DDM - Financial Services

Finding Value in Low Potential Brokerage Customers

Segment your customers and prospects to optimize your marketing campaigns

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case study Finding Value in Low Potential Customers Brokerage Firm Gains $2.5 Million in Incremental Revenue Challenge: Identify and find value in low potential customers Some investors begin their relationship with a brokerage firm by opening an account with just several thousand dollars. This happens for a variety of reasons: ■ New investors may have a limited amount to invest ■ Consumers sometimes like to test how they like working with a firm or financial advisor (FA) before deepening the relationship ■ It takes time and effort to make investment decisions ■ Some investors like to spread out the timing of their investments to avoid potential pitfalls from market fluctuations The result is that most brokerage firms have a large number of investment accounts with small balances. Some of these accounts will grow their balances over time as investors' wealth increases and they transfer assets from other firms; these will develop into highly profitable accounts. Other accounts have limited growth potential; the investors holding these accounts may have few additional assets to invest and may keep their account balances low for years. The challenge is twofold: 1) Identify which low balance accounts have significant growth potential and allocate resources to further develop them, and 2) Identify low potential accounts, prevent FAs from wasting valuable time and effort on trying to develop these accounts, and instead come up with an alternative means of finding value from them. We worked with a leading brokerage firm to address both of these challenges; the below discusses the outcome of addressing the second challenge. Solution: Isolate low potential customers and implement program to offset cost of servicing A leading brokerage firm worked with our team to help identify which low balance accounts had minimal growth potential. IXI Network Member Financial Services Firm CHALLENGE Financial services firms, particularly brokerage companies, have many customers yet not all of them hold significant assets with the firm. In fact, some brokerage customers hold relatively low balances which, coupled with limited upside potential, results in high service costs for minimal return for the firm. SOLUTION A leading brokerage firm used WealthComplete total assets estimate to segment its customer base, identify low potential customers, and effectively implement a new program to offset the costs of servicing this group. RESULTS By incorporating WealthComplete into the firm's customer management efforts, the brokerage firm was able to identify thousands of low balance – low potential accounts, resulting in: ■ An ROI of over 300% ■ $2.5 million in revenues from newly assigned account fees ■ $20 million in new assets under management (AUM)

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