Communication Strategies for Donor Retention

Donor Cycle Image

In times when operational costs for organizations are increasing and donor prospects are lower, the need for a donor retention strategy takes on renewed importance. With the unprecedented economic upheaval and evolving business practices due to COVID-19, finding ways to communicate effectively and retain donors is crucial. Donor retention is part of the ongoing donor process that includes identifying prospects, building relationships, and donor stewardship.

Donor stewardship is the process that occurs once a donor has given to your organization. Stewardship refers directly to the continued communication and relationship building that happens after the initial transaction, which directly affects your donor retention rate. 

This guide covers the importance of donor stewardship in order to maintain donor retention, explains why donor retention is economically beneficial compared to acquiring new donors and how it increases your organization’s rate of return (ROI). The critical components of a consistent messaging plan to facilitate keeping donors informed of the impact their donations are having on the cause they care about and highlighting your organization’s continued appreciation for their support is explored in detail.

Keep reading or “jump” ahead to these sections:

Building and Maintaining Donor Relationships

Donor Cycle Image

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  • Beginning the Cycle with Donor Cultivation

Donor cultivation is the process of identifying and engaging with possible prospects, sharing your organization’s mission, and beginning to build a relationship before requesting a gift. Donor qualification determines which potential donors have the ability to give to your organization, and at which level they can be expected to contribute. WealthEngine’s wealth modeling feature works to help determine the status of each prospect, so you can easily identify which areas of your organization will appeal to them and which level of contribution is the best fit. 

The donor cycle begins as soon as a prospect is identified. Help these potential donors familiarize themselves with your organization’s mission, and explain why your cause is relevant to each donor. WealthEngine 9’s Engagement Science feature allows you to utilize personalized information and interact with your donors through targeted campaigns designed to increase engagement.

Insights provided by the WealthEngine 9 comprehensive platform dig deeply into the lifestyle of your donors, so you can understand what motivates them, which allows your organization to create meaningful relationships centered around your mission and your donors’ interests. By analyzing relevant wealth and lifestyle signals, WealthEngine gives you the necessary tools to personalize your campaigns and boost your donor engagement.

Once you have utilized this information to appropriately target your messaging, continue the conversation, and explain why their contribution is important. Provide examples of the impact their support will have and make it clear where their gift will be going. This provides your donors with a clear understanding of their impact. Remember, it is important to find ways to personalize your message to make it relatable to each donor. 

  • Continue to Build Relationships Through Donor Engagement

Once a relationship has been established, it is crucial to continue nurturing a connection between the donor and the organization. Focus on keeping an open line of communication with supporters through consistent emails and newsletters featuring updates of your work and achievements. 

It is vital that the relationship between your organization and its donors be one built on two-way communication. Use all of your communication channels to solicit donor feedback through interactive surveys, polls, and reviews, and be sure to announce when elements of initiatives contain suggestions gleaned from donor feedback. This will demonstrate to your donors that their suggestions are listened to and when viable, acted upon.

Invite donors to events or activities your organization is hosting so they can witness how their gifts are being used. Donor engagement will increase the likelihood of recurring gifts while strengthening your relationships with donors, which will encourage them to remain active participants in your organization.

Cost of Acquisition

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  • Increase Your Donor Retention Rate

Once a relationship has been established, donor retention is the process of retaining donors and keeping them involved in your organization after their initial gift. The goal of donor retention is to have donors give more than once and see these donors become more involved with your cause. 

Using the model above as an example, assume the initial cost to acquire a new donor is $85 while the cost of sustaining donors is $12. This graph illustrates how donor retention is economically necessary for a nonprofit to survive, as sustaining donors is significantly less expensive than acquiring new ones. 

The average year-on-year donor retention rate in the United State is 46%, which shows that less than half of all donors remain active after their first contribution. This low percentage illustrates how easily money is lost through poor retention rates, as the cost to onboard new donors is greater than the cost of sustainment. 

It is also worthwhile to seek out donors who can donate their time to initiatives. Just because a donor’s financial outlook may not make them a promising cash donor does not mean that the resources they could bring to the organization as a valued volunteer should be overlooked.

