Informed Decisions

Data analysis drives right-product, right-price, right-time strategies

By Shazia Manus

Community banks know their customers better than the larger banks against which they compete. This comes from a longstanding tradition of over-and-above service and the building of personal relationships whenever possible. However, as consumer preferences evolve and as customers spend far more hours driving by branches than visiting them, those relationship dynamics are changing.

What was once an intuitive understanding of the financial consumer can easily become a superficial knowledge based on misguided assumptions. To interact with today’s customer, more touch points are needed. Yet, to build out these touch points, community banks must first understand whom they are targeting and the type of interaction these target customers value.

Loyalty matters

Why do businesses really need to know their customers? Because delivery of relevant products and services—based on known psychographics, ethnographic knowledge, behaviors and expectations—ultimately drives loyalty. Customers are loyal because the business communicates its value proposition through experiences, directly appealing to the customer. They sense the difference, and they appreciate a company or organization that’s willing to invest the time into understanding what, when and how customers want to interact.

In today’s digital world, the threat of being viewed as a commodity is very real. With fewer face-to-face opportunities to get to know customers, community banks must evolve. Fortunately, advances in technology are making this evolution easier. With a wealth of data at their fingertips, community bankers can leverage emerging technologies and tools to learn—on an individual customer level—what is most important. For today’s community bankers, analysis of this data, powered by intelligent software and advanced methodology, is not only affordable; it’s increasingly a must.

Applying what you know

Access to consumer insights will enable delivery of the right solutions, at the right price, at the right time and through the right channel in a cost-effective fashion. With data analytics, community banks can develop new business strategies that include customer segmentation, product bundling, channel optimization and brand positioning.

As well, community banks can use this type of intelligence to attract more like-minded individuals or to develop new markets where the bank may want to increase its footprint. Without it, rolling out new products and services may be nothing more than “shot in the dark” strategies. Community banks are great at collecting data. It’s the application of that data that truly holds the power to transform one bank from just another provider to an indispensable partner.

While the answer to the question <em>Do we really know our customers?</em> may require a heavy-handed retooling of “the way we’ve always done things,” the outcome should be definitely worth the effort. To achieve these initiatives, data analytics will prove to be a powerful tool for community banks in 2013 and beyond.

Shazia Manus is CEO of The Members Group, a payment processing company for community financial institutions.