Know-How Exchange : Customer Behavior

To reach through literature or advertising then segment by industry type and interest and associations and professional membership bodies for certain key areas.

For profitability and need for services, size is most important even in SMEs. Simple list marketing by size combined with copious amounts of networking. Much medium sized business networking tends to be industry specific - eg conferences, events. At micro-level general purpose networking may suffice.

You could look at ownership types, strategic outlook and management styles, but I don't think it maps on to anything particularly. Use of technology is a moderately useful indicator of outlook - mobile phone, computers etc.

Also don't forget the importance of the small business advisors (lawyers, accountants, business schools and colleges), or overlook the importance of personal banking on corporate business decisions for SMEs.

Majeta

The key thing is what you want to use the segmentation for... Is it to launch a new product? Or to convert customers from other banks, over to yours, using existing products?

The 'purpose' test is critical when deciding exactly how to construct your segments.

The only rule about segmentation that matters is "segment so it makes sense for your particular purpose".

If you could explain a bit more about your intended purpose you will get a more targeted response.

ChrisB

Hello Majeta,

It sounds like you'd benefit from incorporating needs-based segmentation. This is derived from asking questions that cover the holistic customer experience with products and services, including awareness, attitudes, satisfaction and usage habits. There may be sub-segments of customers, for example, who are do-it-yourselfers and value high self-service functionality and online tools the most. Others may value a more personal relationship and dedicated account management more. These traits can run across traditional industry and size segments, and understanding them can help to maximize effective product packaging and marketing.

Regardless of how you sub-segment the customer base, it's critical to be able to optimize the customer data for targeting and predicting receptivity. These questions are helpful in that regard:

1. Can you really form segments to have the maximum difference between the groups and the minimum difference within the groups?

2. Can you slot your various customers within the segments?

3. Can you effectively target the segments and communicate directly to them?

4. Is each segment large enough to be profitable if targeted distinctly?

As a bank, surely you would want to focus on those sub sectors which present the best credit risk profile.
If you want to discuss further mail me on [Email address deleted by staff] I am a SME specialist who works in this market.
regards rob