Evaluation And Application Of Lifetime Value For Retail Customers In Commercial Banks

Since the Economic Revolution and Openness Policy, wealth owned by Chinese residents has risen significantly. Single resident and family have gradually turn to the main part of social wealth. It results in consumption of the residents enhanced and their demand in financial assets varied. Therefore, numbers of Chinese commercial banks suggest the idea called strategy transformation, of which the most important subject is to shift the role of these traditional commercial banks to personal financial service. The native banks are facing amore and more competition in retail business. Meanwhile, as Chinese banking opens to the rest of the world gradually, international retail banks are setting up hundreds of branches in China. It makes the retail business of our native commercial banks facing greater challenge but chances as well.The competition in retail banking service is finally due to the contest in customers. Customer resource is becoming a core competitive resource for financial area. However, not all customers can bring profits to banks or banks cannot offer satisfying service for all customer. Generally speaking, most profits of commercial banks come from minority customers. Therefore, it is a root for commercial banks to live and develop by discovering excellent customers in existing customers, exploring valuable new customers, maintaining respectable customer resource. Meanwhile, it is a guarantee to take over enough portions in the market and a source of handsome profits. Who can win in the portions of excellent customers, who can get the initiative in market competition. Thus excellent customer resource has transferred to be an important index in measuring core competition.It is a short time for Chinese commercial banks in developing retail business. To win the competition in getting the retail market, it requires our banks to set up the theory of taking customers as a center. To realize this theory, it demands these banks, first of all, to understand customer lifetime value, to set up a structure in valuing customer lifetime value scientifically and then to set up a customer value management system encircling customer lifetime value. These could improve the value of customers and realize the customer value maximization.According to this realistic issue, this essay will do the following creative work by reading a great deal of references related to the evaluation of customer lifetime value and combining my personal experience of working in retail business in commercial banks: (1)Based on the state the retail business of Chinese commercial bank is at the stage of beginning and it lacks an efficient frame for retail customer lifetime evaluation, this essay sets up a suitable framework for value management of Chinese commercial banks' retail costumers according to lifelong measuring method. It includes customer maintain value and improve value. Moreover, it contributes some reference for measuring retail customer lifetime value in Chinese commercial banks.(2)Based on the general research in customer lifetime value and concept computing model, taking a part of retail customers' data in C commercial bank's D branch as a sample, it calculates customer current value and analyzes affecting factors on customer current value. According to present available data, it finds out some relatively more fateful factors and helps first-line employees to recognize excellent customers.(3)Based on the research in customer current value, taking a part of retail customers' data in C commercial bank's D branch as an example, the essay analyzes and calculates customer lifetime value. It builds a planar matrix for customer lifetime value and analyzes affecting factors for customer lifetime value. Meanwhile, it compares affecting factors between customer current value and lifetime value. According to present available data, it finds out some relatively more important factors in effecting customer lifetime value. Furthermore, it offers a basis for commercial banks to recognize excellent customers.(4)Taking customer lifetime value measure as a core, taking C bank's D branch as an example, it refers to an improve approach of customer value management and further maximizes customer value. This essay develops a general meaning for variouscommercial banks based on this customer value measure framework.