in its market value of
$10.8 million.
This is the type of ROI Clarity
the bank can achieve as a result of Teradata's
Business Impact Methodology.
|