The continued cycle of donor cultivation and stewardship is vital because sustaining current donors has a positive effect on your organization’s return on investment (ROI), and plays a crucial role in your organization’s survival. Maintaining relationships and encouraging donor engagement leads to a higher ROI as your sustainment costs continue to lower and your revenue stream increases during a donor’s lifetime involvement in your mission. 

By continuing the donor cycle past the first gift through communication and strategic donor engagement, the experience donors have with your organization can improve, and your donor retention rate will increase. 

The Importance of Communicating the Impact of Donations

So you’ve received a donation, now what? Making sure your donors see how their gift is supporting your cause will be vital in retaining them for future contributions. Some organizations give the option for donors to specify where they would like their donation to be used. Finding ways to showcase these impacts can strengthen the donor relationship. 

Start with a plan for communicating the value of each donation. Share the ways these contributions are being used to sustain your organization’s guiding mission, while also enabling the pursuit of important new endeavors that align with the values of the organization. 

Continually emphasize how the generosity of your donors makes these actions possible. In the digital age, it is easier than ever to keep in touch with donors, so you can easily focus your social media messaging to showcase the impact that is being made to benefit your cause.

It’s also extremely important not to forget the importance of personal contact. Send a handwritten note thanking your donors for their gifts; have a plan for you or someone from your team to speak with them personally when they attend events, and make a point of discussing all the ways their donations are being used, being sure to listen to any suggestions donors may wish to share. Making the effort to meet and speak with them as individuals and discuss the progress the organization is making thanks to their generosity can make all the difference when it comes to donor retention. 

Communication Strategies for Retaining Donors

Communication is the most important factor when working to retain donors. Focus on maintaining early contact with your donors. Personalization is also vital in nurturing the donor relationship and small acts such as remembering to acknowledge and express gratitude to donors right away, with a quick post-gift follow-up, such as a brief phone call or a personalized email thanking them for their continued support, increases the likelihood the donor will continue to feel connected to your organization and its goals. 

Timing is important, and maintaining consistent and efficient communication will ensure a donor feels seen and appreciated by your organization. Always let donors know that the important role they play in the organization’s success is appreciated and go out of your way to ensure each donor feels welcomed by your group.

Share meaningful content and a consistent narrative. When reaching out to donors to give updates on the impact their support is having, focus on driving your messaging through intentional content. Donors will appreciate, and most likely respond to, action-driven messages rather than fluff, and a consistent narrative illustrating how their gifts are being used will encourage continued donations to your organization.

Ask for donor feedback by conducting surveys and polls, and do your best to integrate their suggestions into your work. Don’t be afraid to use your communication lines to ask your donors what they think. Reach out and hold conversations with them, so you can tailor your communication strategies to their needs and avoid donor fatigue

Developing and Implementing a Successful Donor Stewardship Program

Donor Stewardship Program

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As you continue to search for new prospects, and implement donor stewardship programs, start by gathering and analyzing your information. Create personalized campaigns, segment donors according to their financial capacity to give and their shared interests, based on insights gathered by WealthEngine 9’s We Analyze tool, which features look-alike modeling, and use this information to create a plan to reach your target audience. 

Find ways for donors to get involved beyond their initial gifts. Reach out when you need volunteers, especially if you have an event coming up that is being funded by their contributions, or when something exciting is happening within your organization. 

Donors who are actively involved in initiatives will see the impacts of their gifts first-hand and feel inspired to continue giving, which increases your donor retention rate. Donors who give of their time also need to feel they have made impactful contributions and be shown that their endeavors are making a difference. Continually prioritize highlighting the impact donor support is having on the sustainability and success of your mission using every form of communication available.

For more information about how your organization can more efficiently search for new supporters while retaining its current donor base and increasing its donor retention rate, check out a free demo of the WealthEngine platform today.

 

8 High-Conversion Fundraising Tactics in the Wake of Coronavirus

Donor Pyramid

While everyone is contending with some level of financial uncertainty in the wake of the coronavirus (COVID-19) pandemic, this does not mean your fundraising efforts need to stop or even decrease. In fact, continued fundraising activities during this time are essential for ensuring you maintain a strong relationship with your donors.

