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Digital: The beginning of the end for segmentation?

We are all familiar with Google, Facebook, Instagram, WhatsApp etc, the backbone of search and communication tools on the web. We see these organisations valued at billions of dollars, we see their founders - often twenty-somethings - become overnight billionaires, but how many of us understand the real value in these business, or understand how they are changing the way we sold to and served... why are companies prepared to pay mega-bucks for what essentially is a web site? It all comes down to profiling, giving business the information they need to empower better decisions, be it in sales, or service.

Every interaction we make online, every game we play, every dollar we spend says something about us, and in the digital age, where this information can be collected and used to profile behaviours, it is an awesome tool for business. Collecting information like this is called ‘Big Data’ or sometimes ‘Small Data’ - depending on what the information is used for and how it is collected.

Some say ‘Big Data’ and customer profiling sound terribly ‘Big Brother’, that they do not want large organisations to gather any data about behaviour, least of all to profile them. However, these naysayers are protesting too late. The ‘Big Data’ revolution is here and here to stay.

So what does this mean for us, the customer? and how will this change the way organisations behave and serve us better?

I sat in Board meeting last week and I heard the CEO of a leading Bank speaking about Segmentation and I could not believe what I was hearing. Introducing new segments to entice customers to stay with the bank...

Why was this such a shock? Well, in simple terms, I am struggling to understand why any customer should fit into a box - ‘Mass’, ‘Mass Affluent’, ‘Premium’ and ‘Private’ for example? If, as I am lead to believe, banks are racing towards a digital age, offering customers more and more technology, smaller branches crammed with technology, greater convenience etc... through their digital experiences, why is it necessary to group customers into little boxes? Bankers must remember that ‘One size does not fit all’.

Why, if my bank is using digital, can it not understand me better and talk to me personally, in a meaningful and relevant way? Why do I have to be grouped into the category of other ‘Premium’ customers and marketed to on mass with other ‘Premium’ customers? It is simply because it is easier for internal marketing teams to make sense of the complex world we live in... but even that is a nonsense. Why should we as customers conform to the inadequacy of big business to provide us with a personal service? We shouldn’t.

There are ‘Banks’ out there who are aligned to this thinking. Virgin Money for example, offer a fantastic experience for all their customers whether you have £1m or £100 in an account with them. The notion that a customer has to fit into a box and that a ‘Premium’ customer deserves better service, a swanky lounge or something super-duper because they are in some way ‘special’ has been thrown out of the window and replaced by a culture of service excellence on a par with that which one would expect in a leading retailer or hotel. A relationship where every customer is an individual, where relevancy matters. Critics would say that this is just branding mumbo-jumbo, but at the end of the day, the commercial results speak for themselves (How to increase profits by 37%).

It is therefore my belief that indeed, the rapidly developing world of digital and everything it entails does spell the beginning of the end for segmentation. This is already happening in other industries, why isn’t it happening in Banking - where after all, every bank already knows it’s customers intimately - where we go, what we spend and how we spend. Welcome to the age of ‘super-personalisation’.

I am not saying there is anything wrong with a special service, for a special customer, but surely all customers are special?

My advice to bankers is as follows:

  • Rip up the segmentation model

  • Get personal

  • Use the data you have to understand your customers intimately

  • Focus on meaningful and personal relationships with every customer

  • Deliver great service regardless of the individuals bank balance. They may have millions with another bank and transfer this to you, or they may be future millionaires

  • Use trend analysis to predict the needs of your customers before they know them

  • Speak to your customers individually

  • Remove the guess work from marketing activities - data will tell you all you need to know about customer behaviour

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