The Future of Data Monetization in Financial Services: Customer Segmentation & Personalized Experiences

In the landscape of personalized experiences, it’s vital to understand your customers and cater to their needs. Data gathered by financial institutions provides a broad array of information, from basic demographic data such as age group and geography, to more sensitive information like salaries and spending habits. This information, along with leveraging technology, can generate insights to enhance customer engagement, establish loyalty, and increase customer satisfaction.

Truly personalized experiences are achieved by understanding your customer base, mastering their segmentation, and creating accurate personas. In this article, we take a glimpse into the focus areas that drive personalization of customer experiences and the future of data monetization.

The importance of customer segmentation

Customer segmentation is the process of separating the customer base into groups based on similar characteristics. To establish an effective customer segmentation strategy, organizations must have specific data points, multiple data sources, and data analysis tools that identify and assess the unique characteristics of each group.

In financial services, organizations sit on a vast amount of collected transactional and demographic data. This data contains valuable information that helps identify patterns and predict which products and services customers will use in the future. To extract this information effectively, historical data must be cleaned, organized, checked for quality, and analyzed for trends and insights.

Utilizing data to better understand customers and their behaviors can provide countless benefits towards a business’s growth strategy. It helps by developing stronger customer relationships, offering new products and services, cross-selling current products, and providing a more efficient acquisition and retention process.

Customer personas

It is important for customer-facing departments like sales and marketing to understand their customers and provide tailor-made products and services to meet their needs. Leveraging business intelligence tools and techniques can help identify common characteristics such as demographic data (e.g., age, income, gender), transactional data (e.g., spending history, products used, savings amounts), and behavioral data (e.g., time of activity, channel usage) to create customer personas representing the different segments of their customer base.

Customer personas are essential to building stories around the target consumer to learn more about their behaviors, needs, and goals, in addition to understanding their pain points. These personas provide useful information for targeted marketing campaigns, customer retention, acquisition strategies, and better prioritization of time and resources within the organization.

Once customer personas are identified, sales and marketing units can focus on the personas that provide the greatest business value and return on investment (ROI). ROI can be measured in various ways such as identifying which products have the highest profit margins, consolidating marketing efforts to scale down advertising spend, and assessing the lifetime value (LTV) of certain personas or products.

These personas provide additional insight into which products are most frequently used and adopted by which groups. By focusing on the segments or personas that provide the greatest ROI, organizations can offer personalized products and services that meet each of the personas’ needs to generate greater profit margins and increase efficiencies in its internal processes.

Providing personalized customer experiences

Personalized products and services are one way to satisfy the customers’ individual needs. Through data analysis, organizations can personalize the entire customer experience (CX) by analyzing how users interact with various service channels to facilitate product adoption.

These opportunities can be realized in a variety of scenarios such as a newly married couple looking to obtain a mortgage loan with attractive interest rates, a younger family who wants to start investing for their children’s college education, or an entrepreneur who’d like to have their personal and business banking services provided by the same firm (as seen of Figure 1).

Providing a personalized experience is crucial for maintaining positive customer engagement and satisfaction. Customers are most likely to become repeat consumers with organizations that know their financial needs, goals, and level of risk, all of which will be major differentiators for financial services firms in the future.

An ideal way to achieve this is by creating user journeys that identify the interactions that occur during the customers journey and measures their level of satisfaction throughout each interaction. This data provides valuable insight into which interactions provide tangible value and deepen the customer experience. Acquiring these insights can be used to continuously enhance the customer journey and increase customer retention.

With the shift from brick-and-mortar branches to online platforms, financial services firms can quickly personalize the CX by leveraging technology to distribute products and services that meet the customer’s objectives, rather than attempting to pull the customer towards generalized product offerings that do not offer any value.

Organizations can use technology to personalize experiences through services such as virtual assistants or chatbots. These tools can help take the load off customer service agents by offering personalized support for tasks such as answering frequently-asked-questions or assisting with transactions. With artificial intelligence, these tools can learn to adapt to unique customer preferences and therefore increase customer satisfaction.

Business outcomes of the personalized customer experience

Customers today expect a seamless and customized experience across all channels which makes it essential for financial firms to adopt a human-centric approach regarding product development, product management, product design, and other strategic offerings.

For financial services institutions, leveraging data to create personalized experiences for their customers is a powerful way to increase satisfaction, loyalty, and retention. Data can help financial services institutions understand their customers’ needs, preferences, and behaviors, and tailor their products and services accordingly.

By using customer segmentation and personas to create personalized experiences, financial institutions can set themselves apart from their competitors, and continuously monetize the vast amounts of data they acquire.