Don’t Forget Joe: How Customer-Facing Companies Can Make a Buck in a Down Economy


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You got him! Joe applied for your bank’s gas rewards credit card and you approved him. Now, how do you keep Joe as a profitable customer? And given the current economic conditions at hand, how do you apply further scrutiny to ensure the up-sell and cross-sell decisions you make down the line are in the best interest of the bank?

Conventional marketing wisdom says you should try to sell as many products as possible to Joe to increase the share of his wallet. If you do that, you will make the company more money and your marketing executives will be happy with you, no? Well, it’s just not that simple. There are a couple realities that come to mind.

First, each customer has a threshold of saturation. So getting the right product offer to a customer before he or she feels soaked with offers is key. To do this, you really need to think about optimizing your contact strategy. This word, “optimize,” is used loosely in the industry. But what I mean by “optimization” is finding the best of all possible solutions to achieve a goal (such as maximizing profit or revenue) on a group of marketing programs or campaigns given a set of constraints (budget limits or call center capacity) and contact policies (if Joe is in Campaign A, he must also be in Campaign B.)

Let’s say I have five offers I’m trying to make: platinum credit card, small business owner credit card, home equity line of credit, 12-month certificate of deposit and online banking. I have the opportunity to make these offers through a variety of available channels: direct mail, call center, ATM, email, mobile and branch. Also, I must take into account constraints set by the business such as the minimums we need to meet to get our postal discounts or budget limits for certain products or campaigns. Last, we must respect contact policies set by the business and the customer’s noted preferences. Given all that, what is the perfect offer for each of my 12 million customers? Answering that question is a headache in the making!

An avalanche of offers

Maybe, that’s why many companies don’t even attempt to solve it. They keep over-contacting customers with the same offers, with different offers at the same time and, often, with the same offers on the same day to each of multiple individuals in the same household. By using these tactics, marketers will not only negatively affect revenue and profit but also risk negatively affecting customer satisfaction and advocacy.

Secondly, not every product is appropriate for every customer. Some customer conversions might actually be a mistake because of the high cost to serve or risk-oriented factors such as a customer’s likelihood of defaulting on the product commitments. Customers defaulting on credit card payments—a sure way to erode profits—is always a concern, and the current economy makes it even more worrisome. As marketers, however, we constantly struggle with desire to make that next best cross-sell or up-sell offer to make another buck for the business. So, what’s a company to do?

One U.S. card issuer did it right. This company’s Risk and Marketing departments worked together to get the best of both worlds for one of their marketing offers. The up-sell offer was credit-line increases to existing credit card accountholders. Which customers should get what increase amount? What would the ideal increase amount be for Joe? Or, given Joe’s risk, should he receive an increase offer at all? This card issuer improved its decision-making process by analyzing scenarios that focused on maximizing credit-line increase while minimizing risk.

To do this, marketing managers first calculated model scores for net present value, revenue, balance and net credit loss. Then, they populated those scores into a marketing optimization application to determine what would maximize profit. Additionally, they ran different scenarios to understand the risk/reward tradeoffs when they changed certain levers and constraints. This gave the business more control over the offer decisions and risk it was willing to take. Understanding these and other tradeoffs within any organization makes marketers more in control of the marketing results they will reap.

This course of action isn’t reserved to the financial services world; a similar process takes place across many customer-facing industries including retail, communications, leisure and publications. Whatever the business, a marketer’s ability to instill more scrutiny in the company’s marketing decisions will positively affect revenue and profit. Optimizing contact strategy to maximize revenue and minimize risk will help ensure that you make a buck, not lose a buck, for your business. And don’t forget Joe. He’s your customer. He’s your potential. He’s your profit.

The more you know about Joe, the more you’ll help your bottom line.


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