The marketing cube

The marketing cube


A large bank with which the author was associated many years ago felt that that it was critical to acquire vast amounts of new residential customers. They reasoned that these new households would provide the growth needed to expand the business to higher levels. The same organisation had a series of retention programmes. The intent of these campaigns was to maintain the customer base. After several meetings with management, an important fact became apparent: the objective of all these marketing efforts was to report to the public that the customer base had grown. This in turn would affect the stock price, and this, of course, would make many shareholders very happy.

Is it logical to expand and retain the customer base at any price? While the author certainly advocates cultivating and growing the customer file, it should be done prudently. It is still perplexing to learn that while an increasing number of marketers have formal retention programmes, few measure these accurately, if they are evaluated at all. At a recent conference, the author asked the audience of marketing practitioners whether they had a formal programme, and if they did, how they measured its success. About 40 per cent of the participants had an official campaign. Out of these, 70 per cent claimed that they were assessing the results of their efforts. One manager volunteered that his firm had reduced attrition rates by 150 basis points, a significant improvement.

When asked how much revenue he ‘saved’ as a result, he did not know. He proceeded to hypothesise that the revenue saved was probably proportional to the 1.5 per cent reduction in attrition that his bank experienced. Perhaps, but the author put forward an argument that he might not be saving the ‘average’ customer. Possibly he was successful with the lower than average customer. Worse yet, conceivably he was victorious with the zero balance customers!

Table 1


Income $

% to income



125% (100
divided by






Targeting efforts should be a key component in any marketing programme. Customer relationship management or CRM as it is popularly referred to, is about touching the right customers at the right time. Who are the ‘right’ customers? There are many efforts that are currently directed towards responding to this question and the marketing ‘cube’ is one such attempt. The ‘cube’ is a three- dimensional framework incorporating key success drivers. These are:

—         profitability

—         profit potential

—         retention likelihood

In the banking world, focusing on the ‘right’ customer can make all the difference. In a study undertaken by the First Manhattan Group, the authors concluded that the top 20 per cent of customers account for:

—  60 per cent of all bank revenues

—  more than 100 per cent of pre-tax income.

Although the ‘more than 100 per cent’ seems intuitively difficult to grasp, Table 1 highlights how this is indeed possible. Astoundingly, margins on this most valuable segment hovered around 75 per cent!

The question is how the marketing cube can be of value.

Representative APR 391%

Let's say you want to borrow $100 for two week. Lender can charge you $15 for borrowing $100 for two weeks. You will need to return $115 to the lender at the end of 2 weeks. The cost of the $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you decide to roll over the loan for another two weeks, lender can charge you another $15. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.

Implications of Non-payment: Some lenders in our network may automatically roll over your existing loan for another two weeks if you don't pay back the loan on time. Fees for renewing the loan range from lender to lender. Most of the time these fees equal the fees you paid to get the initial payday loan. We ask lenders in our network to follow legal and ethical collection practices set by industry associations and government agencies. Non-payment of a payday loan might negatively effect your credit history.

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