Rather than deal with multiple banking agents, the customer communicates their specific need to one individual who then arranges the requisite action for the client. Account Manager Jamie Reich is a perfect example of this type of individual client relationship. "Account managers know their customers and know what their needs are" (Narayanan, V.G. 2002. 7).
What should RBC do about customers who are unprofitable and Why?
The unprofitable customer must be analyzed in the context of current profitability as opposed to the future value of their business. The unprofitable customer is likely in the Key group and has relatively few RBC product offerings. The advantage of the CRM system is that Bank managers can gauge prospective future profitability. The lifetime value calculation involved "calculating the present value" (Narayanan, V.G. 2002. 8) of a future stream of profits, along with a "factoring of other variables such as: age, tenure with the Bank, number of products held, probability of acquisition, and attrition of products" (Narayanan, V.G. 2002. 8). If a currently unprofitable customer is deemed to have future value to the Bank the relationship should be cultivated and expanded to greater product offerings. If on the obverse the customer is not a future profitable actor then the Bank should sever the relationship particularly...
Because lifetime value "can be aggregated up to segment level" (Narayanan, V.G. 2002 6); a group of unprofitable customers, perhaps utilizing free checking, can be phased out with a new fee structure which will prompt customer exit. The Bank's own analysis revealed the unprofitability of a segment of customers; "20% of its customers accounted for 100% of its profits" (Narayanan, V.G. 2002. 7).
Specifically, what can RBC do about negative profitability customers that use retail branches and ABM machines for their bill payments and Why?
This specific group of unprofitable customers must be targeted using the same lifetime value philosophy as described previously. The cost of ABM placement for a financial institution is considerably grater than its return. ABM's are a customer convenience which can engender a potential long-term relationship with greater product acquisitions. So too does the brick and mortar facility create both fixed and variable costs which the Bank must then mitigate with higher revenues. The unprofitable customer who uses ABM's or visits branches for bill pay must be viewed in the context of their current but also future holdings. Assuming the lifetime profitability calculation has been made; those marked as long-term unprofitable from a group perspective must be
