Targeting the Best Customer Segments for Revenue Growth in Banking

Banks can increase earnings potential by understanding customers' demographics, creditworthiness, income distribution and personal interests. By combining data-driven objectives and customer insights, banks can target, reach and convert the best audiences to achieve growth goals.
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What brands are your customers loyal to? What do customers do in their free time? What’s their next big life decision? Many banks can’t answer these questions. And if they can, they know the answer for some but not all of their customers. Yet, responses to these questions and others like them hold the key to unlocking revenue potential in 2023.

With the current interest rate environment, increased regulation and the growth of fintech competition, certainty can feel far-fetched and further away. To outmaneuver these changes, a bank’s marketing and its entire business needs to be focused on the right people. When you invest in understanding your customers and your best marketing audiences, you can achieve, and exceed, your desired business outcomes.

Start with Your Business Objectives

First and foremost, establish or revisit the key business outcomes the bank wants to accomplish. It feels obvious, but specificity is key to achieving meaningful results. The difference between winning and losing sometimes comes down to how specific your objectives are.

Instead of saying, “We want more checking accounts,” bankers might consider saying, “We want 3,500 new bank households before year-end at a 55% return on marketing investment.” Why? Understanding the objective drives audience selection and testing tactics within that audience.

Changing the Narrative:

When launching the next marketing campaign, don't just say 'we need to onboard more customers' and leave it at that. Goals must be specific — and actionable.

Every financial institution has unique objectives and should approach its goals based on its distinctive marketplace and position. To increase market share with next-generation competition, precise, data-driven objectives are a must. With clear, precise and actionable outcomes, the bank’s marketing can target, reach and convert the best audiences to achieve goals.

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How to Find — and Deeply Know — Your Best Audience

You know your customers — but do you know your customers? While it might sound simple, it’s extremely powerful to understand the demographics, creditworthiness, income distribution and interests of your customers. Ask yourself and your team:

  • Do we know the demographics of our customer base?
  • Do we know how our customers from one part of the business are using and interacting with other services and products we provide?
  • Do our customers want to stay in the same job or do they change jobs often?
  • Do our customers travel in their free time?

Having such insights tips the scales in your favor as you position your business against your competitors. When you truly know your customers, you can increase revenue in the short term and the long run. And growth is a top priority for most leadership within financial institutions.

There are great business cases to reach a wide variety of demographics. Your best audience can look different than even your closest competitor’s audience. Instead of focusing on who you think you should be targeting, it’s better to understand your existing customer base, which is already driving your profitability.

The graphic below illustrates an example of a representative bank’s existing customer base versus the ideal customer qualities the bank might prioritize for growth.

comparison of existing versus ideal customers such as education age wealth homeownership spending jobs and travel

What kinds of jobs do customers hold? What’s their income potential? Your team might know. But what do your customers do in their free time? Do they travel internationally? Do they just love heading to Wal-Mart? Or maybe having gourmet food delivered? These answers are out there. And while they might feel like one-offs, they are the key to developing data-led strategies for your marketing and business tactics.

Build a 360° View of Your Best Customers

Collect all existing customer data from across your organization. It’s easy for customer data to get siloed, but checking the nooks and crannies ensures that the bank has a complete picture of current customers.

That customer data can then be analyzed against a reference group in your geographic marketplace for similarities and differences. Why? Every customer base has a tell — sometimes multiple tells. What is the key variable that stands out within the population and is unique to your business in its marketplace? Once you’ve identified what’s truly unique about your customers, you can find other people exhibiting those same signals. And you’ll know how to market to them with the right message, channel and measurement.

Finding the Niche:

A great way to segment customers is to identify the unique tells that separate them from others. Then, market to these individual characteristics.

When a bank knows its customers inside out, it can make better informed, data-led decisions. With a full view of exactly who your customers are, you have choices. Do you want your acquisition prospects to look like your current customers, or not? Or do you want to expand your cross-sell tactics to other key services of your organization? These pivotal business decisions are only possible when you have the full picture of your customers.

For example, let’s say the goal is to expand market share by adding X number of households within your current geographical marketplace. Gather all current customer data from within your organization. Analyze customer data against the population in your geographical marketplace to uncover the unique variables that only your customers have. Then, identify prospects within your location with the same variables.

Marketing Rests on Understanding Your Audience

Deeply understand the ideal audience, and the rest of the bank’s strategy and campaign tactics will fall into place. You’ll know how your best customers do or don’t interact with technology, so you’ll know which channels to use. You’ll understand their habits, so you’ll be able to connect with them at just the right moments. You’ll know about their interests, so you can develop messaging and creative that resonates. There’s great power in knowing your audience.

Financial institutions have long searched to find their best customers. Today, it’s possible to identify who is your best audience and how you should reach them. Set up for success in 2023 by unlocking the revenue-driving potential of your best audience — to make better decisions for your business.

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