However, one important element of fundraising has changed as a consequence of COVID-19the manner in which organizations need to go about identifying and reaching out to their donors. This guide details ways fundraising organizations are pivoting to continue their capital campaigns, explains the types of messages that are proving most effective at this time and outlines specific actions you can take to continue raising money. 

Read on or “jump” ahead to each section:

This guide is based on an interview between Rick Dunham, Chair of the Board at the Giving USA Foundation and the CEO of Dunham + Company, and Raj Khera, WealthEngine’s EVP and Chief Marketing Officer. Listen to the webinar here

The Importance of Fundraising in the Time of Coronavirus

Given the global impact of the sudden economic downturn, it’s imperative that nonprofits continue fundraising in this difficult time. It is important to bear in mind that many nonprofits are founded based on mission statements declaring a commitment to increasing equity in fair treatment and opportunities for advancement among underserved sections of society.

The societal challenges members of these groups face are only exacerbated when a catastrophe like COVID-19 shakes the foundations of social and financial norms. As Dunham noted, “If your mission was relevant before all this hit, then it’s still relevant today.” 

In fact, the number of individuals in need of assistance can increase significantly. This has certainly proven true in the wake of COVID-19. As Khera observed, “We saw [recently] there were over six million people that had filed for unemployment. Our country is hurting…there’s a lot of need out there.” 

Donors also depend on consistent communication for assurances that the organizations they support are still functional and fulfilling their mission in times of crisis. If you go silent during a critical period for fear of being perceived as insensitive, it may end up damaging your relationship with your donors rather than helping it.

Dunham urges people to remember, “It’s not about the organization, it’s about what the organization is actually able to accomplish in the lives of people.”

8 High-Conversion Fundraising Tactics in the Time of Coronavirus 

The pandemic hasn’t put an end to fundraising. It’s only changed how fundraising is done. These tactics ensure that you’re appealing to and communicating with donors effectively.

1. Find Alternative Touch Points With Donors

Social distancing protocols and specifically, bans on public meetings in groups have disproportionately impacted religious-based nonprofits that now find themselves searching for alternative fundraising strategies. 

Dunham, whose company is a global leader in providing fully integrated marketing and fundraising strategies for nonprofits, offers the following suggestion: “Part of what I want to encourage churches to do is to consider a midweek eAppeal, that is more like an offering, if you would, that encourages people [and] reminds people of the ongoing work of the church.”

The same is true for museums and community organizations that primarily interact with people through face-to-face interactions. Just because your doors are closed to the public doesn’t mean that communications with them need to cease. You simply need to find a more appropriate method of interacting with them. 

2. Segment Donor Lists

Before sending a single email, segment your donor list using a donor pyramid. A donor pyramid can accurately identify which donors nonprofits should pursue at specific target amounts. 

Donor Pyramid

A behavioral trend has emerged where high-level donors are continuing to give but in smaller amounts, while mid-tier donors are increasing their gifts. Take advantage of this trend by targeting donors in these tiers with relevant messages and requests for donations.

WealthEngine recently unveiled the first artificial intelligence-based donor pyramid modeler in the industry. This advanced tool allows nonprofits to easily and quickly visualize how major fundraising endeavors should be broken down among giving tiers. 

With this tool, you can automatically segment your existing donors so you know who to target for planned giving, major gifts, mid-level gifts, and more. You can also easily see how many prospects you need to meet your goals. WealthEngine then works to find those prospects for you. 

Khera detailed how the donor pyramid modeler works by giving a hypothetical fundraising goal and explaining how you can use this new tool to create an accurate visualization of how close you are to meeting your fundraising objective: “Let’s say you want to raise a million dollars. All you do is type that in and our pyramid will actually help figure out how many gifts you need for each tier. You can change the thresholds for each tier…and it’ll recalculate everything for you, including your conversion ratios of how many people you need to meet, and how many you would close.”

