Micro-segmentation is the technique to break down a set of customers into much smaller groups on the basis of narrowly defined criteria (eg. Customers who revolve their card balance during Jan - Feb, commodity & real estate investors, etc.) based on their transactions, interactions, preferences and expectations. Micro-segments may be as small as 100 making it possible to address customers with highly pointed messages resulting in higher conversions in marketing campaigns, or collections approach resulting in fast and maximum recovery amount.
Why banks need to consider customer micro-segmentation?
The top reasons why a bank needs to consider customer micro-segmentation are
A) Improve revenues: Micro-segmentation helps in identifying the most relevant products or offers for each customer. Relevant offers lead to higher conversion rates in campaigns, better customer experience and less “wastage” of marketing resources.
B) Optimise Costs:
- Micro-segmentation makes it relevant to consider customer level costs of servicing alongside the revenue / profit potential; thus banks can manage their transactions & interaction in line with the customers’ service level expectations (overdraft facilities, off network ATM usage, dedicated relationship manager).
- Cut losses: Micro-segmentation lets banks uncover and identify the “anti-segments”, i.e. the segments that the bank should avoid selling to.
How can VirtusaPolaris help?
We can help banks to define & implement a micro-segmentation based approach to banking functions such as marketing, collections, risk management to improve business outcomes. Eg:
- Consulting services to recommend the roadmap from 2 marketing campaign a month to 100+ a month with higher conversion rates
- Implementation of ‘out-of-the box’ tools related to graph analytics as a component of a comprehensive micro-segmentation platform
- Ground up micro-segmentation platform development from data cleaning, data ingestion to micro-segment identification and application in marketing, collections, risk management through integration with campaign management or other downstream systems