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Welcome to 360° View! |
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What Is Profitability?
Beginning in April 2007, inBusiness Services will begin offering a Premier Modeling add-on to the 360 View CRM system that will allow financial institutions the ability to calculate a more precise measure of account level profitability, Companion Product Demand, and Attrition. The Premier Profitability add-on is being designed to be a user friendly means of calculating account level profitability using a combination of transactional summary data, financial institution cost figures, and statistical calculation. 360 View CRM: Current Standard Modeling Methodology Contribution Indices Ranking The net interest margins incorporated into the 360 View software are derived from a weighted average of the net interest margins reported to us and our partner company Customer Intelligence, Inc. by client banks. The rates for loans are adjusted for net (non recoverable) credit loss provisions. The rates are updated quarterly and incorporated into each new release of the software. The calculations begin at the account level with specific net interest margins applied by product type and are then summed to be included as a household level attribute in the database. The financial institutions who have contributed information have defined their net interest margins as the percent of an asset (calculated as an annual rate) which produces income net of the amount of interest paid on the liabilities which fund those assets. These calculations should be considered relative contribution indices and not true profit (which could be reconciled to the general ledger). The additional information needed to transform these calculations to a true profit number is primarily the incidence and costs of specific transactions at the account level. Potential and Attrition Modeling The potential and attrition measures incorporated into the 360 View software have been calculated through an empirical examination of past customer or member account opening and closing patterns detected from data provided to us and our partner Customer Intelligence by client banks and credit unions. Multiple snapshots of data were tracked and the historical, statistical profiles of households who opened accounts, closed accounts or maintained their account status are contrasted with one another. The resulting knowledge allows us to examine the current statistical profiles of a customer or member base and project which households have the potential to be sold additional products and which are at risk of closing their current products. With this knowledge, the financial institution can direct their marketing and sales efforts in the most profitable direction.
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