Exhaustive and expensive analysis has led bankers to the truism that fewer than 20% of their customers contribute 100% of profits. We call those our "A" customers, the best of the best, whom we must protect.

It could take more than 100 new customers to make up for the profits lost from the defection of a single outstanding client. In fact, some suggest that many customers do not have the potential to become profitable at all. Therefore, we should find ways to convert them to profitability through higher prices or lower servicing costs, or find a way to exit that part of the market.

The real question is: What would happen if all customers below A status left our banks? What if by some magic we were left with less than 20% of our former customer total, all of them highly profitable?

The answer: We would go bankrupt.

Though the profitability of most customers is negative, in many, though definitely not all, cases they deliver incremental revenues, without necessarily adding costs.

And if left with only our highly profitable customers, it is unlikely that we could close our automated teller machine networks and branches because those customers expect access to all of our distribution systems and will not settle for fewer points of contact. The variable costs of those channels are not sufficient to offset the reduction in volume associated with a reduction in the customer base.

Living only with A customers would not be economically viable. They may be critical to our success, but on their own they are not enough to deliver adequate returns to shareholders.

Competition for these desirable customers is intense. The competitors are able and diverse, ranging from other depository institutions to high- powered brokerage houses, on-line trading networks, and specialist boutiques. They, like us, know that each of those customers makes an enormously disproportionate contribution to potential profits and is willing to do a lot in the way of loss-leading to acquire the accounts.

As a result, some banks end up moving their best customers into lower- profitability tiers with indiscriminate price breaks and other discounts just to stay competitive and not lose the business.

Though the A customers are indisputably of critical importance, focusing solely on them is highly risky. The likelihood of success is greater in underserved pockets of seemingly less attractive markets-where the competition is less stiff.

Some banks have made a very good living in such markets, with an economic-value proposition that works for all constituents-shareholders, customers, and employees.

Let us not all flock to the same place. The lemming syndrome has never served the banking industry well. We should diversify our efforts to find underserved segments, beyond the A customer, that we can capture, serve, and retain economically. Ms. Bird, an executive vice president of Wells Fargo Bank, is based in Sacramento, Calif.

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