The Hindu Business Line : Know your customer

Ted Oliver, the Head of a newly constituted business development group in New York was assembling a crack team of market savvy analysts to conduct due diligence and bake potential deals for growth through M&A (mergers and acquisitions). He believed in a healthy profile of customers as a prerequisite for the success of any M&A.

Biju George was a star performer in the Wealth Management Group with a distinguished track record for growing the assets under management (AUM) of the customers assigned to him. Biju made out a one-slide presentation to be the basis for a 15-minute conference call with Ted.

Min-max principle

Biju stated his min-max relationship principle upfront: Minimise efforts to acquire and retain relationships (X-axis) to maximise their patronage to the investment options through the bank for an extended life of the entire relationship (Y-axis).

Treasure trove represented 17 per cent of the relationships and almost 70 per cent of the AUM. They demanded constant attention and engaged in extended debate on investment alternatives testing Biju’s patience and intellect. The returns were substantially rewarding in two ways. First was the high quality referral leads on HNI (high net worth individuals) they provided time to time. Second was the near proprietary status accorded to Biju that he monopolised their share of the wallet, cutting out the access of other banks and relationship managers.

Prize catch represented the NRI customers who returned to India every 6-8 weeks to make investments only to go back to their merchant carriers or oilrigs in the Gulf of Oman. An occasional email or a chat at the bank was all it needed. They were net savvy and required very little follow-up.

Unforced errors are customers with sporadic interest in investment products. They are in large numbers and may not demand much attention; tragedy is that they are also difficult to cultivate the habit of any SIP (Systematic Investment Planning).

‘Iffy’ assets belonged to the customers who are perpetually in doubt about their investment as to constantly make efforts to ‘beat the market’ and question the wisdom of fund managers and portfolio analysts.

Biju was not sure if Ted would you find this analysis too simplistic to consider inviting Biju to New York for a final interview. What do you think, and what will be your suggestion?

TheFourthQuadrant@gmail.com http://FourthQuadrant.blogspot.com

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