Understanding your customers is one of the first rules any good marketer learns. But during a
recession, it is all the more important for companies to know which consumers or business buyers best match the profiles of their most loyal and profitable customers.
When times are good, consumers may be more willing to take a punt and marketers have a certain amount of leeway in their approaches. However, consumers are now more watchful of their spending and speculative campaigns are likely to have a much lower yield.
It is increasingly important to ensure that marketing campaigns are targeted at the right people. If incorrect or obsolete data is causing the material to be sent to consumers in the wrong market segments or with profiles that are unlikely to produce profitable relationships, the campaign is a failure.
Despite this, our latest study shows that fewer than half the financial decision makers in key UK firms think that companies in their industry sector are using customer data to drive marketing initiatives. When asked if, overall, most firms in their sector were able to access and analyse customer data and then use this intelligence in their marketing, only 43% of the finance directors and senior financial managers surveyed said yes.
While banks performed above industry average, only 50% of financial directors and managers see strong use of data-driven marketing in the sector, indicating that there is clearly room for improvement.
The recession along with high profile cases of data security breaches in the sector have made customers less confident in banks, leading to lower levels of customer loyalty. Furthermore, increased competition is threatening retention, and the commoditisation of products makes it harder for banks to stand out from the crowd.
Nevertheless using customer data to inform marketing strategies is vital in the current economic environment. Customer data is a tool that is easily at the disposal of most banks and, when used smartly, it helps them to make sure they are focusing on both existing and potential customers that will help keep up their margins and cash flow in the face of the recession.
Bank marketers can put their existing data to work, helping them to understand customer profiles in the broader sense to develop and manage customer relationships successfully. For example, if they notice that a customer’s credit card transaction level is a quarter of what is was the previous month, they can use this information to trigger an offer that will incentivise them to make more transactions on their credit card.
Banks should therefore be using customer data to get the most out of existing customers so that they can up-sell and cross-sell additional products or services. This understanding then needs to be applied to prospects. Segmentation and modelling techniques can be used to create detailed profiles from the existing customer base to identify who the right customers are, establish what they buy, how they buy, how much they spend, and their preferred channel of communication
Lastly, customer insight needs to be an on-going process so that banks can adapt with their customers. Otherwise, they will find themselves approaching today’s customers with last year’s data and parameters.
The benefits of detailed customer insight are clear: the better you know your customers, the more likely you are to know what they want. It allows marketers to tailor their marketing in an informed way – and to target more precisely. The discipline imposed by economic difficulties can help to instil the sort of best practice that it can be too easy to ignore during a boom. Good data habits adopted now will allow marketers to reap the rewards again when the economy recovers.
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