Reference no: EM132524038

Norman Stoner has just been appointed Chief Executive Marketing at the Lend More Bank. He wants to grow the customer base and talks to the senior managers of all the branches. Norman states, 'Recruit more customers is the slogan-that is how we as a bank can grow. Offer more loans, with lower fees and attract new customers'.

Anne, a manager of customer services, is more tentative. She says that the bank is losing around 15 per cent of existing customers every year. They take their business to the competitors because, as existing customers, they are not getting the favourable deals that are offered to new customers.

Norman takes the view that existing customers are not a priority for a growth strategy. More revenues are the key to growth.

Question 1: Both Norman and Anne ask for your recommendation as the management accountant. What is your recommendation?

A. recruit more customers with aggressive discounting of lending rates-growth in revenues is the key to profit growth

B. increase the retention rates of customers because increasing customer retention rates by 5 per cent increases profits by 25 per cent to 95 per cent

C. attract more 18- to 25-year-old customers because their lifetime profitability is higher than retaining 40- to 60-year-old customers

D. keep coming up with new deals so that there will be new customers who will be attracted to Lend More Bank-customers will come and go in today's competitive market