Member Segmentation Improves Your Bottom Line
Do you know which members are your most profitable? Do you know which members would benefit most from certain products and services? If you cannot answer with certainty, it’s time to look at member segmentation as a way to improve credit or debit card penetration, usage, cross sales, and overall member satisfaction and loyalty. This, of course, also generates increased revenue for the credit union and a greater return on marketing efforts.
The value of member segmentation is based on the fact that not all members have the same needs for the same products and services. Credit unions use market segmentation to divide their membership base into meaningful groups, or segments, in order to create specific marketing strategies that are customized for each group.
“Segmentation is very important in identifying groups of members and/or cardholders and their needs, as well as creating offers that are specifically relevant to their attributes and previous behaviors,” says Barney Moore, a senior consultant with CSCU. “For example, a credit union may want balance transfer offers to go to credit cardholders with
example ‘open to buy’ who are in good standing. Member segmentation will identify these members for the marketing campaign.”
Examples of other member groups that would be of interest to credit unions include:
• Users of high or low interchange merchants
• Members that don’t currently carry the credit union credit or debit card
• Low or inactive cardholders
• Transactors/revolvers
• High/low balance and credit line utilization
Methods of Segmentation
Defining target segments requires analytic tools and capabilities that segregate key data elements. The most basic approach is breaking out simple demographic information that credit unions have on file, such as age, income, marital status, age of home, net worth, employment status, and other basic data. The ability to extract account-related data and sort it based on various attributes and behavioral factors is essential for performing segmentation.
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