The following is an article written by Trellance’s Senior Director of Product Management, Nate Wentzlaff. It originally appeared on CUInsight.com.
We’ve all heard the saying “know your audience,” but have you thought about using that same approach at your credit union? Member segmentation is the process of categorizing your membership based on the data you have about their wants, needs and position in life. Investing in member segmentation allows you to cater to your members’ unique needs; when you know your audience – members – you can ensure that their relationship with your credit union remains a healthy, loyal one that will keep them coming back for years to come.
Why Is Member Segmentation Important?
Member segmentation should help your credit union accomplish two high level goals: create a better, more personalized experience for your members and increase member loyalty to your credit union. By segmenting your membership based on who they are, what they want and need and where they are in life, your credit union will be able to provide each segment with what they need, when they need it. Meeting those needs will encourage members to stay with your credit union and invest in additional products and services.
Personalized communications should be a goal for every credit union; in an age of digital interactions, little touches that show that your credit union knows and understands its members can aid in generating member loyalty. Member segmentation can help with this by allowing your credit union to send targeted messages to members based on where they are in life. This can look like promoting mortgage products to the recently married young couple, a business account to the new entrepreneur or a personal loan to the mother of three as the winter holidays approach. It can even get as granular as showing banner ads featuring dogs on the Millennial dog mom’s main accounts page. Member segmentation allows your credit union to understand and anticipate the needs of its members.
Being proactive about meeting members’ needs will lead to members staying with your credit union for longer. If they need to research the products they need, there is an opportunity for them to look at financial institutions beyond your credit union. By utilizing member segmentation, your credit union can get the products members need in front of them before they even begin researching.
How Can Technology Help with Member Segmentation?
Technology is vital to member segmentation. 30 or 40 years ago, your credit union could rely on a member’s relationship with branch employees for member segmentation; employees could offer products based on what they knew about the member and make sure needs were met that way. Today, however, between population and credit union growth and the availability of more and more products, there is simply no way to manually segment membership.
The first step of member segmentation is a robust data warehouse. Your credit union should have a running database of members and information about them, including age, spending habits and more. From there, use your data warehouse to apply filters to create the member segments that will help drive your credit union’s communications. If your data warehouse does not have those capabilities, it may be to your benefit to find a provider that can help with this or to invest in a data warehouse with more capabilities. Furthermore, going beyond the data warehouse to leverage predictive analytics enables credit unions to segment members in ways that a human is not able to. Applying machine learning algorithms to billions of rows of data will pick up trends and patterns that are indistinguishable to the human eye (or human written query in a database) and give the credit union a more robust segmentation engine.
When segmenting your members, try applying personas to them, such as Student Susie or Card-ready Cathy. Naming your segments can add a human element to them and help your credit union continue to think about the real people behind each segment. At the end of the day, credit unions have a people over profits approach, and keeping the people behind the data top of mind will help your credit union to serve them better.
Once your membership is segmented, your credit union will have a wealth of options before them. You can use segment information to begin a series of campaigns, such as an AI-driven next best product campaign, that identifies the product a member segment is most likely to be interested in.
Credit unions are growing quickly – there’s no way to cater to each individual member anymore. By segmenting your membership, your credit union can cater to member segments instead. This will allow your credit union to meet member needs while maintaining that personalization element. The biggest value a credit union can provide is knowing their members – segmentation allows credit unions to maintain that brand promise even as membership grows. For more information on this topic, register for our on-demand webinar.
Nate Wentzlaff is the Senior Director of Product Management at Trellance.