You’ve heard of demographics and psychographics, but how about segmenting customers by the kind of banking experience they’re most likely to appreciate?
Building on some of the ideas that were put forth by Pine and Gilmore and others, that’s what Samuel Rabino, Stephen Onufrey, and Howard Moskowitz recommend in their recent paper “Examining the future of retail banking: Predicting the essentials of advocacy in customer experience” in the Journal of Direct, Data and Digital Marketing Practice.
The difficulty in creating a better customer experience is that different customers might define “better” in unique ways. What is a great experience to one customer might be off-putting to another. What complicates things further is the fact that most people are not very good at telling you what they want, especially if it’s something they’ve never seen before. (Moskowitz’ pioneering work in the 1970s with spaghetti sauce bore this out.)
Rabino, Onufrey and Moskowitz presented participants in their study with vignettes that described a set of bank services. (Read the paper to see how they structured the study.) This allowed them to gauge consumers’ reactions to different experience “components.”
They found that consumers seem to fall into four experience segments:
| Segment | Description | Percentage of participants |
|---|---|---|
| Self-reliant online banking seekers | This segment does not respond to much. The only strong element is the real-time feature: "We will answer all your requests in 'real-time' by email or instant or text messaging." This first segment provides us with a dose of reality — and cautions us not to think that everyone is waiting for this new bank. | 40% |
| Technology and high security seekers | They respond strongly to security, and to security backed by technology. Thus, they will really feel that they have an improved experience if the bank can facilitate transfers safely and electronically. They also feel strongly about pure security (e.g., "We keep the most secure customer identity system anywhere via biometric identification.") | 20% |
| Collaborative online seekers | They like working with the bank's staff, in a collaborative mode (e.g., "Faster loan application process," "work in real-time online with a loan officer.") Part of the experience desired by these individuals is the personal touch. | 20% |
| Personal touch with technology seekers | They want some feeling of connection with the bank, but a feeling that they are recognized as individuals. Thus, ideas appealing to them are "Manage all your banking needs with self-service state-of-the-art kiosks and be confident that live help is available if needed," and "our entire bank departments are connected in 'real-time' so we get all your needs met in the branch quickly." | 20% |
The authors go on to describe a “knowledge-driven, ongoing learning system that
defines, creates, delivers and refines a favourable customer experience
using a four-step, closed-loop business process.”
Now, that’s a mouthful, but it gets at the next most pressing issue. The awareness of different experience-based segments is one thing. But how do you go about marshaling your resources (employees, branch space, marketing messaging, etc.) to provide those experiences? And how do you direct prospects and customers to the most appropriate experience?
If Onufrey et al. are correct, we’ll be reading more in the years to come about the importance of customer experience as a point of differentiation in banking. But, given the current economy, the experience advocates who will be heard loudest are the ones who can offer innovative, low-cost and low-risk approaches.
