4 segmentation strategies to improve people’s financial health
Traditional data analytics techniques may sort consumers into neat categories, but to truly understand people's financial needs banks and credit unions may need to build a completely different way of evaluating them using their attitudes towards money and their present financial pulse. The effort begins by asking them to answer probing questions about themselves.
Financial marketers traditionally analyze and segment their customers based on the kinds of measures that census takers and demographers use. They slice and dice data pools by generation, asset holdings, income level, marital status and similar one-dimensional factors.
Aurélie L’Hostis, Senior Analyst with Forrester, suggests a better approach, especially in the wake of the Covid-19 pandemic, which shook up many consumers and made them more aware of their financial vulnerabilities. L’Hostis believes a superior form of segmentation will separate consumers on the basis of factors that, once understood, will help banks and credit unions improve consumers’ financial well-being.
Several factors impact how consumers behave regarding their finances, says L’Hostis. “I look at three things: people’s attitudes, their psychological attributes, and the perceptions they have about their finances. All three will influence how they manage their finances.”
These three factors are influenced, in turn, by two others, according to L’Hostis. One is the external factors a person faces where they live — political stability or lack thereof, economic conditions, natural disasters and health crises are key ones.
continue reading »