Targeting for Success: Customer Segmentation and Retention Strategies for BFS Companies
The importance of proper customer retention and customer segmentation is unparalleled in the banking and financial services sector.
Retention is crucial since it is always more beneficial to retain more customers who not only add to the BFS company’s revenues and recommend it to others, but are also not as costly to retain in comparison to the acquisition of newer customers.
Satisfied and long-term customers are not only more amenable towards price or other fluctuations, but are also more likely to engage in word of mouth recommendations.
With proper segmentation, BFS firms can target customers better, depending on their specific needs.
Customer retention strategies for BFS companies
Here are a few customer retention strategies that BFS firms can use:
- Anticipate and understand customer requirements- The needs of customers keep evolving with the passage of time and several other developments. You should be aware of several event or milestone-based requirements that may become important for diverse customer types. Customers are now used to intuitive banking engagement, higher convenience and better speed as offered by other financial institutions. You should look at boosting the customer experience through a simple and intuitive interface on your mobile app or website. You should also offer round-the-clock access through an omnichannel and digital-first blueprint.
- Package similar offerings by highlighting unique value propositions- A great way to enhance customer retention is to package your offerings uniquely. Highlight the value that customers stand to gain along with the core differentiators. From rewards, deals and other discounts to highlighting unique or different features, you can adopt these strategies towards building a customer-focused culture at the institution.
- Higher personalisation- Personalisation is the name of the game today, with regard to fostering customer loyalty and enhancing customer experiences greatly. From personalised recommendations suitable for specific customers or groups to custom interactions/engagement, they go a long way towards enhancing overall retention. You should start segmenting customers based on their preferences and circumstances, before ensuring that they get the right offerings at the right time.
- Boosting customer satisfaction- You should emphasise on cutting-edge customer service in order to enhance overall satisfaction levels. Keeping clients happy is possible with personalisation, swift responses to queries, prompt assistance and problem-solving, better engagement, and better data analytics after gathering information throughout multiple touch points. This data will help you understand what customers want and where they are unhappy. You can thus leverage analytics to improve satisfaction levels.
- Using behavioral analytics- You can tap data analytics to boost retention and revenues alike. Analyse data throughout multiple customer touch points and engagement channels to understand behavioral patterns and trends along with customer preferences, buying patterns, products/services that are more in demand, channels used by customers, and other aspects
Customer segmentation and how it is essential for BFS firms
Customer segmentation is crucial for banking and financial services firms. Before venturing into data analytics, you should undertake segmentation on the basis of behavioral patterns.
This will be influenced by things like preferences for rewards/loyal programs/promotions/deals and also buying patterns, overall frequencies for purchases, and other parameters.
This will help you roll out targeted marketing and recommendation campaigns for various segments/groups based on these insights.
Customer segmentation involves tailoring your content for ensuring the delivery of more relevant and useful marketing campaigns for specific customer groups in place of choosing generic messaging for everyone.
Here are some segmentation strategies that you should follow:
- Build marketing strategies for every category/segment. Channelize your marketing campaigns, budgets, and resources towards highly profitable customer groups and segments which may eventually become your leading customer base.
- Sync your customer groups with relevant services and products. You can build personas based on these customer segments. It will help you understand which products/services customers require throughout their journey with your brand.
- Anticipate customer requirements smartly- Analyze customer data and historical patterns to define your segments based on what customers require. For example, are customers looking at using more rewards points? Are they browsing more on the website than the mobile app? Create messaging with a focus on the solutions that you can provide to anticipated customer needs in advance.
- Identify up-selling and cross-selling opportunities on the basis of customer segments. Customers with numerous products are likely to demonstrate higher loyalty although they have varying needs at different life stages. Divide them into categories based on the life cycle or life stage, along with most-likely-next-sell. Develop marketing campaigns based on relevant opportunities for every segment.
Segment-wise communication and engagement strategies, along with tailoring messaging for every segment will help you create better personas of your targeted customers. You can then leverage insights to come up with the best marketing campaigns tailored to customer requirements.
1. How can BFS companies effectively identify and define their target customer segments?
BFS firms can more effectively identify their targeted customer segments and define them better through proper segmentation. They can do this on the basis of data analysis, helping them classify customers on the basis of parameters such as age group, buying habits, patterns, products/services most required, life stage or life cycle in the customer journey, and so on.
2. What are the key benefits of customer segmentation for BFS companies?
Customer segmentation helps BFS companies in several ways, enabling them to target specific groups better with tailored marketing campaigns, recommendations, and products and services. BFS firms can know which target groups require specific solutions and offer the same accordingly.
3. What challenges or obstacles do BFS companies face when implementing customer segmentation and retention strategies?
BFS companies face a few obstacles in the implementation of customer retention and segmentation strategies. These include the absence of technological expertise, compatibility and integration issues along with the inability to leverage data analytics for enhancing customer experiences and satisfaction alike.
4. How can BFS companies measure the effectiveness and ROI of their customer segmentation and retention initiatives?
BFS companies can track the ROI and effectiveness of customer retention and segmentation initiatives by undertaking data analytics relating to parameters such as sales growth across segments, changes in consumer patterns, customer feedback trends, churn rates, and so on.
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