Thursday, April 12, 2012

A Forgotten Practice: Data Segmentation

By John Blom and Margie Church

Data segmentation in marketing is a practice you may have forgotten about, but it's one we recommend for every campaign. By appealing to members' needs at various life stages or situations, you're making your message more personal and relevant. A more refined message will have a positive, stronger impact on your campaign. 

We always recommend using the credit union's data or MCIF to create a retention, acquisition, and prospecting strategy for every campaign. Using auto loans as an example, here's how to do it.

First, reach out to the people who have auto loans with you now (or recently so) to retain their business. You can't assume that once a member has opened a loan with you, they'll come back for more without any incentive. Their loan can be at risk the moment the balance due is lower than their vehicle's equity. Remember auto purchases are usually emotional decisions. Be clear about all the financial and time-saving benefits of financing their next vehicle with the credit union. A pre-qualified offer, additional rate discount, or other incentive should be considered.

For an acquisition strategy, modify the message slightly to reach members who have an auto loan with another financial institution. Maybe a cash-saving refinance offer will help you acquire the business of these members. Make payment examples, rates, and terms front and center to show how much money could be saved by financing at your credit union.

A broad-sweeping, prospecting message is the third important tactic to take. Sadly, this is often the only marketing strategy many credit unions have for all the segments. Prospecting typically promotes a single product. With good frequency, they also familiarize the community with your existence and the benefits of membership, but prospecting does little to protect the business the credit union already has. Put rates, terms, and payment examples front and center to make it easy for people to compare their current payment and/or their budget with your offer. You'll write some new loans because your offer reached some people at the right time and place, but waste a lot of money on those who are in no position to buy or aren't interested. That's why prospecting shouldn't be your primary strategy. 

You might be thinking you can't afford to create a custom campaign using segmentation. You don't need to have a do-over for each version to accomplish this. In fact, you might send out fewer pieces, but your  overall results will be better because you strategically positioned your message. Switch out the graphics, headline, and a sentence or two and you're done. Not very costly at all. 

Here's something else to think about. Pre-approval auto loan offers are a really hot item right now, but credit scoring is costly and time-consuming. Think about shifting the expense of credit scoring to repeating the campaign two or three times for greater exposure. If you've segmented your data, you'll benefit from a targeted message and increased frequency, perhaps more so than a one-time pre-approval.

The true value of segmentation is often in the eye of the beholder. Make sure your members are seeing your credit union clearly.

Pinpoint Direct Marketing creates data-driven, electronic and print marketing campaigns for the financial industry. Its customized campaigns achieve excellent results without premium costs. Learn more about Pinpoint Direct Marketing at or call Kerry Blom, owner, 866-784-7555.