Customer Profitability and Crm at Rbc Financial Group

CUSTOMER PROFITABILITY AND CRM AT RBC FINANCIAL GROUP

OBJECTIVE:

To understand the Customer profitability by the Customer life time Value estimation and suggest strategies whether to drop or retain customers based on their life time value

PROBLEM:

• To bring together all view of contacts and centralize the overall system and offer interaction with each customers.

• To allow its Personal Bankers to get their contacts all in one place

• For effective marketing strategies, it was necessary that the following is done

o Customers said the most important value to them was intimacy, encompassing feelings of trust, reassurance, a feeling that the bank knows and understands them and their needs.

SITUATION ANALYSIS:

20% customers accounted for 100% profit

• "A" customers made the most profit

• "B" customers made some profit

• "C" customers broke even or lost money

ANALYSIS:

To estimate the customer LTV by two methods

The first method involves determining all the cash flows expected to get the present value of the future cash flows

The second method is all about estimating it by considering a specific product that can be obtained for sale

ASSUMPTIONS

Discount rate: 8%

Products available: Credit card and both

Attrition rate: 5%

METHOD 1:

Age Cash Flow Discount Probability of Getting the final cash Present Value

23 -90 100.00% 100.00% -90.00

24 -90 92.59% 95.00% -79.17

25 -90 85.73% 90.25% -69.64

26 -90 79.38% 85.74% -61.26

27 -90 73.50% 81.45% -53.88

28 -90 68.06% 77.38% -47.40

29 -90 63.02% 73.51% -41.69

30 -90 58.35% 69.83% -36.67

31 -90 54.03% 66.34% -32.26

32 -90 50.02% 63.02% -28.38

33 -90 46.32% 59.87% -24.96

34 -90 42.89% 56.88% -21.96

35 -90 39.71% 54.04% -19.31

36 350 36.77% 51.33% 66.06

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