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Strategic Database Marketing by Arthur Hughes

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18Financial Services

 

Over the past three years, research has taught us several lessons: Nearly half of our customers are unprofitable; almost 20% are very unprofitable. Balances are only loosely correlated with profitability. Demographics are even more poorly correlated with profitability. As a result, every day, over half the new accounts sold will never be profitable. Every day our staff work very hard to retain customers who destroy customer value.… We have also learned that it is hard, if not impossible, to profitably cross sell our most profitable customers. Most sales to them cannibalize profitable usage. Sales efforts to these good customers should be restricted to retention-aiding devices.

RANDALL GROSSMAN,Former Senior Vice President, ...

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