Customer Profitability and Customer Relationship Management at RBC Financial Group (Abridged)
Harvard Business School Case #102-072
Case Software #XLS-405
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Home Loan Savings Account
Net Interest Revenue $60 $2
Other Revenue $0 $0
Direct Expense $3 $5
Indirect Expense $1 $1
Risk Provision $5 $0
Total Profitability per account $51 ($4)
Table B Sample Customer Profitability Calculation for Customer John Doe, January 2001
Source: Company records.
Niece Aunt
Age 23 68
Number of Products Held 2 8
Type of Products Held Signature Plus checking
account; Calculator Plus
savings account
Signature Plus checking account, Royal Money
Maker Plus savings account, mortgage on home,
mortgage on second home, investment accounts,
retirement account, line of credit, visa
Tenure with Bank 6 years 50 years
Annual Income $23,000 $240,000
Net Worth $5,000 $2.8 million
Exhibit 6 Client Profiles
a
Source: Casewriter.
a
All information in this exhibit has been disguised.
Activities
Full
Function
Cash
Counter
Retail
Branch BBC
b
Agent IVR
d
Internet/Web
Mortgage
Reps
Open
Products approved (credit check)
RD (telephone banking) Enrollment -- -- $104.03 $365.72 $158.36 $97.15 $194.35 $983.15
Business Development (New
Business/Growth) -- -- -- -- 14.89 -- -- --
Business Development (Retention) -- -- 67.44 90.36 4.26 -- -- --
Fulfillment -- -- 9.29 12.68 4.26 -- -- --
Renewal -- -- 19.14 17.16 -- -- -- --
Withdrawal -- -- 32.18 20.00 -- -- -- --
Deposit 0.40 $0.55 3.80 -- -- -- -- --
Transfer 0.97 -- 2.87 -- -- -- -- --
Bill Payment 2.26 2.38 21.36 3.84 8.39 0.30 0.18 --
Inquiry 0.90 -- 2.69 -- 8.15 0.30 0.18 --
Maintenance 0.31 0.54 9.19 7.18 8.52 0.30 0.19 --
Close -- -- 28.49 47.93 10.75 -- -- --
d
Interactive voice recognition.
Source: Company records.
a
All numbers in this exhibit have been disguised for confidentiality purposes.
b
Business Banking Center marketed to and serviced small businesses from a centralized location.
c
All costs are on a per-call basis as opposed to a per-transaction basis. In addition, back office operation (support costs outside of Royal Direct hierarchy) are included in the respective unit costs. All IVR
costs except for loan applications are based on the average time per call.
Exhibit 7 Royal BankAverage Unit Costs by Channel
a
Channels
Telephone Banking
c
ABMs
Name of Service Signature Plus Checking Account
Royal Money Maker
Plus Savings Account
Free Debits 2/monthly cycle and
1/payroll credit
2/monthly cycle and
1/payroll credit
Per-check Fee $0.60 $1.35
In-Branch Withdrawals $0.60 $1.35
PTB
a
Withdrawals, Payments, Transfers $0.50 $1.35
Telephone Banking Debits $0.50 $0.50
PC/Internet Debits $0.50 $0.50
IDP
b
Purchases $0.30 $0.30
ABM Withdrawals at other FIs
c
$1.25 plus PTB withdrawal fee
Flat Fee Options 15 full-service debits for $5/month None
15 self-service debits for $3/month
25 self-service debits for $5/month
Overdraft Protection Option
Account record
a
Personal Touch Banking is the Banks proprietary name for their automatic teller machines.
b
Debit card payments at a retail outlet, such as a grocery store.
c
FI = financial institution.
Exhibit 8 1996 Personal Account Pricing and Service Levels
Source: Company records.
