Q2.

What are the various steps in online acquisition process and how can the bank improve the
process? What is the effective acquisition cost and life time value of customers acquired through
the online channel?

The online channel was built to increase brand awareness and acquire new customers for various
business lines. BBVA compass used both search and display advertising accompanied by promotional
offers to encourage the customers to open a new checking account. Following steps were used for
customer acquisition:

 Customers would google search for checking accounts or would come across a display ad and
click on it
 After clicking, they are taken to the banks landing page where they can complete the
application to create an account
 The application has to then be verified by the bank and confirmed whether the customer
meets the minimum credit score to ensure that he can meet the service charges and
overdraft
 Once approved, a new checking account is created for the customer and he needs to fund it
within a certain period of time to avoid cancellation

Only 10% of the customers who came across an ad and actually clicked on it start an application. This
could be because the rest were just enticed by the offers and found the location inconvenient.
less than half the people who start the application actually complete it and 80% of the submitted
applications get approved. While only 2 thirds of the accounts that are approved actually get funded
before the cancellation period.

Following are the steps recommended for improving the acquisition process

 Make the application process more appealing and attractive and at the same time less time
consuming yet more interactive
 Clearly mention the details required and the minimum criteria that makes customers eligible
for creating an account
 Provide proper alerts or reminders for customers to ensure that they fund the account on
time.
 Take feedback from customers to improve the process and eliminate bugs

BBVA compass uses online as well as offline channels to acquire new customers. Some of these
channels include telephones, branches, direct mail and websites. While the balances for online
accounts are low, their charges are higher and therefore provide a slightly higher net income. The
average checking account lifetime value with expected life of 5 years in the banking industry is about
$800.

BBVA aimed to keep its customer acquisition cost below $200. Based on the offers, the effective cost
of acquiring a customer through an online channel was just $100.