How Credit Unions Can Use Customer Segmentation to Help Boost Revenues
As a credit union, you need to understand who your potential members are and what products and services they need. In today’s hyper-competitive market, demographic segmentation is no longer enough to zero in on the members that will help you build a rising revenue stream. Instead, you need powerful tools that leverage big data and accompanying analytics to provide the granularity necessary to identify and “talk to” high opportunity members. These tools should fully explore the following three keys to enhance your segmentation:
Total financial opportunity and capacity: What are your members’ incomes, accumulated wealth, credit behaviors and spending habits? Who has the means or wealth to invest heavily, in contrast to individuals who lack the means regardless of intent?
Channel preference: Which of your members are using smartphones or online banking? Who still prefers to walk into a physical office? You may be surprised by the answer.
Purchasing behaviors: What loans have your members taken out recently? Borrowers who recently took a certain loan product — auto or mortgage — may or may not be interested in ancillary offerings.
Drilling deeper, beyond demographics and life stage
Many financial institutions rely on demographics and lifestage to help them segment their audience. These tools are helpful, but they are not enough. Segmentation tools that depend solely on demographics leave an information vacuum in wealth analysis, channel preference and purchasing behaviors. These tools assume that individuals who fall into broad demographic and life stage categories have certain financial behaviors, which may have been valid 30 or 40 years ago, but not today.
Today, there are powerful customer segmentation tools that provide credit unions with data granularity that goes well beyond simple demographics. These newer tools rely on a foundation of directly measured consumer assets and are aggregated to provide highly predictive insights into the likely wealth profiles, habits and needs of current and prospective credit union members. In addition, today’s segmentation tools can help credit unions understand how best to communicate with various member segments (e.g., via mail, email, or mobile). With these insights, credit unions can better place the right message in front of the right person.
What to cross-sell/upsell and to whom
Today’s credit unions must understand what products and services their members might need. What types of investments might members be interested in beyond checking and savings? What types of loans and services are they looking for?
Segmentation tools should provide credit unions with precisely this information — consumer financial activity, behavior and financial capacity. This helps credit unions identify member segments for specific product and service cross-sell or upsell efforts. Inundating members with financial products they can’t use or don’t need wastes money and can leave them feeling disengaged. Knowing a member’s needs at this drill-down level helps deepen member engagement and improve customer service and retention. It also makes for a more favorable relationship.
Painless implementation is key
Easy access to these newer segmentation tools is critical for credit unions to be able to efficiently transfer their new learnings into their marketing tactics. Many segmentation tools offer both standalone applications that can help credit unions ramp up quickly, as well as advanced options to combine new and current member data within a credit union’s existing CRM or POS application.
Combining powerful segmentation insights with what the credit union already knows about its members fills in many gaps, adding even more power to a credit union’s ability to find hidden opportunities within its member-base and promote appropriate new products and services.
Credit unions who want to stay a step ahead of the competition and gain insight about the likely financial profiles of their members should consider these powerful segmentation tools.
Richard Nuckols is the Director of Product Management for IXI Services, a division of Equifax. He has over seven years of experience with IXI Services developing solutions for the nation’s leading financial services firms to optimize their omni-channel marketing strategies.
Article originally featured in July 2014 on www.creditunions.com
Image source: Cooldesign via FreeDigitalPhotos.net
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