Commercial Performance and Profitability: the Case of Italian Banks

This study covers the subject of the relationship between commercial performance and profitability with reference to the experience of Italian banks. The reference environment is useful for giving a concrete basis to the analysis, but the results are also applicable to other business environments. After having illustrated the theoretical basis of the exercise the study then went forward, with the verification of its empirical existence, using the results obtained from various research projects carried out by the author over time. Having found that, also in the absence of explicitly customer based policies, the influence of the dynamics of the customer portfolio is particularly weighty on the gross profit, the attempt was made to find out the reasons why most Italian banks, till now, have not put the theory into practice. The conclusion reached was that one of the main causes of this situation was due to the lack of conceptual interpreting schemes, which would enable the practical implementation of actions relative to a customer based business view. Lacking the appropriate methods, to be able to correctly interpret the real situation, the impact of marketing on profitability becomes hazy and vague and this impedes its active integration into traditional managerial models. Therefore the desire was to make a first approximate contribution to the solution of this problem by proposing three working hypotheses. The first was to try and reinterpret banking activities as an ensemble of business areas. The second was to propose a way of interpreting the profitability results through customer behaviour. The third was to lay down a system of reading the commercial performance indicators, which was able to monitor its relationship with company profitability. Jel codes: G21, M31. Keywords: Bank Marketing, Bank Management, Bank Performance, Commercial Performance, Italian Banks