Bbva Compass: Marketing Resource Allocation
Autor: Maryam • September 6, 2018 • 1,534 Words (7 Pages) • 1,698 Views
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Assume its aim is similar or slightly higher than industry average
Growth Rate 0% Assume growth rate is 0
The profit/ margin for banking industry calculated based on the above assumptions is $187.
Appendix 2: Calculating the Lifetime Value of Customer Acquired from the Online Channel
Cost per Application (CPA) Online $81
Online Application Approval Rate 80%
Average Additional Promotional Cost
(per approved application) $100
Actual cost per Successful Application
(or Acquisition Cost) $81/ 80% + $100 = $201.25
Profit Per Year
(Assume profit from online channel is the same as industry standard) $187
BBVA Customer Lifetime and Loyalty - Online Customer
Loyalty Rate 55.0%
Interest Rate 1.0%
Sales Growth 0.0%
Acquisition Cost 201.25
Profit Per Period 187
Lifetime value
5 period $198.63
10 period $208.82
Customer Tenure Profit Retention E[Profit] NPV
0 $(14.25) 100% $(14.25) $(14.25)
1 $187.00 55% $102.85 $101.83
2 $187.00 30% $56.57 $55.45
3 $187.00 17% $31.11 $30.20
4 $187.00 9% $17.11 $16.44
5 $187.00 5% $9.41 $8.95
6 $187.00 3% $5.18 $4.88
7 $187.00 2% $2.85 $2.66
8 $187.00 1% $1.57 $1.45
9 $187.00 0% $0.86 $0.79
10 $187.00 0% $0.47 $0.43
Appendix 3: Calculating the Lifetime Value of Customer Acquired from the Offline Channel
Online Offline (Calculated) Remarks
Marketing Expense
(Jan – Nov 2010) $1,153,000 (21%) $4,337,476 (79%) Based on the data in the case, offline advertising budget is 79% of total advertising budget. Assume expense is the same.
Other Offline Marketing Expenses - $30,000,000 Per references in the case, BBVA Compass signed multi-million dollar sponsorship with NBA and other sports league. Assume the sponsorship expense in 2010 is $30 million
Completed Application 14,316 (5%) 272,004 (95%) Given 5% of BBVA Compass’s applications come from online channel and 95% through offline channels; we can project the completed applications from Jan – Nov 2010 offline channels
Cost Per Application (CPA) $201.25 $126.24
Application Approval Rate 80% 95% Based on the data in the case
Average Additional Promotional Cost
(per approved application) $100 -
Actual cost per Successful Application
(or Acquisition Cost) $81/ 80% + $100 = $201.25 $126.26/96% =
$131.5
Profit per Period $187 $187*90% = $168.3 Based on the data in the case, online channel yields slightly higher profit than offline. Assume offline profit is 90% of online.
BBVA Customer Lifetime and Loyalty - Offline Customer
Loyalty Rate 65.0%
Interest Rate 1.0%
Sales Growth 0.0%
Acquisition Cost 131.5
Profit Per Period 168.3
Lifetime value
5 period $307.13
10 period $336.97
Customer Tenure Profit Retention E[Profit] NPV
0 $36.80 100% $36.80 $36.80
1 $168.30 65% $109.40 $108.31
2 $168.30 42% $71.11 $69.71
3 $168.30 27% $46.22 $44.86
4 $168.30 18% $30.04 $28.87
5 $168.30 12% $19.53 $18.58
6 $168.30 8% $12.69 $11.96
7 $168.30 5% $8.25 $7.70
8 $168.30 3% $5.36 $4.95
9 $168.30 2% $3.49 $3.19
10 $168.30 1% $2.27 $2.05
Appendix 4: Customer Lifetime Value of BBVA Compass from Paid Search Vs Display Ad
BBVA Customer Lifetime and Loyalty - Paid Search BBVA Customer Lifetime and Loyalty - Display Ad
Loyalty Rate 55.0% Loyalty Rate 55.0%
Interest Rate 1.0% Interest Rate 1.0%
Sales Growth 0.0% Sales Growth 0.0%
Acquisition Cost 191.25 Acquisition Cost 210
Profit Per Period 187 Profit Per Period 187
Lifetime value Lifetime value
5 period $208.63 5 period $189.88
10 period $218.82 10 period $200.07
Customer Tenure Profit Retention E[Profit] NPV Customer Tenure Profit Retention E[Profit] NPV
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