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Six things you've missed if you haven't updated your segmentation

Finance brands that fail to update their segmentation could find themselves behind the times, neglecting their needs - and those of their customers

Six things you've missed if you haven't updated your segmentation

Traditional segmentations tend to be updated on a two-to-five year cycle. When consumer behaviours and attitudes are continually evolving – shaped by events, technological advances and changes to legislation – this isn’t good enough.

If you haven't updated your segmentation recently, there's a good chance your customers now think and behave differently to how you think they do. This means there’s a real danger that your campaigns and messages won’t resonate. 

Brands should expect their segments to evolve with their customers - being flexible enough to absorb and adapt to changing consumer attitudes and behaviours. Modern segmentations are dynamic and allow you to see consumer behaviours in much richer detail.

If you haven’t updated your segments in the past year you will have missed…

…the first steps towards open banking

Digital challenger banks such as Atom and Monzo have gained traction recently in what many see as the first step towards open banking.

Existing segmentations can’t tell you which of your customers have signed up to one of these new rivals. If they have signed up, are they: early adopters keeping up with the latest trend, heavy spenders looking for a simple way to manage their money, or just curious consumers?

Knowing who they are and where they sit in your customer base is vital to keeping them within your ranks and communicating to them on their terms.

…the rise of telematics insurance

Telematics and the growing possibilities offered by connected devices in the home is shaking up the insurance industry.

As the amount people pay is no longer determined by their age or gender, communications founded on basic demographics will not work. With premiums increasingly based on actual usage factors, such as whether they are careful drivers or conscientious home owners, insurance companies instead need to speak to consumers on the basis of their behaviours.

Because telematics benefit both policy holders and insurance companies, brands need to know which consumers have signed up, which are likely to sign up and how to encourage the more reluctant. Only by truly understanding your customers can you know what will resonate.

…major pension reforms

The fall-out from recent sweeping pension reforms have dramatically changed the way people access pensions.

As people can now take out their annuities as lump sums while others continue with regular payments, not knowing which side of the fence your customers fall into places you at a significant disadvantage.

Knowing which type of consumer is drawing a traditional pension and which is opting for a lump sum, can help you plan effectively and tailor how you approach them about future investments.

If you haven’t updated your segments in the past three years you will have missed …

…the inexorable rise of banking apps

Over the past three years the use of banking apps has exploded.

Existing segmentations won’t tell you whether customers are early adopters, mainstream users or consumers that are hesitant to change. This means you may be selling the benefits of smartphone banking to a customer that has serious concerns about security and is resistant to using a banking app.

Only by having an up-to-date and dynamic understanding of these attitudes can you know where on the journey they are and more effectively lead them along the path.

…consumers being more open to alternative banks

In recent years more current account holders have started to turn to challengers such as Tesco and M&S, meaning traditional banks have to work hard to maintain loyalty.

When it comes to consumers who have switched or might switch, it's vital for banks to know their motivations. It may be their attitudes towards PPI, loyalty schemes offered by "supermarket banks", or particular types of switching deals. But the chances are your current segmentation won’t be picking up on these things.

Only by having a constantly-updated overview of your customer base can you know which of your customers have lower levels of loyalty, and may be looking at alternatives – and why.

…the cumulative impact of historically low savings rates

While many expected interest rates to increase following the recession, they have actually stayed low. As a result a savings gap has emerged for later life provision, with some people’s pension pots falling well short of expectations.

If you have not updated your segments recently you will not have a clear steer on which policy holders have reacted by investing more intelligently, and which have stuck their heads in the sand and are hoping for the best.

In order to plan effectively and approach your customers appropriately, you need to know on an ongoing basis where your consumers sit on this scale.

Using dynamic data for more effective segmentation

YouGov has helped global businesses within the finance sector – including two of Britain’s largest banks – to more effectively segment their audiences and connect the data that informs their marketing communications.

Brands’ existing segmentations are plugged into YouGov’s dynamic and vast connected data cube to create unrivalled descriptions of your audience, including those that may be niche or harder to reach. Or alternatively, start from scratch and build your segmentation from the very beginning.

To find out how dynamic segmentation can help your brand, contact YouGov.

Photo by Sean MacEntee licensed under CC BY 2.0

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