How do banks segment their customers?

There are numerous ways to segment customers. Traditionally, segments are demographic, geographic, or product based. Banks can craft segments based on a wealth model, in which segments are categorized based on similar traits and demographics and give insight into the potential spending for these consumers.

Why is customer segmentation important for banks?

Customer segmentation helps banks get to know their customers on a more granular level. Segmentation reveals specific intelligence that could otherwise be obscured by the sheer volume of data. Segmentation can also help banks better understand the customer lifecycle and predict customer behavior.

What is the criteria for effective segmentation?

Effective segmentation should be measurable, accessible, substantial, differentiable, and actionable. When a company has segmented their market accordingly, there is a higher chance that it will become more profitable and successful in the long run.

What are the benefits of customer segmentation in banking?

A list of common benefits derived from customer segmentation follows: Through customer segmentation, banks can deploy more personalized initiatives that increase the likelihood of prospects becoming customers. Banks can also generate specialized efforts toward segments that yield the highest profitability.

How to segment a market for a bank?

Probably the easiest approach to segmenting a market for a bank is to look at customer value segments and the progression through the customer relationship life-cycle.

Which is the best example of market segmentation?

Market segmentation example for banking. Probably the easiest approach to segmenting a market for a bank is to look at customer value segments and the progression through the customer relationship life-cycle. In terms of the customer relationship life-cycle, the bank will look to attract first-time customers…

Who are the segments of the bank customer?

A family living in the suburbs with two children under age six in a house less than 1200 sq ft, who have a net worth over $500k. This segment could be attractive to candidates looking for home loans to move into a bigger house. An existing customer who has only a car loan for $30,000 with your bank, but is also a business owner.