Consumers are not a homogenous group, which means that banking is not a one-size-fits-all service. For that reason, consumer segmentation — and developing a deeper understanding of the needs of those segments — should be on every bank’s resolution list for 2012. By understanding the expectations of different consumers, financial institutions can better target potential new customers, improve retention and provide better customer service.
Earlier this year, First Data and Market Strategies International conducted a study, The New Consumer and Financial Behavior, that measured consumer attitudes, behaviors and expectations pertaining to their financial institutions. As expected, the study did not reveal one cookie-cutter consumer with one set of desires and interests. Instead, the study uncovered six customer segments, each one based on a set of unique values, behaviors and attitudes.
So, what is the main implication based on the six different customer segments? As community banks evaluate programs for 2012 and throughout the year, they can strengthen their ties with consumers by developing programs that are relevant to customers and prospects. They can also prioritize marketing efforts by using segmentation insight to determine which groups are most valuable to them.
For example, Simplifiers and Conventional Stalwarts often prefer traditional banking methods such as face-to-face interaction, check writing and cash payments. Although some Simplifiers are open to online banking, for the most part, these customers are not likely to dive into new technologies right away.
So the message is clear and simple for community banks: continue to provide traditional banking services and face-to-face interactions to help make these customers stick. Also, look for ways to improve efficiency within these more traditional and often more resource-intensive services, such as offering quarterly statements.
Interestingly, the New Consumer and Financial Behavior study found that 89 percent of Simplifiers are highly satisfied with their financial institution, which is a local bank or credit union for roughly one-third of them. This finding simply underscores the fact that in-person interactions can go a long way and traditional banking methods have not disappeared for everyone. Given the current climate in financial services, satisfaction rates among smaller banks are not anticipated to drop anytime in the near future — especially if these financial institutions continue to properly cater to the needs of their specific customer segments.
To retain and attract new Fast Trackers, on the other hand, banks would be wise to promote mobile banking, ATM convenience and high-tech communication channels. And, to help keep these customers from switching to another financial institution, community banks should continually make Fast Trackers aware of their tech-related products and services, as well as those that make their busy lives more convenient.
To be successful in 2012, financial institutions must realize they cannot be everything to everybody. Community banks need to determine which consumer segments are most valuable to them and how they can best attract and retain them. The answer to the question, “Who is the new consumer in 2012?” is definitely not the same for everyone.
Market Strategies (www.marketstrategies.com) interviewed a national sample of 2,000 consumers age 18 and older from March 17 to March 24, 2011. Respondents were recruited from the uSamp opt-in online panel of U.S. adults and were interviewed online. The data were weighted by age, gender and household income to match the demographics of the U.S. banked population. Due to its opt-in nature, this online panel (like most others) does not yield a random probability sample of the target population. As such, it is not possible to compute a margin of error or to statistically quantify the accuracy of projections.
Bryan Kratz is senior vice president, financial institutions at First Data.
Copyright (c) January 2012 by BankNews Media