How could online banking customer relationships be managed based on their measured financial value?

1. Formulate a quantitative management decision problem and research problem, when the overall research question is: How does the company maximize finansial return managing Customer Relations through Online Banking and the Sub Question: How could online banking customer relationships be managed based on their measured financial value?

Answer & Explanation

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Online banking customer relationships can be managed based on their measured financial value by implementing a customer segmentation strategy that categorizes customers based on their financial value. This involves analyzing customer data such as transaction history, account balance, and creditworthiness to determine the level of financial value they bring to the bank.

Once customers are segmented based on their financial value, the bank can implement different strategies to manage their relationships. Here are a few examples:

VIP Treatment: The bank can

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Step-by-step explanation

provide personalized attention to high-value customers by offering them premium services such as personalized financial advice, exclusive access to events, and higher interest rates on their savings accounts.

Incentivize Savings: The bank can incentivize low-value customers to increase their financial value by offering them promotions and rewards for increasing their account balance or using certain banking products.

Customized Marketing: Based on their financial value, the bank can tailor marketing messages and offers to each customer segment. For example, high-value customers might receive offers for premium credit cards, while low-value customers might receive offers for basic savings accounts.

Risk Management: The bank can use the financial value segmentation to manage its risk exposure by monitoring the behavior of low-value customers more closely to detect fraud or suspicious transactions.

By implementing a customer segmentation strategy based on financial value, online banks can effectively manage customer relationships and offer personalized services that meet the needs of each customer segment.

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