Segmentation Applications in Banking - Data Mining Techniques in CRM: Inside Customer Segmentation - page 288

good prospects for lending products such as a consumer loan or even a mortgage.
These customers are heavily involved with transactions. Therefore they should be
encouraged to make use of the bank's alternative channels. They should be aware
of all the options they have for taking care of their business without visiting a
branch. The self-service options (online banking, automatic payments, etc.) should
be communicated to them and their transactional convenience should be regarded
as a main priority.
Borrowers-credit card users are high-value customers with a high attrition
risk and low satisfaction rates. Their handling included the offering of loyalty
incentives to prevent possible migration to competitors. These customers are
price sensitive and keep on gathering information concerning consumer lending
products on the market. Thus, the bank should focus on their product bundle
and pricing to reduce their attrition risk and increase their satisfaction level. The
bank should further analyze their needs and behaviors and offer them specialized
products that better match their wants and requirements. For instance, the mining
of credit card usage data can identify the distinct purchase behaviors of credit card
holders which can then be addressed by specialized cards and reward schemes.
Likewise, a personal loan solution can be proposed to credit card holders who
have problems with the payment of their dues. Many of these people are already
familiar with the alternative channels. To facilitate their interactions with the bank
and their payments, they should be introduced to the benefits of Internet banking
and automatic payments. This segment can prove to be a good target group for
promoting a mortgage loan. Considering that some of them are delinquent debtors,
their credit score should be taken into account before making such an offer.
Full relationship customers are the backbone of the organization. They are
high-value customers who have a strongly established relationship with the bank.
These people should feel that they are specially treated and that the bank fully
understands their needs and handles their possible complaints in a timely manner.
They should perceive their importance in every interaction with the bank. Their
loyalty should be rewarded with incentives, special offers, tailored product bundles,
and special pricing as a sign of recognition of their significance and as an attempt to
further develop their relationship with the bank. Alternative transaction channels
could be further promoted to these customers. Since the bank is the main financial
partner for most of them, their confidence and trust may consist of a cross-selling
opportunity for a mortgage loan.
SEGMENTATION IN RETAIL BANKING: A SUMMARY
The marketers of a bank decided to segment their consumer customer base
in order to better understand their customers and more effectively tackle their