Customer Segmentation and Market Analytics FHLB Regional Member Meetings

Transcription

1 Customer Segmentation and Market Analytics 2018 FHLB Regional Member Meetings 158 Route 206 Gladstone, NJ P: (908) F: (908)

2 The evolution of customer wants and needs is driving financial institutions toward becoming customer centric as opposed to product centric... Customer Centric Each customer segment is a line of business Product lines are subject matter experts Relationship manager is key contact Marketing is targeted Product Centric Each product is a Line of Business Manage bank by product market share Organization is SILO ed Limited coordination between lines Marketing tends to be decentralized 1

3 Financial Institutions must move from the traditional banking model which pushed all products to all people and therefore is confusing to customers... Products / Services Delivery Channels Deposit Products Branch Loan products ATM Retail banking services Internet Commercial banking services Mobil Other financial services Remote Capture In person Customers??????? 2

4 To a customer centric approach where products are delivered to customers based on their needs and preferences... Products / Services Delivery Channels Deposit Products Branch Loan products ATM Retail banking services Internet Commercial banking services Mobil Other financial services Remote Capture Customers In person 3

5 aly An er tom Cu s Understand your customer Break down silos ce rvi Se t & ion uc vat od o Pr Inn tic s To do this, we need to implement a customer centric banking strategy... Improve customer experience Process Improvement 4

6 How to define retail customers... P$YCLE Segments Groups households together based on predictive abilities of financial behavior including: Income producing assets Household income Life stage Age of Householder Home-ownership Urbanization Financial product and service usage 58 segments Within 12 life stage groups 5

7 Example Who s your customer? Meet the Whipple Family Ted and Carol Wealth Market 2. Greg and Nancy School Daze 3. Stacey Loan Rangers 1. 6

8 Customer #1 Who are Ted and Carol? 7

9 Customer #1 Lifestyle profile... 8

10 Customer #1 Media profile... 9

11 Customer #1 Financial profile... 10

12 Customer #2 Who are Greg and Nancy? 11

13 Customer #2 Lifestyle profile... 12

14 Customer #2 Media profile... 13

15 Customer #2 Financial profile... 14

16 Customer #3 Who is Stacey? 15

17 Customer #3 Lifestyle profile... 16

18 Customer #3 Media profile... 17

19 Customer #3 Financial profile... 18

20 A tale of 1 family, but 3 customer segments... 19

21 The concentric circle of Relationship opens up a wide array of direct marketing opportunities... Family Business Associate Customer Friends Neighbors 20

22 Ted and Carol have other business opportunities... Ted Partner in an accounting firm Has 14 employees Interacts with 100 wealth clients directly and 30 + businesses Has a Trust for Carol s benefit then then kids Carol Owns and operates real estate properties Has 6 operating accounts Heads the local chamber of commerce 21

23 Understand Your Customers Understand your customer Break down silos Improve customer experience 22

24 P$YCLE coding gives a very detailed view of who the customers are, and identifies which customers to target... Demographics Financial Behavior Geographic Data Consumer Behavior P$YCLE Understand What are their demographics? What does their financial wallet look like? What are their lifestyles? What are their attitudes? Find Where do they live? Where do they shop? What do they watch? What do they read? What do they do online? Engage What products and services do they use? What messaging will resonate? How can I meet their needs? How can I attract more? 23

25 Implement a customer centric approach to Community Banking 24

26 Case Study: Let s go after School Daze customers Who are they? What is our market share? How do we engage them? Where are they? Which markets should we be cross selling in? Which markets should be generating new customers? 25

27 Who are they? P$SYCLE provides a wealth of data on customers in the School Daze segment... School Daze Demographic Data Financial product and service profile Lifestyle datasuburban households, A collection of large, School Daze represents one of the nation's best markets for borrowing. These uppermiddle-class families score near the top for having first mortgages, college savings plans, and auto loans. Yet these Gen-X parents have only just begun to think about retirement, and they've acquired only moderate levels of income-producing assets such as stocks and mutual funds. Still in their childrearing years, they're a prime audience for term life insurance, which they tend to buy from independent agents whenever a new child is born Media data 26

28 What is the market penetration of the existing Bank relationship with the Target segment group... Strong levels of core deposits with a focus on checking and savings Limited dollars in CDs Highest dollars are in real estate loans - focus on 1st Mortgage and HELOC Also strong demand for auto loans, student loans, and credit cards 8-27

29 The delivery channels these customers use... High usage of Direct deposit Strong users of internet banking services 8-28

