Why segment? Take the extreme example: if a credit union surveys its 4,000 members and 2,000 are completely satisfied while the other 2,000 are completely dissatisfied, the overall results are neutral and therefore not actionable. That's where research segmentation clarifies the "muddy response" total membership overviews can provide.
The most common segmentation strategy is age and income, which breaks down membership according to changing financial circumstances as people age. While useful in and of itself, age and income segmentation renders more actionable results when complemented by other segmentation strategies such as:
Branch proximity. Since people who live or work near a credit union are more likely to do business there, the results of branch proximity studies such as convenience analysis may cut across and alter the dictates of age and income research.
Recent transactions. If an institution wants member feedback on a recent service change, for example, the most valuable input will come from frequent users. A total membership survey is less valuable because it includes the opinions of people who may not even have noticed or experienced any change.
Member profitability. It's vital for institutions to understand the needs of their most profitable members, usually the top 10%. Driven by account relationships and balances, Profitability profitability depends on number of accounts and balances, which may in some cases be completely unrelated to age and income.
Foreign language. While translating collateral is a good first step, research segmentation may reveal significant cultural differences that call for a unique approach to marketing and service for ethnic communities.
Technology use. Encouraging people to use electronic delivery channels also gives them the tools to shop around for the best products and services. Thus, segmentation by technology use may show that less frequent users of technology are more loyal and could ultimately lead to more profitable relationships.
Age and income segmentation alone is an incomplete yardstick in today's diverse environment. Not all members of distinct age and income strata utilize financial services in the same way. Not everyone in a certain age group falls into the same income bracket or has the same needs, even within a single geographic area. A diversified portfolio analysis of segmentation strategies makes a better guide for marketing and service enhancement efforts.
Neil Goldman is President of Member Research. He can be reached at (310) 643-5910 or by email at ngoldman
