The profit/balance tradeoff…
…Helps efficiently segment your customers.
Customers can have big balances or small balances. They can have high profitability or low. With these qualities you can get 4 possible quadrant combinations:
- Low profit, small balances. Lots of upside with no downside. Push aggressively.
- Low profit, big balances. These customers are 1 or 2 small decisions away from profitability.
- High profit, small balances. These customers are a “good fit” for your bank. Grow balances here.
- High profit, big balances. Keep them happy and ask for more.
The beauty of these quadrants, or scores, is that you can easily append them to your CRM system so that client-facing staff understands customer status without getting bogged down in the actual numbers. This arms your reps with the information they need to make better day-to-day decisions without exposing sensitive profitability info.
This type of nuanced treatment is just a glimpse of what’s available with deposit profitability. When you run the numbers on your customers you’ll see who is ripe for fee increases and who is more apt to respond to incentives to reduce transactions or grow balances.
You can grow profit by increasing revenue, cutting costs or growing balances. It all works to build your profit.