Question

In: Operations Management

If you are the manager of a large retail bank and you find that some customers...

If you are the manager of a large retail bank and you find that some customers are not profitable, how could you manage the divestment process?

Please Give a well explained answer using proper terminology

Solutions

Expert Solution

Managing the divestment process

Firms engage customers when the transactions are mutually beneficial . However it is difficult to maintain for the long term. Disinvestment comes into management’s mind when the value to the customers exceeds the value extracted.

Reassessing the customer relation presently

First of all the executives should review the information beyond the profit, which was used to identify thing the customer or an individual as a problem. The financial metrics such as future spending, current spending.

Sometimes companies find out that they have misjudged the customers and customers who are identified as unwilling to sped and therefore not profitable they may be simply not aware of the range of the services available.

Educate the customers

Fostering relationships with the customers is like managing all their expectations: If the customers will have the information they needed to navigate the complicated service or product situation then they have very few questions and less need to draw the company’s valuable resources. Managers should always be aware of the customer’s knowledge gaps and he should try to fill that gaps. Instead of the disinvestment customers may need to be taught about different products and services usage better. In b2b space, the education of the unprofitable customer is feasible than in consumer space. An educated customer is very less likely to blame the company if the relationship dissolves. Indeed by just changing the relationship information, companies can manage attribution and the consumer responses.

Renegotiating the value proposition

It is an outgrowth or the education and reassessment processes and especially is very attractive in the market where the company offers different price and service strategies for different customers without affecting the relationship with the customers. Renegotiation in the market involves long lead times reviews of the facets of the relationship. Rather than the product alone, some companies offer varying levels of support.

Migration of customers

Some companies actively assist the customer for divestment because for making a transition to a different company, or a partner and sometimes to the competitors itself. By doing this, the businesses not only get rid of the problem but also demonstrate the efforts that can help them mitigate the customer’s reactions that are negative or fears about switching to other service providers.

Terminate the customer relationship

If there is no hope after trying all the methods than the company should end the relationship with the customers.


Related Solutions

If you are the manager of a large retail bank and you find that some customers...
If you are the manager of a large retail bank and you find that some customers are not profitable, how could you manage the divestment process? Please Give a well explained answer using proper terminology
Currently, Katie White (retail customers manager) and Jules De Martino (corporate customers manager) have their performance...
Currently, Katie White (retail customers manager) and Jules De Martino (corporate customers manager) have their performance assessed based on how much profit/loss is made with their customers' loans and savings activities, but this has led to many disagreements. Based on figures from the previous year, the corporate customers' loans and savings activities have generated a profit of $124 million whereas the retail customers' loans and savings activities have generated a loss of $84 million. Jules is very happy with this...
As the assistant bank manager, you want to provide prompt service for customers at your bank's...
As the assistant bank manager, you want to provide prompt service for customers at your bank's drive thru window. The bank can currently serve up to 10 customers per 15-minute period without significant delay. The average arrival rate is 7 customers per 15-minute period. Let x denote the number of customers arriving per 15-minute period. Assume this is a Poisson distribution. a. Find the probability that 10 customers will arrive in a particular 15-minute period. b. Find the probability that...
You have been appointed as a project manager for a large bank in Dubai. The board...
You have been appointed as a project manager for a large bank in Dubai. The board of directors can’t decide how to analyse the project stakeholders. They ask you to compare the Salience Model to the Stakeholder Rating Model. You must refer to the example of stakeholders in your comparison.
You are the coding manager for a large city hospital. You outsource some overflow coding to...
You are the coding manager for a large city hospital. You outsource some overflow coding to a vendor. As the contact person for those coders, you sometimes get e-mails asking for discharge dates or dispositions to be entered so the account can be finalized. You would like those coders to be able to enter that information themselves to save you time. Your HIM director has a differing opinion. What explanations would lead you to support her position? Objective: Students will...
As an agribusiness manager you find out that a large cooperative group in your area jmhas...
As an agribusiness manager you find out that a large cooperative group in your area jmhas decided to take supplies off the market through a marketing order. Ehat does this imply about the elasticity region for the cooperative? Based on your answer, will removing the supplies necessarily result in an increased profit?
Scenario. Bank X provides home loan service to their retail customers and charge a interest rate...
Scenario. Bank X provides home loan service to their retail customers and charge a interest rate for their service. Due to market fluctuations, Bank X only offers floating interest rate (FIR) for their home loan customers. A friend of you who works as a banker at Bank X told you that the average yearly FIR in the last thirty years follows a Normal distribution with mean 3.2% (i.e., μ = 0.032) and standard deviation 0.04 (i.e., σ = 0.04). In...
Recently the Bank of Canada (BOC) asked retail stores to continue accepting cash from customers as...
Recently the Bank of Canada (BOC) asked retail stores to continue accepting cash from customers as payment for in store retail sales (ie for groceries or clothing). Why does the BOC have to make this request? Doesn’t Canada’s “legal tender” law require retailers to accept cash as payment by customers? Briefly explain.
A bank manager has developed a new system to reduce the time customers spend waiting for...
A bank manager has developed a new system to reduce the time customers spend waiting for teller service during peak hours. The manager hopes the new system will reduce the waiting time that currently is 10 minutes. Formulate the hypotheses and rejection rule for this problem. A random sample of 70 waiting times was obtained after the system was implemented. The sample showed a sample mean of 9.5 minutes and a standard deviation of 2.2 minutes. Obtain the p-value. At...
Recall that a bank manager has developed a new system to reduce the time customers spend...
Recall that a bank manager has developed a new system to reduce the time customers spend waiting to be served by tellers during peak business hours. The mean waiting time during peak business hours under the current system is roughly 9 to 10 minutes. The bank manager hopes that the new system will have a mean waiting time that is less than six minutes. The mean of the sample of 100 bank customer waiting times in Table 1.9 is 5.46....
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT