How to Quantify Your Value with Financial Services Customers

Executive Conversation — Fri, 15 Jan 2010 02:13:18 +0000

While the Financial Services industry has been in the news a lot lately, the metrics such customers use for managing performance are rarely mentioned. Here’s a look at this industry’s unique metrics.

While the Financial Services industry has been in the news a lot lately, the metrics such customers use for managing performance – the metrics you should use to quantify your solution’s value – are rarely mentioned. Here’s a look at this industry’s unique metrics.

We’ve developed this short format overview for exactly that purpose. In addition, use Analyst Reports. These reports used to benchmark companies are an ideal resource for identifying industry and customer-specific metrics.

Operating Revenue Growth (Net Interest Income + Fee Income)	Measured as year-over-year growth, use this metric when your solution impacts fee income drivers such as product mix, cross-selling, product bundling, customer retention and loyalty programs, and reducing time for entering new markets.
Net Income Earnings Per Share (EPS) Growth	Measures year-over-year profitability. Areas of opportunity include impacting cost savings, operational improvements and improved acquisition integration.
Efficiency Ratio (Non-Interest Expense ÷ Operating Revenue)	Primarily used in retail banking, potential points of alignment include increasing branch productivity, shifting call centers to sales and enabling customer/employee self-service.
Loan Growth	Evaluating year-over-year and quarterly growth compared with your customer’s peer group is one way to identify new opportunities.
Deposit Growth	Year-over-year and quarterly measurements of total deposits.
Net Charge-Offs	A ratio computed by current year provision plus the average loan balance.
Cross-Sell Rates	The ratio of customers using more than one product or service (e.g., checking accounts, credit cards, home loans, etc.) To the total number of customers.
Return On Equity (Net Income + Shareholders Equity)	A high-level profitability ratio used for benchmarking financial services companies. sed for benchmarking financial services companies.
Combined Ratio (Claims And Expenses As A Percentage Of Premiums)	A general gauge used by insurance companies that encompasses sales, claims and expenses in one calculation.
Customer Churn	Churn, or turnover, is calculated by dividing the number of customers who cancel service during a period of time by the total number of customers at the beginning of that period.

Selling to Retail Customers? Use these Industry-Specific Metrics

Executive Conversation — Mon, 21 Sep 2009 20:22:31 +0000

One of the easiest ways to demonstrate you understand the customer’s business is to quantify your value using industry-specific metrics important to them. Gain credibility and create differentiation when engaging retail executives using the metrics below.

Executive Selling Bonus Tip: Analyst reports commonly benchmark companies using the key metrics of an industry. They’re an ideal resource for identifying industry and customer-specific metrics.

Metrics Retailers Use

Revenue Growth	Measured as year-over-year sales
Market Share	The percentage of the total available market being serviced by a specific company.
Revenue per Unit (Square Foot, Square Meter, etc.)	A measure of space utilization retailers employ to determine optimal store locations and floor plans.
Comparable Store Sales or Same Store Sales	Sales growth of existing stores measured over a specific period of time, compared with the corresponding period of the year prior. Typically, only those stores open for the entire period are considered so the growth rate is not affected by openings or closures. Specific definitions for stores included or excluded from this metric may vary by retailer.
Number of stores (Equivalent Units)	Measures end-of-period impact of store openings and closures. When shown as equivalent units, the impact of timing for store openings and closures is also incorporated.
Store Margin	Provides an operating margin at the store level (sales minus cost of sales, labor and other store-related expenses). The definition of store margin may vary by retailer.
Payroll to Sales Margin	Provides a measure of operating efficiency that isolates labor costs – the largest single cost component for many retailers
OIBDA (Operating Income before Depreciation & Amortization)	Used by companies to show profitability in continuing business activities. Excludes the effects of capitalization and tax structure

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How to Quantify Your Value with Financial Services Customers

Selling to Retail Customers? Use these Industry-Specific Metrics

Metrics Retailers Use