Preview

Pilgrim Bank Case Study

Satisfactory Essays
Open Document
Open Document
600 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Pilgrim Bank Case Study
Pilgrim Bank Case
September 26, 2013

How much do profits vary across customers? Provide statistical support for your answer.
Out of a sample of 31,634 Pilgrim Bank customers, from a population of 5 million total, and zero missing values, profits vary widely. The average customer profitability is $111.50. The minimum value of this data set is -$221 and the maximum is $2071. This describes that there is a very wide range. The median customer profitability is $9 and the standard deviation is $272.84. See exhibit one.

How does Pilgrim Bank make money from its customers and how can this explain the variation in customer profitability?
Pilgrim Bank makes its profit from customers with components including the balance in deposit accounts, the net interest spread, the fees collected by serving customers, and the interest from loans distributed. This can explain the variation in customer profitability because customer accounts generate different types of revenue for Pilgrim Bank. Each customer generates investment income by keeping a deposit balance. Fees are assessed for checking accounts, late payments and overdrafts. This is an important revenue source Pilgrim Bank. Since each customer varies in how many fees they rack up, each customer accounts for a different amount of the profitability from this source. Depending on the customer, a loan will be handled and the rate will be decided upon. Each customer would create revenue for the bank this way but not all would create the same amount.

Are online customers more profitable than offline customers? Provide statistical support for your answer.
The null hypothesis is that online and offline customers are no different and the alternative hypothesis is that there is a difference between online and offline customers. According to the data, online and offline customers are no different. We accept the null hypothesis and the differences are not meaningful. Of the 31,634 customers in the sample, 3854 are online customers and

You May Also Find These Documents Helpful

  • Good Essays

    Customer Analysis- the Bank presently has a customer banse of around----- clients and still growing.…

    • 960 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Peter S. Rose and Sylvia Conway Hudgins (2003), Bank Management & Financial Services, 5th Edition, New York: McGraw-Hill.…

    • 18280 Words
    • 74 Pages
    Powerful Essays
  • Powerful Essays

    For comparison purposes, we separated our stores into quartiles, and ranked them from highest to lowest, by profit. (Table 2) This method enabled us to demonstrate clear correlation between those stores that were most profitable and those that were least profitable in relation to the factors of monthly advertising, store size, and store population. (We noted that the coefficient of variation for the fourth quartile is extremely high, and that this data should be used with caution. We believe that at least part of this high variation is attributed to the fact that some stores did not make a profit, and actually lost revenue.)…

    • 1222 Words
    • 5 Pages
    Powerful Essays
  • Powerful Essays

    Century National Bank has offices in several cities in the Midwest and the southeastern part of the United States. Mr. Dan Selig, president and CEO, would like to know the characteristics of his checking account customer. To better understand the customers, Mr. Selig asked Ms. Wendy Lamberg, director of planning, to select a sample of customers and prepare a report. To begin, she has appointed a team from her staff and the team has selected a random sample of 60 customers. All the information gathered is tabulated in the table below:…

    • 2139 Words
    • 9 Pages
    Powerful Essays
  • Powerful Essays

    Scotiabank Analysis

    • 7764 Words
    • 32 Pages

    Extensive research has determined that the banking industry is in an unstable state. The industry’s profits have declined over the last few years mainly as a result of bad debt resulting from the US subprime issues as well as the recent global economic downturn. With many competitors, competition has increased in recent years to attract younger customers who historically have less loyalty towards banks.…

    • 7764 Words
    • 32 Pages
    Powerful Essays
  • Satisfactory Essays

    Customer profitability analysis provides managers with the information that can be used to determine whether customer should be emphasized or not. In part- b second table, shown analysis that Weymouth has a low cost and Brookfield is the high cost to serve customers. This is because Weymouth required more sales orders, order taking process, more manager visits, normal and rushed deliveries than the Brookfield and Summerton. While, Weymouth has lowest cost this company is not profitable for the Methven firm, for the reason that is frequent order placement, 14 times in a quarter, low volume of orders, high number of rushed deliveries and numerous manager visits to the customer. Whereas, Brookfield place eight purchase orders in a quarter…

    • 161 Words
    • 1 Page
    Satisfactory Essays
  • Satisfactory Essays

    Kaplan, RS (2005) A Balanced Scorecard Approach To Measure Customer Profitability. Working Knowledge. Harvard Business School. Retrieved May 17, 2010, from http://hbswk.hbs.edu/item/4938.html…

