There are four main methods of segmenting customers available to organisations.
As discussed earlier, because of the level of information available to banks through how they use their products and services, their transaction history and how they use their channels, most banks should be capable of undertaking the more sophisticated and insightful behavioural segmentation.
|Demographic||Using one or a combination of age, income, gender, family make-up or education.|
|Psychographic||Solely uses attitudes, aspirations, or other psychological criteria.|
|Geographic||Solely by region, state, city, or neighbourhood.|
|Behavioural||Using behaviour exhibited towards your organisation, include the products and content consumed, and interaction frequency.|
In undertaking the above, the bank determines some segments that aren’t currently valuable. It’s not uncommon for senior executives and others to demand that the bank withdraws from or closes certain customer segments. However, that the segment may not be valuable now isn’t an automatic reason to close or withdraw, but a challenge to find a way that turns these customers into valuable ones.
Resources in a bank are finite, and senior executives must allocate resources to where value will be created. The bank’s senior executives will determine where they will focus and invest in that segment, proposition, or channel.
In deciding they will take into consideration the relative need to get new customers, grow existing customers and to keep customers from moving to a competitor, asking questions to develop what they need to do to direct resources to where value will be created.
Then, by using techniques such as Market Management, Opportunity Management, Sales Management and Customer Management they realise the value.
This is discussed in further detail in Customer management Level II.
The bank should share relevant insight in an easily accessible format so that all employees, whether they are front-line or back-office, understand the bank’s customers..
This helps employees understand customers even though they do not deal with them directly and can improve internal and customer-facing processes that cause customer frustration and dissatisfaction.