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162 Managing Customers Through Economic Cycles

Table 7.1

$ Profit/ % of % of $ Profit
HouseHold HouseHold Balance
$3,021,332
Over $600 0.19% 2.34% $945,321
$550 to 599 1.45% 1.53%
$350 to 549 1.78% 4.22% $1,353,798
$200 to 349 2.80% 9.35% $4,354,323
$150 to 199 3.88% 7.55% $3,456,387
$100 to 149 6.03% 31.87% $2,435,678
$0 to 99 13.88% 12.44%
−$1 to −25 22.34% 14.32% $978,453
−$26 to −49 33.78% 9.90% −$7,345,234
−$50 to −74 13.64% 5.50% −$2,453,654
Under −$75 0.23% 0.98%
Total 100.00% 100.00% −$877,954
−$324,165
$5,544,285

Many organizations before they start the journey to infor-
mation mastery find themselves expending tremendous
resources beyond what is necessary because of their under-
lying weakness in the information on which they are basing
their initiatives.

One leading US investment banking organization would
send out a tremendous volume of mailings to its customers
in hopes that a very small percentage of them would
respond. The basic criteria were that the customers have a
certain number of products and that they transacted at least
five times a year with the organization. The executives were
aware that many of the mail campaigns were indiscriminate
yet they did not have an alternative because of their in-
herent information weakness.

As the organization progressed down the road to mastery,
it was able to radically reduce the number of mailings while
at the same time doubling their response rate.