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Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
Segmenting Financial Consumers
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Segmenting Financial Consumers

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a presentation about how to segment financial consumers

a presentation about how to segment financial consumers

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  • 1.  
  • 2. Tim van Tongeren Associate Analyst Forrester Research November 14, 2006 Segmenting Financial Consumers
  • 3. Theme Segmentation can help firms understand customers’ needs, preferences, channel behavior and choices of company
  • 4. Agenda <ul><li>Forrester’s Consumer Segmentation For The Financial Services Industry </li></ul><ul><li>Applying Segmentation To Drive Client Satisfaction </li></ul>
  • 5. Agenda <ul><li>Forrester’s Consumer Segmentation For The Financial Services Industry </li></ul><ul><li>Applying Segmentation To Drive Client Satisfaction </li></ul>
  • 6. What is segmentation? <ul><li>“ The subdividing of a market into distinct subsets of customers, where any subset may conceivably be selected as a target market to be reached with a distinct marketing mix” </li></ul><ul><li>Philip Kotler , Professor of International Marketing at Northwestern University </li></ul>
  • 7. Segmentation helps to answer the most important questions <ul><li>Who are my best customers? </li></ul><ul><li>What products and services do they need? </li></ul><ul><li>When will they need them? </li></ul><ul><li>How do they want to interact with us? </li></ul><ul><li>Why do they behave the way they do? </li></ul>
  • 8. Consumers can be segmented in four main ways <ul><li>Demographics – age, income, gender, geography </li></ul><ul><li>Contribution – revenues, costs, profit and lifetime value </li></ul><ul><li>Behaviour – product ownership, spend, transaction frequency, channel use </li></ul><ul><li>Attitudes – technology optimism, brand loyalty, trust, financial self-direction </li></ul>
  • 9. No single way of segmenting consumers is perfect <ul><li>Demographics are easy to gather but are rarely the best predictors of behavior </li></ul><ul><li>Contribution tells you who matters, but can only be measured for existing customers and doesn’t explain motivation </li></ul><ul><li>Behaviour is relatively easy to gather, but changes quickly and is often the very thing that you are trying to influence </li></ul><ul><li>Attitudes are the hardest to measure but change slowly and explain consumers’ behaviour – and how to influence it </li></ul>
  • 10. Financial self-direction The motivation and confidence to research and make financial decisions without the help of an advisor
  • 11. How we determine consumers’ self direction Strongly agree “ I rely on professional financial advisors when making financial decisions” Strongly disagree 1 2 3 5 4 “ I always try to shop around when making financial decisions” and “I like to do my own research before taking financial decisions” 1 2 3 5 4 Strongly agree Strongly disagree
  • 12. Segmenting financial consumers Self-Directed Validators Avoiders Gather information Rely on advisors Ignore advisors Delegators Don’t gather information
  • 13. Each group has different needs Self-Directed Validators Avoiders Information, value, speed, and control Information, value, advice, reassurance, and a trusted relationship Simplicity Group Financial needs Take financial decisions on their own; seek best products and prices Interested in finances; seek advice on complex decisions Neglect their finances; distrust firms and advisors; risk averse Description Delegators Advice, good service, and a trusted relationship Bored or confused by finance; want others to take decisions for them
  • 14. The four groups have similar demographics, but different attitudes and behavior Self-Directed Validators Delegators Avoiders Base: European adults Source: Forrester’s Consumer Technology Adoption Study, Q2 2005 Number 74M 53M 47M 70M Aged 25-44 42% 39% 33% 36% High education 34% 26% 25% 24% Work full time 49% 45% 39% 41% High income 36% 34% 34% 32% Like talking to people when making decisions 52% 71% 55% 28% Keep careful track of finances 63% 69% 52% 40% Female 48% 50% 56% 51% Confident of retiring comfortably 51% 69% 63% 37%
  • 15. Dutch consumers behave like other Europeans Base: Dutch adults Source: Forrester’s Consumer Technology Adoption Study, Q2 2005 Willing to take financial risks for higher returns Keep careful track of finances Research financial services online Trust financials firms to be fair &amp; honest Confident of retiring comfortably Self- Directed Validators Avoiders Delegators All NL Financial attitudes &amp; behavior Buy financial services online 9% 19% 56% 9% 52% 70% 12% 18% 37% 7% 43% 30% 21% 57% 62% 17% 66% 76% 23% 17% 60% 29% 45% 49% 18% 12% 59% 55% 37% 54%
  • 16. Self-Directed consumers are the keenest self-service users; Validators and Delegators like a human touch “ Which of the following banking channels do you use at least once a month?” Base: European adults Source: Forrester’s Consumer Technology Adoption Study, Q2 2005
  • 17. Each group researches decisions differently “ How did you find information about or research your most-recent financial purchase?” Base: European adults Source: Forrester’s Consumer Technology Adoption Study, Q2 2005
  • 18. The different groups trust quite different sources of information – but few trust insurance agents “ When taking financial decisions, which of the following information sources do you trust?” Base: European adults Source: Forrester’s Consumer Technology Adoption Study, Q2 2006
  • 19. The groups look for different things from financial providers; the Self-Directed care more about price Base: European adults Source: Forrester’s Consumer Technology Adoption Study, Q2 2005 “ What influenced your choice of company for your most recent financial purchase?”
  • 20. Each group uses different channels to buy financial products “ What was the main way you bought your most-recent financial purchase?” Base: UK adults Source: Forrester’s Consumer Technology Adoption Study, Q2 2005
  • 21. <ul><li>Use attitude-based segmentation to: </li></ul><ul><li>Understand existing customers </li></ul><ul><li>Decide which segments to serve </li></ul><ul><li>Develop different packages for each segment </li></ul><ul><li>Tailor marketing messages and media mix </li></ul><ul><li>Prioritize customer-facing technology spending </li></ul>Use segmentation to develop your strategy
  • 22. Agenda <ul><li>Forrester’s Financial Consumers Segmentation </li></ul><ul><li>Applying Segmentation To Drive Client Satisfaction </li></ul>
  • 23. Customer Advocacy The perception that the firm does what’s best for its customers, not just the firm’s bottom line.
  • 24. Customer Advocacy <ul><li>A better measure of client’s engagement with firm </li></ul><ul><li>Uses client’s trust as the basis of the evaluating the relationship </li></ul><ul><li>Unlike customer satisfaction, customer advocacy maps to purchase intent </li></ul>
  • 25. Bringing Segmentation together with Customer Advocacy <ul><li>Segmentation categorizes clients </li></ul><ul><li>Customer Advocacy measures client’s emotional engagement with the institution </li></ul>
  • 26. Customer Advocacy’s service impact
  • 27. Self-directed care most about operational and product related issues Self-Directed
  • 28. Delegators decide based on human-focused and product related issues Delegators
  • 29. Validators value all areas Validators
  • 30. Summary <ul><li>Segmentation helps firms understand customers’ needs, preferences, channel behavior and choices of company </li></ul><ul><li>Different groups of financial consumers have different financial needs that require different marketing and service strategies </li></ul><ul><li>Firms can apply behavioral segmentation to understand the elements of customer satisfaction and future purchase intent </li></ul>
  • 31. Thank you Tim van Tongeren +44 (0)207 323 7618 [email_address] www.forrester.com

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