CUSTOMER RETENTION | BY TED TRIPLETT
With the Right Tools You Can
Accurately Measure Retention
MOST SENIOR MANAGEMENT EAMS BELIEVE their bank has an attrition problem.
Their assumption, however,
generally is based on conventional
wisdom. They see statistics showing the
average attrition rate for banks in the
United States at 14. 6 percent. They hear
a branch manager mention it seems
like the bank has closed more accounts
this month than they’ve opened. They
get a report back from a team member
attending a conference saying that other
banks are starting to focus on customer
The reality is that a majority of
management teams can’t quantify their
own bank’s retention problem. Why?
Many can’t access their data in a timely
manner and don’t have the analytic
capabilities to accurately calculate their
As a result, management is led to
believe customer relationships and
retention can’t be effectively measured.
Therefore, even though they intuitively
suspect they have an attrition problem,
they’re hesitant to implement a retention program.
That’s why it can be difficult for
bank marketers to get management to
include retention in their strategic plan.
So marketers are tasked with demonstrating that the bank has an attrition
problem, providing a strategy supported by data, and proving the strategy
can generate measureable results—a
To build a strong case for retention, marketers need access to effective
measurement tools like analytics, dashboards and scorecards.
Analytics can help management
teams understand the impact attrition
scorecards can help
marketers prove to
the key retention
moving in the right
has on their bank by assisting them in
measuring attrition. Data analysis can
not only help calculate a bank’s retention rate, but can also show:
m;How many customers are leaving.
m;Why customers are leaving.
m;Which customers have closed
m;What part of attrition is controllable
and what part is uncontrollable.
m;What customers are at risk of
m;The value of winning back lost
m;The impact of attrition on the bot-
Analytics should be a key part of
any strategy to stop the revolving door
of customers leaving the bank. For
m;The data-mining process can help
stem the outflow of new customers
by assisting the bank in acquiring
customers who value long-term
m;Data analysis can help identify
the percentage of single-account
households and aid in developing an
effective strategy to cross-sell more
products to these “at-risk” customers.
m;Predictive modeling and event-triggered analysis can help anticipate
the next-best product for customers,
thereby increasing the number of accounts per household.
Dashboards and scorecards can help
marketers prove to management that
the key retention indicators are moving in the right direction—and that
their strategy is working. The analytics
behind the scorecard allow the team to
measure important metrics such as attrition rates, cross-sell ratios, campaign
results and ROI.
The scorecard also helps the bank
communicate and measure strategic
objectives that drive behavior at the
branch level to strengthen relationships
and increase the lifetime value of its
Ultimately, it takes more than intuition alone to get a retention program
implemented. You need to be able to
demonstrate to management that the
bank has an attrition problem, demonstrate that your strategy is supported
by data, and prove that your strategy
can generate measureable results. Using analytical tools not only can help
you build your case but also help your
bank gain a competitive advantage over
banks slow to adopt this technology. n
ABOUT THE AUTHOR
TED TRIPLETT is the
chief marketing officer
for Insight Ecosystems.
His area of expertise
is helping financial
institutions build and deepen
customer relationships. E-mail: ted.