Database: Get a Little Closer
Navy Federal Credit Union, one of the world’s largest credit unions and one of the 50 largest financial institutions in the United States, uses predictive analytics to study its 3.2 million members’ buying habits. The credit union created more sophisticated segmentation functionality, allowing it to determine which members best matched specific product and service offerings, thus eliminating the guesswork many direct mail solutions impose.
While it was important to know what products and services members were interested in, as well as how they used them, predictive analytics allowed Navy Federal to dig deeper into its segments to better understand members’ responses and predict how they might respond in the future.
Alan Payne, manager of the member research and development team at Navy Federal, says, “With greater insight of our membership, through segmentation, we were able to gain much deeper understanding of the value points of our membership and pinpoint where members came from … so we could quickly identify what those members’ immediate needs would most likely be in that geographic space at that particular time and enable sales and marketing to respond with appropriate offers.”
Segmentation Road Map
To get the most out of customer segmentation analysis, organizations should create road maps incorporating the following steps:
1. Determine the Overall Business Objective. Get everyone on the same path and in agreement with what you want to accomplish, such as improving the yield on lead-generation efforts, identifying cross-sell opportunities or identifying customers most likely to go to a competitor.
2. Capture All Potential Customer Data. Segmentation begins with gathering customer data from a wide variety of resources, including data warehouses, point-of-sale systems and loyalty programs.
A database of static customer information is valuable, but until key active knowledge gained from feedback is applied—like preferences or motivations—there’s an incomplete picture of the customer.