Afinancial institution has three business development goals:

1) To increase volume at the point of sale, 2) increase purchase frequency, and 3) increase new customers. Most financially driven KPIs are often overlooked and replaced with more complex strategies. These strategies are either forgotten with time, or too complex for front-line employee to understand, and in turn, execute.

Increasing the volume of the point-of-sale relates directly to an institution’s ability to effectively deepen relationships towards customers when customers are making their original purchases. In 2010, U.S. consumers owned an average of 8.2 financial products; however, no more than three of those products were at any single institution14. Given this sales opportunity, it is incumbent upon the bank to implement relationship pricing strategies as well as to communicate the bank’s overall capability (e.g., brand presentation) to effectively serve a wide range of financial needs including retail, commercial, wealth management, and insurance15. Once a bank has mastered relationship strengthening, the next step is to turn its attention to increasing customers’ frequency of purchases.

In 2009 United Kingdom banks report 20% of customers defect annually16, and in 2011 U.S.-based institutions suffered a 31% attrition rate17. The most commonly cited reason is the nebulous “poor service.” One reason why customers believe they receive poor service could be a lack of meaningful ongoing communication and a demonstrated appreciation for their business. No complicated statistical models are needed to understand that consumers gravitate to a company that demonstrates interest in them. By increasing purchase frequency throughout the customer’s lifetime, a financial institution would certainly reduce attrition rates and increase loyalty. Another benefit of executing this strategy is the increase in profit. As little as a 5% increase in customer retention can increase profits by as much as 95 percent18. Your current customers came to you because they believed in your company’s brand promise. You owe it to them to continually reach out and explain why doing more business with you makes sense for them and for you.

The final universal goal of your business is to increase the number of new customers. For any bank, this is a challenge. Acquisition costs of a new household range from $300 to $400 each19; making most marketing acquisition efforts unprofitable given a 1-year payback of the marketing investment. If a bank executes goals one and two (increase sales at the point-of-purchase and increase transaction frequency), then its customer base will become more loyal and active. Empirical research has confirmed the link between satisfaction, loyalty, and common business goals (increasing profit and market share). Further, communicating and educating customers creates a chain reaction propagating loyalty20. Loyal and active customers tell their friends. In other words, take care of goals one and two and goal three will follow. In order to accomplish these goals, one needs a starting point. For many, the starting point of winning the competitive race can be found in data.

Data is the Foundational Building Block to Success

A bank’s ability to gather financial data from both a transaction and behavioral perspective, combined with its ability to convey trust, gives it a competitive advantage. This collection of information can provide the firm with behavioral insight leading to improved service, enhanced products, and provide real-time analytics for marketing execution21. For many small to mid-sized banks, especially those without large analytical staffs, the implications (both in time and dollars) can be daunting. First, you must identify who are your most profitable, engaged, and valuable customers that best support this process. After that, identify those customers who could be more profitable and engaged by adding one additional product or service to the household. An off-the-shelf customer relationship management (CRM) or marketing customer information file (MCIF) tool designed for banking can be useful to facilitate dynamic analysis of relationships at the household level. Either system will give you analytical capability to analyze household profitability and optimal product and service mix. Using either the CRM or MCIF system, examine most profitable and active household as well as those most likely to be profitable and engaged. At this point, the marketer should have a profile and lists identifying the core market. However, at this stage, marketing intelligence is limited to the customer’s life within the bank and does not include demographics, psychographics, or predictive purchase data. The more valuable information will be found by looking outside the bank. Fortunately, one does not have to look far in order to glean a wealth of information in a short amount of time.


  1. Keenan C. In search of wallet share. American Banker. 2010 March 1, 2010.
  2. Mäenpää I. Drivers of cross-sectorial cross-buying behavior among business customers. The International Journal of Bank Marketing. 2012;30(3):193-217.
  3. Wood A. Speaking my language? Journal of Financial Services Marketing. 2009 Jun 2009;14(1):92-7.
  4. 2011 global banking survey: A new era of customer expectation