How Banks Can Use Data Analytics to Measure Customer Profitability and Grow Revenue
Produced by: BankTalk
Host: Charlie Kelly, Partner at Remedy Consulting
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How to think about Revenue-Per-Customer
How much are you spending to acquire a customer? Do you know what each customer account is worth? Can you measure profitability per product or profitability per customer? Most banks can’t answer these questions. They lack the consolidated data and analytics to gain these critical insights.
In a recent podcast with BankTalk, Supreet Singh, Finlytica CEO, discussed with the host Charlie Kelly, Partner at Remedy Consulting, how community financial institutions can use data analysis to determine the value of each customer and measure profitability at the customer level.
It makes sense that banks and credit unions focus on gaining customers, but not every customer is profitable. In this podcast, Supreet compares managing a bank’s customers to fishing on a local lake. There is little to be caught in 80-90% of the lake. You need to be in the right part of the lake to catch a fish. Similarly, for a bank, most of their profits will come from 20% of their customers. It is essential to understand this profitability to maximize results.
Supreet goes on to explain how analytics can improve the results of your marketing efforts. What offer would make sense for your customers? Tracking and analyzing your customers’ consumer behavior allows you to be more strategic in making these decisions. For instance, if you understand who your profitable customers are and target these customers with the proper offers and incentives, banks can expect better results at lower costs.
Whether your focus is customer profitability, lifetime value, or ideal customer profile data and analytics are your key to understanding these metrics and using them for competitive advantage.
The more you know your customers – the profitability of their business and the totality of their transactions – the more you can drive additional profits and revenue.
Listen to the podcast and get insights into how banks can use customer profitability analytics to grow revenue and profits.