Creating a segment of one

For decades, financial marketers relied on customer segmentation models built around basic demographic data. But simplistic demographics such as age, income, and education are poor predictors of actual consumer behavior. Today, marketers must leverage the power of insight-driven personalization and use a predictive or prescriptive approach to understand the needs and desires of customers. The end goal should be building a “segment of one” for the customer.

What are some tools and methods used to market to the segment of “1”?

Delivering a personalized experience to a segment of one is achieved by creating a digital ecosystem that leverages insights from data and also drives value and loyalty through a unique interface design and content delivery. With more customers demanding a seamless, personalized experience across multiple channels, it’s imperative for financial firms to deliver. Many of these customers also identify as Gen Y or tech-savvy and have shown that they are ready to switch financial firms if they are not pleased with the customer experience.

Four enabling methods/tools used to attract and retain these customers are:

• Insight-driven personalization
• Customer attribution
• Data management platforms
• FinTech-enabled architecture.

Insight-driven personalization:

Personalized marketing (or one-to-one marketing for a segment of one) at the most basic level can be explained as the implementation of a strategy to deliver individualized content to recipients through data collection, analysis, creating contextual content and engaging customers or prospective customers by communicating with each individually.

A good example of personalization is Amazon “noticing” what a customer is buying/viewing and dynamically changing the page to feature items that are relevant based on their behavior. Amazon does several dozen queries to personalize each page visited by a customer. To personalize for customers, companies must build in rules-driven content that can be mapped to personas or attributions.

Customer attribution:

Customer attribution is a model made up of rules, or a set of rules, that determine how credit for sales and conversions is assigned to touchpoints in conversion paths. Using model comparison, companies can compare how different attribution models impact the valuation of their marketing channels and journeys. Creating customized journeys results in successfully decreasing the churn rate for products and increasing customer acquisition and overall positive customer experience.

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Data management platforms:

Data management platforms (DMP) are used to manage audience and campaign data from a variety of sources (e.g., social, third party data, etc.) that are stored, analyzed, and segmented in large data lakes. This knowledge can be leveraged to learn about customers’ preferences and behaviors to precisely target narrow market segments (microsegments) tailored to that customer. Microsegmentation is a more advanced form of segmentation that groups small numbers of customers into extremely precise segments based on defined factors, including behavioral predictions. Marketers can then direct specific marketing actions to each microsegment to maximize the effectiveness of every contact with each customer. That means each contact with the customer is personalized (depending on the size of the segment).

Microsegments provide a vehicle to deliver personalized and relevant offers that are more likely to lead to a conversion or have a positive impact on customer retention.

FinTech-enabled architecture:

The disruption FinTechs have created in the banking industry has also created opportunities for traditional banks to forge stronger connections. As discussed in Capgemini’s World FinTech Report, FinTechs pioneered personalized customer service and products, prompting traditional banks to rethink how customer data can be used to offer personalized products. For banks today, applying the data and insights to strategy will drive the high rate of return on a marketing investment. Using microsegments to improve performance indicators for success will also deepen their relationship and understanding of customers, increase retention and drive acquisition of new customers.

In addition, banks can now create an architectural ecosystem that integrates FinTechs. Together, the collaboration can bring differentiated products and service to market. Federated architectures that leverage FinTechs for alternative credit scoring, social crawling, peer-to-peer lending, robo-advisors and more will continue to set the standard for the segment of one.