Capital One Financial case study.

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Capital One Financial case study

  1.    A customer loyalty strategy is one that is used to cater to those clients that are deemed most loyal.  For instance, most banking institutions in the 1980’s did not have the technology or the resources available to them to determine which of their customers were most profitable, and hence tried utilizing tactics such as the decrease of overall prices to retain and maintain as much of their customer base as possible.  This, is turn, is thought to keep the company profitable.  A customer profitability strategy, in contrast, lends itself to a much more targeted approach- it is used identify and acquire customers that are most profitable.  The retention of such customers also is thought to increase company profits.  The latter, as proven by Capital One, appears to be a much more effective strategy.

  1.    The customer profitability gradient can be described as the differential in the profitability of customers- and is essential to profitability-based strategies.  Different customers produce different profits- this knowledge is used to effectively formulate strategies that are utilized to target different customers for different products and services based on their profitability- hence the term “profitability-based strategy”.
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  1.    Adaptation seems to be the best feasible solution to opportunistic pick-off.  For instance, although they were not actively pinpointing customers with high profitability, banks could target a sector of their credit card customers in which- based on such factors as spending limits and APR’S- would be assumed to earn the banks the most profits.  The banks could study the spending habits of these customers to use in analyses of consumers in the general population.  In this way, they can target obtain more customers like them.  In other words, they replicate and adapt to the attacker’s strategies out ...

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