Target marketing is a now a prerequisite for survival
Today’s Analytical Society
In today’s increasingly competitive environment for depository growth, the need to target different credit union member segments is a must. Organizations that segment their members or customers through data mining and profiling will be able to have a more tailored and personalized set of tactics for its product service offerings thus increasing profitability.
Target marketing which may not have been as essential for an organization’s success twenty years ago is now a prerequisite for survival. In order to effectively target market one must gain insights into their member or customer base through the use of data analysis. This may seem logical but many organizations today still operate under the “gut feel” on customer service offerings of an influential stakeholder. Decisions are made simply based on personal experiences rather than statistically valid samples of actual behavior. In many cases, this can result in mismatched product and service offerings which negatively affect member or customer satisfaction expectations. Differentiation and exceptional service are what attract members and customers to an organization. The lack of attention to either will increase defections and increase churn. Churn is inevitable in every business but the more you reduce it the higher profitability for your firm. As we all know, it costs less to keep an existing customer then to gain a new one.
Where to Start-People First
I am often asked where to start on gaining insights into your customer base. The first place to is actually speaking with your members or customers to assess what their wants and needs. Yes…A data guy just said it …people first. The world of analytics and data is meant to better the lives of members and customers by blending what they say to us and matching it to the patterns found elsewhere within the data. Too many times marketers use static or related data to make decisions without taking into account the human side by actually datamining and evaluating the actual behavior of their members or customers.
How to Put Segmentation to Work for You
After gathering direct input from your members or customers and blending it with other information you might have such as demographics and psychographics, a good first step tool is to create member or customer profile sheets. These profiles will help you easily compare specific information including transactions and behaviors between segmented groups within your organization to that of the overall member or customer base. This is a very low cost and straightforward way to discover if there are any traits and behaviors that stand out for the member or customer segment of interest. Once you have identified these traits you can tailor your product and service offerings as well as messages that resonate and have a higher likelihood to motivate a desired action. Below is an example of a basic profile sheet done in MS Excel.
|General Membership Base||Proposed Target Market within General Membership|
|Average Membership Duration-in Years||4||2|
|Median Membership Duration-in Years||3.5||2|
|Average Share Balance||8500||12500|
|Percentage that Possess Credit Card||35%||37%|
|Percentage use our Mobile or Online Services||35%||65%|
|Average Number of Transactions Per Month||15||17|
|Focus Group Interests||Low APR. More Branch Location||More Mobile Banking Features, Live Chat on Website|
After looking at the information above you can see that certain traits within your target are different from your overall base. From a quick examination of the information one can proceed directly to building the marketing plan or in many cases it will generate the need for further targeted research and analysis. An organization’s member or customer base is much like a salad bowl. Each item within the bowl is unique and has different origins. Data mining and analytics provides the knowledge for customized target marketing to each segment within your member or customer base. This is a key enabler for optimal profitability and to grow at its optimal rate because it treats your members or customers as individuals rather than a homogenous interchangeable group of consumers.