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Keep customers active with segment targeting

Target customer segments to keep customers engaged and motivated. Create ultra-relevant marketing messages and deliver them with precision to distinct customer segments. Nurture customer motivation by continuing to address their problems and aspirations.

Improve the quality of services and products

Knowing your customers’ needs in greater detail allows you to adapt your products and messages to cater to the most important segments. Customers switch banks because they feel their needs are better met elsewhere. Prevent this by implementing customer segmentation insights into product development and marketing.

Personalise customer experiences by layering segments

Layer segments to create ultra-specific target customer groups for personalised services and marketing campaigns. For example, top-spending customers are one of your most important segments, but there’s only so much you can do with this. However, you can divide this group into even narrower target audiences by layering multiple segments.

For example, segmenting top-spending customers by product type can create more relevant messaging. You can also segment recent activity and pinpoint specific usage segments, such as those with a recent drop in transactions.

Now, you have a three-layered segment of high-spending customers who use specific products less often and whom you can target with re-engagement campaigns.

Maximise customer lifetime value

Bringing all of this together, customer segmentation helps you maximise customer lifetime value in several ways:

• Prevent switching
• Enhance engagement and motivation
• Re-engage customers
• Cross-selling, upselling
• Personalised customer loyalty incentives

The longer you retain customers, the more you can learn about them, and the more effective your lifetime value campaigns will be.

Balancing bank customer segmentation with privacy and marketing regulations

Of course, customer segmentation uses a lot of data, which raises important legal and ethical questions. First, you need to comply with data and privacy regulations, such as GDPR and CCPA. Second, you also have to consider the privacy expectations of your customers, who are increasingly aware of privacy issues and rising security threats targeting financial service providers.

If you aim to retain and maximise customer value, respecting their privacy and protecting their data are non-negotiables.

Regulators are clamping down on finance

Regulatory scrutiny towards the finance industry is intensifying, largely driven by the rise of fintech and the growing threat of cyber attacks. Not only was 2023 a record-breaking year for finance security breaches but several compromises of major US providers “exposed shortcomings in the current supervisory framework and have put considerable public pressure on banking authorities to reevaluate their supervisory and examination programs” (Deloitte).

Banks face some of the strictest consumer protections and marketing regulations, but the digital age creates new threats.

In 2022, the Consumer Financial Protection Bureau (CFPB) warned that digital marketers must comply with finance consumer protections when targeting audiences. CFPB Director Rohit Chopra said: “When Big Tech firms use sophisticated behavioural targeting techniques to market financial products, they must adhere to federal consumer financial protection laws.”

This couldn’t be more relevant to customer segmentation and the tools banks use to conduct it.

Customer data in the hands of agencies and big tech

Banks should pay attention to the words of CFPB Director Rohit Chopra when partnering with marketing agencies and choosing analytics tools. Digital marketing agencies are rarely experts in financial regulations, and tech giants like Google don’t have the best track record for adhering to them.

Google is constantly in the EU courts over its data use. In 2022, the EU ruled that the previous version of Google Analytics violated EU privacy regulations. Google Analytics 4 was promptly released but didn’t resolve all the issues.

Meanwhile, any company that inadvertently misuses Google Analytics is legally responsible for its compliance with data regulations.

Banks need a privacy-centric alternative to Google Analytics

Google’s track record with data regulation compliance is a big issue, but it’s not the only one. Google Analytics uses data sampling, which Google defines as the “practice of analysing a subset of data to uncover meaningful information from a larger data set.”

This means Google Analytics places thresholds on how much of your data it analyses — anything after that is calculated assumptions. We’ve explained why this is such a problem before, and GA4 relies on data sampling even more than the previous version.

In short, banks should question whether they can trust Google with their customer data and whether they can trust Google Analytics to provide accurate data in the first place. And they do. 80% of financial marketers say they’re concerned about ad tech bias from major providers like Google and Meta.