Lifetime Value Points to Growth

How a customer centric strategy led to a profitable win for BBVA USA

Seeing the economics of individual customers pointed to growth opportunities for BBVA

Coming out of the great recession, BBVA’s US subsidiary, then named BBVA Compass, undertook a bold growth strategy to expand its presence in the southwest. Under CMO Frank Sottosanti, BBVA Compass narrowed its growth focus to specific customer segments.

“We aim for consumers identified as ‘strivers’ who are both aggressive and anxious when it comes to their money. These consumers want a partner who thinks about them and their needs as individuals.”

Captured in a Harvard Business School case study, the team at BBVA Compass reoriented and optimized their acquisition and retention efforts. Spanning across their in-branch and online channels, they channeled all their efforts into their fastest growing and most profitable opportunity.

This strategy led to insights that guided the features and targeted outcomes of their market-leading mobile app and the acquisition of digital bank Simple in 2014.

When BBVA Compass (by then rebranded as BBVA US) was sold to PNC 2021, they garnered an eye-watering 19.7x price to earnings ratio, 2.5 x the “sum of the parts” consensus valuation.

Being in the right place at the right time helps. Still, BBVA’s early bet on a customer centric view of their business’s economics accelerated their results and put them in a very favorable position.

The BBVA team followed in the success of American Express, Capital One, and Discover Card, all of whom had gone all in on a customer centric, lifetime value driven transformation.

Understanding the contribution of individual customers to net income, both interest and noninterest based, is the start of insights that can unlock the value of your customer relationships.

We’ve developed a free and easy-to-use tool to get you started. Our Customer Lifetime Value Calculator for Community Banks and Credit Unions is your start to the actionable insights from your first-party data.

With it, you can answer critical questions like:

  • How much interest and noninterest income am I getting from individual customers?
  • How long does it take to earn back my acquisition costs?
  • How long do customers stay with us?
  • What would the impact be if we shifted resources to increase retention at the expense of acquisition?

With only nine fields needed to get started, the calculator can provide value in only a few minutes. Writing out the numbers and assumptions can be invaluable in exposing the opportunities available to you.

Download it here:

Dig into your customer lifetime value today

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