Customer Attrition Management Reduces Expenses

The Challenge: 

A large Southeastern US regional bank that had grown to over 1,000 branches through acquisitions and mergers suffered high rates of customer attrition. Internal product sales reports showed annual runoff of approximately 20 percent among checking accounts. The bank wished to understand the causes of the customer defections, and implement long term measurement tools and programs to fix the problem initially and continue to monitor it proactively.

Our Solution: 

Using proprietary MetroMatch customer matching software, PNT pulled together customer records across multiple legacy banking platforms to develop the first clear picture of customer account holdings over a 24-month period. Next, PNT’s RightAttrit attrition model was used to develop a comprehensive picture of the bank’s “retention dynamics.” The analysis revealed:

  • “Noise” in the data was creating the illusion of attrition due to piecemeal account losses
  • As a result of multiple mergers, the bank was offering too many types of checking account – neither customers nor branch staff could make sure customers opened the appropriate one for them, leading to dissatisfaction
  • One region of the bank was failing to grow balances; another was retaining customers but suffering from balance runoff
  • Existing metrics, tools and programs were being implemented inconsistently, yielding poor results
  • What attrition there was resulted from failing to keep up with changing customer needs, not basic customer service failures

PNT recommended a series of programs to move customers to the right accounts and monitor their relationships over time, reducing balance runoff, attrition and costs.

The Results: 

The bank avoided costly customer service initiatives that proved to be unrelated to customer attrition.  Accurate measures of customer loyalty and attrition were instituted on an ongoing basis, including individually managed portfolios of high value customers.  The number of checking account products was reduced to reflect customer needs, leading to fewer customers in the wrong accounts, a major source of defection.

Key Results: 
  • Reduced Attrition
  • Reduced balance runoff – the real issue.
  • Lowered costs for combating attrition
  • Appropriate controls and measures put in place