Hear from Wade Barnes, Financial Services Practice Lead, on the importance of reading and interpreting marketing data for banks.
Hi, I’m Wade Barnes, Financial Services Practice Lead with Hartman Advisors.
In past videos, we’ve talked about the need for financial institutions to focus on their data strategy. I’ve had follow-up conversations with many of you on what that actually means. To distill this, I think about data in two different categories — operational (or internal) data and customer (or marketing) data. Today, I want to focus on customer data.
In banking, it’s the old 80-20 rule — 20 percent of customers drive 80 percent of profitability. Knowing this, we must provide VIP banking services to the top 20 percent to keep them in this category. We must learn everything we can about this 20 percent group.
Segmentation data, like Cycle on the consumer side and Asics on the business side, can give us some high-level categorical information, but we shouldn’t stop there. We must build on these segments based on data we have about the overall relationship, including transactional information, that we can mine for intelligence. Once we know who these customers are and how they interact with us, we can build profiling models that look externally to attract new customers like them to the organization.
For the remaining 80 percent, we can’t ignore them — we must find ways to make them more profitable. This will include activation campaigns to drive more balances and/or transactions, and if not successful, we must consider exit campaigns to either charge service fees to cover servicing costs or to remove these unprofitable customers from our books.
These efforts require strong data capabilities to be able to marry internal and external data sources to build a comprehensive understanding of our customers. This effort also requires a comprehensive strategy with perspectives from the front line — marketing, operations, and IT teams — to effectively categorize and individualize customer communications and servicing.
If customer data is important to your organization, we’d love to have a discussion about ways we can help you along the journey!