Case Study: Excerpted from Bank Director magazine

A small bank (40 branches, less than $2 billion assets) recorded a 4.5% increase in household profitability over a four-month period.  In these excerpts from an article published in Bank Director magazine, Mark Renfro and his client describe how a successful CRM implementation made it possible:

The Starting Point

A meager 12% of households accounted for 96% of what we defined as profitable households.  57% of households were what we defined as unprofitable.

When we considered that information in light of our proud competitive strategy – to out-compete the big guys by delivering more of our excellent customer service – it was clearly time for a reality check.  Not only were we often delivering at a loss, but our people at the point of customer contact had no way of knowing in any interaction whether they were driving a relationship further into the red or firming up an extremely valuable relationship.  For any company, let alone a bank that lives and breathes risk management, the sheer randomness of our customer interactions, no matter how well-intentioned, was not going to sustain us for the future.

We knew we needed a solution, and we knew we couldn’t solve it with a strategy fix, or a technology fix, or a marketing fix.  Whatever we did needed to involve our front line managers – where customers meet the bank and where value either gets delivered or does not.

(We deployed) a combination of sales technology to be deployed at the front line, consulting to align the bank around a new value-over-volume way of doing business, and learning to enable front-line managers to identify, create, and deliver the right value proposition for the right customer.  It was the only solution of its kind – that is, with the intensive front-line focus on customer value.

Early Changes, Early Results

We started tracking results immediately.  We already had the counting mindset – we are firm believers that you only get what you measure.  And we knew if we wanted lasting change, we needed to see substantive change right away.  We needed our managers to experience success.  After all, we had already tried a lot of initiatives.  We had put our people through a lot of “do this, do that,” and they had experienced the letdown of indifferent results.

We were not disappointed:

Results Six Weeks into Our First Installation

  • We discovered a segment of high-value homeowners. We asked the managers to supplement a direct mail campaign for home equity loans.  Planned sales:  $2,350,000.  Actual result, almost twice that:  $4,200,000. By supplementing a central campaign with informed, local interaction, we outperformed the plan!

One of our district sales managers said it best:  “It’s not about increasing your batting average.  It’s about increasing your at-bats and your batting average.”  By increasing your interactions with the right customers that have the right needs, we put ourselves in better scoring position.

Results Three Months into Our First Installation

  • Average value of A households up $18
  • Number of lost A households down 19%
  • Number of lost B households down 34%
  • Number of lost C (unprofitable) households up 22%

Clearly, just one quarter after installation, managers were re-allocating their time and energy:  they were focused on the right customers and re-directing their time and energy where it would yield value for the bank and the customers.

Results Eight 8 Months into Our First Installation

  • Number of A households (worth $1,000 or more) up 9%
  • Total household profitability (across As, Bs, and Cs) up 26%
  • Profit per household (across As, Bs, and Cs) up 2.5%

These were sustainable increases, and we continue to improve in every single category.

Behavioral Change

The quantitative evidence has been powerful, persuasive, and reinforcing all along throughout the organization.  But equally compelling are the behavioral changes we have observed:

  • Consider this: how many organizations our size can confidently claim a common language that evokes a common understanding of the customer base and consistent way of interacting?  We can. Everybody throughout our branch network understands the value of an A customer versus a B customer versus a C customer.  They know what makes them As or Bs or Cs.  And now they instinctively know how to interact with them.
  • Straight from one of our assistant branch managers, when asked if it is worth the effort: “Totally.  Before we had this process, customer traffic managed us.  Now we manage it.”
  • Or our own observation: On our branch tours, just before opening, we used to see the teams lining up their cash, their forms, their pens, waiting for the walk-ins.  Now, well before 9:00, they are reviewing their contact lists for the day, preparing to contact customers to ask what we can do for them.  That kind of proactive behavior is like doubling your capacity.
  • Or branch manager: “We understand what we need to do to make our business grow.  Before, I just prayed the market knew I was there.”  Again, from passive to active, and purposefully so.
  • We had become accustomed to meager growth rates, and so had our managers. Now each manager creates his or her own plan, based on the potential they identify and the tactics they create, and the confidence the process gives them.  Sometimes that means we are asked to approve plans with a 25% profit lift.  We have to send them back and advise a more measured approach. It’s an interesting problem when you have branch managers who are setting the goal too high.  You have to be careful that you don’t negatively impact the momentum of the group.  But the point is, when our managers step up to the plate, now they plan to hit home runs.  That is new, and it is powerful.
  • One more committed employee, a teller supervisor: “I don’t know what I would do without it.  Now I have a reason to contact customers as I know more about their needs, and I understand my contribution to the success of my branch.”  A perfect example of customer value flowing from the employee’s own sense of value.

Aligning Incentives

Now that we had successfully engaged the front line’s focus on value over volume, we needed to be consistent.  We needed to reward the value-producing efforts, not continue to reward volume that might very well diminish value and introduce risk.

It was not an easy transition to make, largely because our new metrics did not align to the traditional bank balance sheet.

So we began to work closely with our Chief Financial Officer at that time, tracking all the numbers assiduously week after week, comparing sales activities and planned sales results with the balance sheet.  The evidence mounted quickly, especially on the loan side.  He noted strong correlations between our new activities, goals, and plans and the balance sheet, and he recognized that we were seeing loan growth well beyond our traditional experience.

He also was pleased to see, not just the increase in non-interest income but the quality of that income.  Now that income is more dependent on service charges and interchange fees – a direct result of our deliberate efforts to help migrate the right customers to the right product and/or service.

Once the CFO was on board, and we gained buy-in from other members of our Executive Team, we tied our incentive pay to household profit lift.  We track the activity weekly, we measure results monthly (so managers can quickly see what is working and what is not), and we pay the rewards out quarterly.  We know how important it is to provide rewards quickly after achieving the desired results.

Are we aligned?  Let’s just say that the year after we began tying pay to lift – in the group of branches included in our initial installation we saw significant increase in household profitability quarter to quarter.  Over the same period, we saw deposits grow at a rate much greater than we had seen in the past, and productivity around loan growth was at an all-time high.


In summary, let us say simply this.  We have just announced quarterly earnings a full 20% over the previous quarter – much of it attributable to loan growth.  This at a time when rates are up and competition has never been more fierce.

So, to answer the question we posed at the start, we believe we have what it takes to triumph at CRM, and our customers have rewarded us accordingly.  We have become, not impervious to external pressures, but better able than our competitors to withstand them.  When the external events force change on us, it helps to know that we have the knowledge and skill and technology to change course at a very precise, customer-segment level.  We know what levers to pull, and we can watch them move the needle, unlike many competitors who can only rev up the sales engine, the way we used to do.  We know how to retain our CRM leadership position.

Mark Renfro is a Managing Partner at Dallas-based Waypoint. He can be reached at