Riding herd on attrition: here's one approach to maintaining your grip on customers in the 'top-tier,' 'mature' and business banking' segments.

• Author: Bernstal, Janet Bigham
• Position: Customer retention - Cover Story

Three thoughts on the topic of customer retention: (1) Customer loyalty adds value. (2) Measuring and managing customer loyalty can give your institution a competitive edge. (3) The advancement of data mining tools has made targeting quality customer groups easier than ever.

"Its marketing 101," says Jeffrey v. Bibb of Clarksville, Tenn., founding partner of BLF Marketing which specializes in working with community banks with up to about $2 billion in assets. "Who's your best customer?" he asks. The answer: "Your existing customer." Bibb helps his clients find the best existing customers by targeting the "upper tier."

There are three key initiatives that the company encourages trankers to focus on. They are called the "platinum level," the "mature market" and "business banking."

Platinum programs

Platinum Level Customer Relationship Marketing is the name for what Bibb calls a formalized strategic effort to identify top-tier customers and to create deeper financial relationships with them. The company has worked with several of its community bank clients to develop platinum programs with four distinct purposes:

1. Client identification. They identify the current 10- to 15-percent highest combined deposit and loan balance clients as well as clients who have the potential to be in the top-tier category.

   "If bankers don't take the time to look up the total relationship, identify those customers (with high loan and deposit balances) and move them up, they'll lose them," warns Bibb.

2. Client Loyalty. They recognize these top-tier customers and extend platinum status to them. The clients receive a higher level of attention from the bank, and as a result of being recognized as "platinum," have a stronger affinity for the bank.

3. Client incentive. The bank makes special bank product offers and pricing to the platinum group, with the goal of creating a customer attitude of "Why would I go anywhere else for banking services?"

4. Client Cross-Servicing. Customer contact personnel are the key to success. Through ongoing training and awareness of the platinum benefits, frontline personnel are empowered to do more for their top-tier customers than ever before.

   "Technology is a great tool, but it all comes together on the front line," says Bibb. "Also, we prefer the phrase 'cross-servicing' to 'cross-selling' since most bank personnel consider themselves in the personal service business, not the sales business."

   The company-developed program is customized for each bank client and marketed under various names such as GoldCrest, PrimePlatinum and Preferred Banking. Marketing efforts in connection with these programs continue daily and contain the following components:

   * A determination of requirements for platinum status. The bank stratifies the combined balances of all bank customers to determine the top 10to 15-percent total relationship customers. The...