    • 497 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Ocado

    • 2766 Words
    • 12 Pages

    Consumers demonstrate different behaviors when shopping online and offline. These differences affect not only the strategy but also how that strategy is finally implemented from an operationally. Because the experiences considered online and offline are different, the customer must ponder the pros and cons of each model. When pondering, the consumer considers the three C’s: convenience, cost, and conscientiousness within the context of both experiences.…

    • 2766 Words
    • 12 Pages
    Powerful Essays
  • Good Essays

    Banc One, based in Columbus, Ohio, has developed a sophisticated system to track several factors involved in customer loyalty and satisfaction. Once driven strictly by financial measures, Banc One now conducts quarterly measures of customer retention; the number of services used by each customer, or depth of relationship; and the level of customer satisfaction. The strategies derived from this information help explain why Banc One has achieved a return on assets more than double that of its competitors in recent years.…

    • 860 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Using your answer to question 2, calculate the profitability of Customer A and Customer B.…

    • 913 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Commerce Bank Case

    • 2404 Words
    • 10 Pages

    They emphasize the importance of keeping their customers happy on a day-to-day basis. They have established practices that are out of the norm for the banking industry. These practices include: extended hours, coffee and newspapers in the waiting lobby, inviting locations, phones in their ATM machines and even a bright-red Penny Arcade in their lobby! Through these practices Commerce’s goal has been to bring the retail experience into all of their branches. Looking at the banking industry using Porter’s Five Forces Model, it is clear that the industry is very competitive. There is a very high degree of rivalry caused by local and international banks along with credit unions which are favored by a substantial number of customers. Commerce is also facing an increasing potential of new entrants into their competition because other banks have started to assimilate their customer-centric practices. Additionally, Commerce has to face the reality of technology slowly becoming a threat in what’s evolving into a “self-service” world. As a supplier, the bank has less bargaining power than the customer due to the minimal costs involved in switching banks and the large number of banking options available to the…

    • 2404 Words
    • 10 Pages
    Powerful Essays
  • Best Essays

    Hasan, M., & Coyle, D. (2009). Better banks. Retrieved from http://accounting.smartpros .com/x64402.xml Document from an organization’s website…

    • 800 Words
    • 4 Pages
    Best Essays
  • Good Essays

    The likelihood of a business having as much success as Wells Fargo has does not come without its drawbacks. With growth and expansion, this company has seen a variety of different issues, ranging from small to large. The problems that have affected this company have done so in more ways than one, and it is through this analysis in which we can see how Wells Fargo has responded to each. By looking into the company’s recent mistakes, we will be able in what ways the company works through its mistakes, develops a solution to solve them, and finally puts into place ways in which to prevent them.…

    • 973 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Bank Of America Atm Fee

    • 1279 Words
    • 6 Pages

    In 2012, Bank of America’s management made the choice to take on a new beast, the customer. Bank of America has decided to charge a monthly fee for the privilege of shopping with their debit cards on either debit or credit during the check out process. At this time, there have been no plans to alter the ATM fees for customer needing to get cash out. Throughout this study, I have five main points to exam. These are: What caused Bank of America to invoke the fee? What was the cost of customer dissatisfaction? Where there any positive effects on either the business or general public? How are customers fighting back? What solutions could have saved Bank of America the headaches? I will take a look at each side of the puzzle including the consumer, the government, and the business to truly understand the background of the fee and how each group has effected the other.…

    • 1279 Words
    • 6 Pages
    Powerful Essays
  • Better Essays

    Math 533 Part a

    • 1063 Words
    • 5 Pages

    AJ Davis department store has asked to take a look at a sample of customers (sample size: 50) in order to more efficiently generate sales and also appeal to their more profitable segment. In order to better understand their customers a statistical analysis and interpretation must be performed. AJ Davis is hoping to achieve insight on how to improve their department store operations and strengthen their customer loyalty. We have taken both quantifiable and qualitative information and have performed descriptive and inferential statistics on the data collected. We do have to disclaim that these are only from a select few from the customer base and does not represent the entire population. Therefore, the interpretations based on the sample group need to be kept in perspective and must not assume complete representation of all customers. After the collection of information from their sample set we have been able to perform statistical analysis and the results are reported below.…

    • 1063 Words
    • 5 Pages
    Better Essays