Customer profit (NI) contributes to corporate overheads and it determines the customers’ characteristics, behaviors and its existing relationship to the company. NI numbers (quarterly, annually, half-yearly) provides an insightful information to the decision makers about the factors that they should consider while making frequent decisions. Analysis on a transaction-by-transaction basis through NI identification gave a much clearer picture on its profitability and helps to gain true actionable insights. Considering the huge customer base it would be challenging for RBC to compute NI at individual customer account level, rather grouping similar customers in each customer segment and build a segment level strategy. Also, the segment level strategy …show more content…
RBC’s decision to do is agreed among the members of Team #9 to be of best practice for the following reasons: ● Customer Service: By the front-line employees not having details about the customer segment information would let the employee focus on the customer. This way the employee can provide exceptional customer service without any knowledge if the customer’s is not contributing or a loss to RBC. The front-line can focus on providing trust, comfort, and understanding without judging the customer by any of the customer profit information. RBC wants to ensure that the service provided are standardized. ● Savings in costs of training and monitoring: There are chances of mistreating the customers by employees thinking the customer to be less profitable. They can mislead the information telling the customer about their profitable segment or leaking additional information to the customer when the information is meant to be for the branch. To mitigate possible risks of losing customers or offending customers, withholding information from front-line employees would prevent any major loses. The cost savings and decrease in liability is advantageous. Moreover, front line employees can be a backbone for receiving the additional feedback from customers that sometimes may not be captured by the customer relationship management …show more content…
With the customers that RBC currently has decisions needs to make about the how to strategically and tactically develop a plan to make unprofitable customers to profitable ones. The following methods can to be in place: ● Customer Profitability Management: Implementing is a defined strategy linked approach that identifies the customer segments in order to devise strategies that add value by making the less profitable into most profitable customers and focus on long term customer profitability. It can help reduce the disruption caused by unprofitable customers. RBC can introduce customer profitability whale curves. It identifies the most profitable to least profitable customer segment and plots them on the profit graph. ● Time Driven Activity Based Costing System (TDABC): The base of the CPM strategy is a costing system that assigns costs to each customer or customer segment rather than average cost allocation (Kaplan and Anderson). It enables the manager to report the costs on continual basis in a way that reveals the costs of business activities as well as time consumed by them. It is based on traceable costs to customer and make business sustain costs. Therefore, leading the management to increase profits and provides a powerful tool when dealing with customers (Barndt, Oehlers and