30 What products and services do they use... Focus on high usage and high potential products and services 8-29

31 Create the correct bundle for this segment... Deposit Relationship: Checking Account Safety Savings Account Special Children s Account School Daze 401k Plans Internet/Mobile Banking and Bill Pay Convenience School Daze Residential Mortgages Loan Relationship: Mortgage and HELOC Auto loans Student loan refi options Delivery Channels: Strong mobile and internet banking platform that includes bill pay Free ATMs Credit Cards and Lines of Credit Other: 401K Plan 529 College Savings Plan 30

32 And competing with targeted product bundles... Bundle Components: Credit Card What is Simple: Now Account Simple offers a bank account that has all the tools you need to manage your money built right in. The funds in Debit Card your Simple account are held by our partner bank, The Bancorp Bank, Member FDIC. Simple provides Direct Deposit everything else, including the Simple Visa Card, our powerful ios and Android apps, a beautifully designed web interface, and customer support that really cares. ATM nationwide Free Bill Pay Mail a check Link to other accounts Instant transfer to Simple Customers No Fees Real Human Support Safe to Spend reports Push notifications 31

33 Where are they? 32

34 Which markets should we be cross selling in? 33

35 Which markets should be generating new customers? 34

36 A customer centric approach to banking allows us to evaluate strategies, locations and marketing based on the specific customers we are targeting... Strategy Location/Channel Marketing Identify cross-sell opportunities Evaluate locations Locate target customers Identify new customer targets Optimize markets Increase marketing efficiencies Identify product and service bundle opportunities Expand into new markets Empower advertising agency Understand market potential Develop promotions Assess alternate delivery channels Tailor messaging and media mix Innovate/create new products Set goals and expectations by market 35

37 Break Down the Silos Understand your customer Break down silos Improve customer experience 36

38 Identify and begin to address the barriers to implementing a customer-centric strategy, including organizational and compensation structures... Data Systems Organization Household your data - define a unique customer identification number and assign to every account that a customer has across the organization Implement a CRM model to track activities such as online and mobile banking, customer retention, and customer analytics Analyze the existing barriers to effective retention and cross-selling efforts Append customer segment codes and other relevant data Continuously gather new data and track customer behavior Implement robust cross-selling and new customer metrics and reporting Integrate data across channels (i.e. CRM system and core processing system) Analyze changes required to make the compensation structure customer-centric Make necessary changes to the organizational structure Implement customer centric employee incentives enterprisewide While having a reliable customer data set is challenging, especially for institutions that rely on legacy systems that were developed many years ago, it is always better to do analysis with a limited amount of data than to do nothing until a robust customer-data warehouse or CRM application is fully implemented 37

39 Engage your customers Understand your customer Break down silos Improve customer experience 38

40 Target the right customers with the right products at the right price using the right delivery channels... Customize Products Differentiate Pricing Enhance delivery Understand the product and service needs of the target customer segment Understand each customer segment s willingness to pay for a given product Develop customized delivery channel strategies for each customer segment Break down products into a set of shared elements that can be easily combined to create customized product bundles Explore where customers may be more flexible about rates and set prices accordingly Strive to provide a consistent experience across all channels while directing customers to their channels of choice Bundle products based on the customer segment needs, type of product/feature growth desired, and how well the products complement each other Provide marketing messaging that articulates the value of bank products to customers Assign clear ownership and responsibility for pricing decisions to coordinate across marketing, sales, and product groups Develop channel-specific strategies that capitalize on the distinct and complementary role of each channel; e.g. low-cost mobile and internet for routine transactions and higher-cost branch and call center for developing new relationships Unify systems so that product bundles can be easily operated across product lines, tracked and reported on 39

41 Breakdown silos, innovate and implement a customer centric approach... Know your customers Household / Geocode / Segment Code Implement a CRM system to track performance Develop a customer centric strategy for growth Incent employees to build customer relationships not sell products Cross Sell your target customers Develop an enterprise wide cross sell strategy Provide incentive to cross sell Implement and maintain a CRM system for tracking Develop brand loyalty Attract new households in your target customers Identify the target customers Know the needs of the target customers in your markets Know how to reach the target customers in your markets Track your performance 40

42 Thank you for participating in today s conference... For more information, please contact us directly at: Donald Musso, President Scott Polakoff, Executive Vice President Scott Hein, Director Tim Koch, Director dmusso@finpro.us spolakoff@finpro.us 41