Customer profitability analysis and value based management at Barclays Bank
Slagmulder, Regine Mukherjee, J.
Slagmulder, Regine
Mukherjee, J.
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2004
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Abstract
In response to the intensified competition in the banking industry, Barclays adopted a Value Based Management (VBM) programme to align decision making at all levels in the organisation with the interests of its shareholders. Under the umbrella of this VBM programme the Bank introduced a new approach to identifying and effectively managing its high-value customers. The case shows how the new customer value measurement tool had a significant impact on managerial decision making and how it was supported by value-based sales incentives. The purpose of the case is to provide an illustration of customer profitability analysis in the context of a 'managing for value' initiative at a leading European bank. The case shows how the Bank's external financial goal of top quartile shareholder return was translated into an internal focus on economic profit, which in turn was cascaded to the front line through value-based sales targets. The objective of the case discussion is to explore the benefits and challenges of adopting a value-aligned performance measurement tool to help the salesforce identify high-value customers and take action to boost customer profitability and create shareholder value.
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Management Accounting & Control