I just read an interesting article from BAI entitled "The Segmentation Conundrum." It speaks to the challenge of identifying and growing profitable relationships and the dual-edged sword of reducing unprofitable relationships. The article describes Chase's approach to targeting high value/high profit relationships and driving more profit and simultaneously reducing the negative burden of unprofitable accounts. (here is the article link: http://tinyurl.com/8yasmre)
This is exactly the challenge that was charged with at Bank One, the Chase predecessor, back in 1995 (and won state-wide kudos for the Dayton affiliates approach)! The program was successful in providing value to our top 20% and driving off the bottom 25%. We called it the 4-Quartile program.
Unfortunately, the logic stopped there.
We would then quartile our customers again 4-6 months later. See the fallacy? There will ALWAYS be a bottom 25% quartile and soon you are attempting to drive away/increase profitability on relationships that were previously core accounts.
I believe that EVERY relationship that a bank has is profitable...you just may not be banking that portion of the client's relationship! This is a key fundamental belief that drives much of our thoughts and strategies at MarketMatch
Enter the Four Corners...
We use the term 4-corners at lot at MarketMatch. Typically it is about getting our arms around an issue or challenge and being able to tack down the "4 corners" of the challenge so that we know where we can operate.
The other version of the 4-corners comes to a point...literally! Its where the best of all worlds come together-- just like when Utah, Colorado, Arizona and New Mexico come together in one pin-point location. This 4-corner is the ultimate place...
For a bank, its the maximization of profitable customers, loyal customers, and relationship depth. There are two types of 4-corners approaches...offense and defense.
4-Corners OFFENSE
- Proactive approach
- Positive, value-building
- Geared to win the relationship tipping point
- Built to win "those that should bank with you"
4-Corners DEFENSE
- Reactive approach
- Negative reinforcement
- Attempts to drive off unprofitable relationship
Here are the top 4 actions to employ if you want a positive OFFENSE built around the 4-Corners:
- DEFINE: who has and does not have the five power account builders with you; checking, savings, investment, loan, access... these drive actions.
- FIVE: Determine who does not have a mix of the 5 accounts and deliver a proactive marketing message.
- FOLLOW-UP: with a personal call, note, visit
- FIND: potential customers in the market that look like you best customers (with the 5) and market to them
Questions??? Call me...
Cheers!
Bruce
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