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Seven 21st-Century Approaches to Segmentation

By Prisma

March, 2023

Have you heard the expression “sell more by selling less?” Marketers have long used the process of segmentation to divide a marketplace into smaller parts and make messaging more definable, accessible, actionable, and profitable. Segmentation allows a seller to closely tailor their offer to members’ needs, desires, uses, and paying abilities. It also helps reduce media spend, retain members, and drive revenue growth. The modern consumer is intelligent and unique, and their needs have grown beyond cookie-cutter marketing strategies that are generalized to the masses.

While developing a target market, you can segment members based on a myriad of factors. Marketers relied on factors such as gender, age, or location for the last half-century, but modern methods of segmentation are worth researching and implementing to create valuable messaging.

It’s important to note that credit unions should not overspecialize their target segments. By being too specific or narrow, you create too small of a segment and alienate members that might have been interested. Your audience can shift and adapt, so allowing your segments to change and evolve with the market is important.

Let's talk about a few modern-day approaches to segmentation.

Modern Segmentation Approaches

1. Life Stages

You don’t want your members to feel misunderstood or unheard, and one of the best ways to solve this problem is by segmentation based on life stage. People have varying financial priorities and needs during the different stages of life: first job, starting a family, marriage, divorce, and retirement. If a college student receives advice for a luxury car application, they’ll most likely be confused. Not all people follow a linear life stage path, so it is important to ask questions and speak to different scenarios within different periods of life.

At Prisma, we highlight the importance of contextualizing your marketing through technology and meeting your consumers where they are in their life. Whether your member is a recent college graduate or a middle-aged business owner, credit unions can impart personalized and relevant advice, digital tools, or educational resources that your members will thank you for.

2. Technologists vs. Traditionalists

By better understanding the products and technologies that your consumers are using, you can increase conversions and the quality of communication. Technographic segmentation is analyzing people behavior through data analysis of the technologies they use. Whether members are early or slow adopters of new technologies, it’s important to customize messaging for each group. By segmenting, you use your budget more effectively and are more likely to successfully cross-sell the advanced products that your institution offers.

3. Phases of the Member Journey

All of your members are in different phases of their journey with your institution. Some might be in the onboarding stage, and some might be account holders of 30+ years. Each phase, and the people within them, need different messaging. Marketing for new members could include setup-related material like signing up for direct deposits, activating cards, and exploring their online banking account.

On the other hand, long-time members might be interested in wealth management services or new, modern tech banking products. It’s important to segment these consumers, so they receive high-quality service and take full advantage of your credit union’s services for each journey phase they’re in.

4. Levels of Loyalty

Some of your members are brand loyalists - they engage with your marketing efforts and aren’t making a switch anytime soon. However, there are prospects outside of your organization that lack deep organizational roots - they aren’t actively looking for a better offer but will opt for one if given the opportunity.

The people more open to change will respond in a favorable way to marketing campaigns that advertise the benefits of your products and services. The brand loyalists deserve updates, offers about the latest upgrades or offers, and attentive member service as well. Your organization will benefit from segmented marketing to appeal to both loyalists and those open to making a switch. This creates a favorable environment for both retaining long-term members and attracting new ones.

5. Business Firmographics

For financial institutions that offer business banking, segmentation by firmographics is a useful approach. Marketing to businesses necessitates different identifiers, and you can think of a firmographics approach similar to how you would use a demographic approach for individuals.

A firmographic approach means segmenting your businesses under descriptive factors such as the company size and performance. Through this process, you gain knowledge on these types of businesses’ pain points and become the “expert” for a specific business segment.

6. Satisfaction

Top-notch member service and user experience are highly conducive to success. There are active steps you can take to ensure your members are satisfied with your service - including a healthy number of surveys, check-ins, or phone calls (no one enjoys an overload of contact!). Member feedback is a helpful tool, and it can influence your messaging between segments.

Dissatisfied members that leave negative reviews or voice their concerns via phone calls or survey responses probably don’t want multiple emails about signing up for a credit card or a new mobile app feature. They have an issue with a product or service, so it’s productive to connect them to member service and resolve the problem instead of overloading them with “Look how great this new feature is!”

For the satisfied segment of members, it’s important to brief them on loyalty features, new tech products, and how to get more out of their accounts. With both groups, member service is key to boosting loyalty and referrals. You want your members to feel valued, but the two groups will find different messaging valuable.

7. Interests

Lastly, another important segmentation approach is interest-based marketing. Everyone has different hobbies and activities they enjoy, and your organization’s features can speak to them. There are going to be technology lovers, environmentally friendly members, families, or students with varying interests. You could have a group of people that are avid travelers and would be interested in your credit card features. There is immense value in segmenting your members by hobbies, activities, and interests they enjoy to create a personalized, long-lasting relationship.

Segmentation is a powerful tool to target members and make messaging more profitable. Today, people are averse to the general, cookie-cutter marketing of the past, but using these modern approaches creates more valuable messaging.

About Prisma Campaigns

Prisma Campaigns is a marketing automation platform specifically designed to help credit unions develop deep and empathic relationships with their members through personalized marketing campaigns. It uses a connected, data-centric approach to communicate with members on all your digital channels - email, SMS, online banking and mobile app. Prisma Campaigns’ open platform integrates with your existing banking technology and is ready to grow and expand with your credit union.

Prisma is trusted by 25 credit unions to enhance their member experience and increase conversion rates.