3. Identify Donors Most Capable of Giving

It doesn’t make sense to reach out to a particular donor if their financial situation has drastically changed and they’re no longer capable of making their usual gift. Instead, use data analytics to focus your fundraising efforts on those who have experienced less of an impact.

WealthEngine’s WE Data tool enables organizations to quickly identify those individuals most capable of giving.

WealthEngine Profile

The We Data feature analyzes information from 60 sources, 300 million profiles, and 122 million households, and then offers insight into a prospect’s net worth, income, assets, history of giving, and more. With that kind of detailed data at your fingertips, you can easily find donors capable of supporting your mission, even at times of challenging circumstances on a global scale.

4. Be Authentic With Email Marketing

The subject line of your email campaign is the first thing donors see, so make it count. Aim to strike a balance between being sensitive to donors’ current situations and leaving the door open for them to continue participating in your mission.

Dunham shared the experience of one of his clients who supplemented its fundraising efforts with an email campaign that began with a simple yet impactful subject line: “How are you doing?”

Dunham explains this subject line was so effective “because . . . it immediately let the donor know how much and how important that donor was to that particular organization.” 

The body of your email should be equally engaging. In the case of Dunham’s client, the body of the email began with, “How are you doing in light of all that’s going on right now? We’re concerned about how you’re doing.” The message also addressed the health of the organization, its plans for moving forward, and expressed gratitude for the ongoing support it had received. 

This lone email blast generated $50,000 in donations. While certainly an impressive return, Dunham was quick to point out that this example of successful email marketing is not an isolated outcome: “For the month of March itself, that would be the last three to four weeks, we’ve seen a 26% increase year-over-year in revenue, but it’s because they’re actively engaging.”

5. Be Honest About Your Need

This is no time for organizations to hold information back from donors: If your nonprofit is genuinely struggling, do not attempt to downplay the stark reality. Efforts to downplay financial distress could negatively impact the carefully cultivated relationship between a nonprofit and its donors. Dunham emphasizes the importance of maintaining a relationship built on trust by asserting, “Nothing could be more distressing to a supporter, somebody who has invested in you, [than] to find out that you were in trouble and you never said anything about it.”  

Dunham advises struggling organizations to issue “a very clear request for funding” detailing why money is urgently needed. 

One of Dunham’s clients was an organization that could only sustain itself for approximately 18 days before operations would be forced to close. The solution was a quickly assembled multi-channel campaign that honestly addressed the situation, clearly stating the urgent need for funding. The ensuing donations allowed the organization to survive.

Dunham asserts, “Without being vulnerable and communicating the severity of their situation, this company could have potentially ended up closing their doors.” 

Smile FM, a Christian radio network based in Michigan, is another organization that saw similar success using the same tactic. Prior to the coronavirus outbreak, the station averaged a loss of three ongoing givers per month. When the pandemic hit, they began losing roughly three ongoing givers per day.

In response, the organization crafted an honest, compassionate email and sent it to 2,557 people, generating 25 donations within the first hour. Less than 24 hours later, the station had received 68 gift pledges, totaling nearly $20,000. Aside from on-air pledge drives, no fundraising initiative in the station’s history had ever generated such a generous response in such a short amount of time.  

6. Match Messaging to Donor Demographics

In addition to being authentic and honest, the messages you craft and their delivery system should be relevant to the demographics of your donors.

WE Analyze, a tool by WealthEngine, gives organizations an in-depth look at donor demographics so they can create messaging that matches the personas of their supporters.

Demographic Dashboards

For example, if your donors tend to be older, a fundraiser driven by direct mail is likely going to be more effective than one through an Instagram campaign or Facebook ads. 

Of course, there’s some messaging that you can land on without needing a demographics analysis tool. A faith-based organization such as a church, for instance, should tailor the content of their emails to reflect how they would engage with their congregants in person.

Dunham noted, “We’ve seen a tremendous response to a message around ‘How can we pray for you?’ For the faith-based organizations, there’s been tremendous engagement around that.”

This message works because it’s the same approach a person would take if they were comforting one of their faith-based peers in a face-to-face encounter.

7. Offer Gift Matching

Gift matching, a process in which a high-value donor or sponsor matches lower-value donations, is another powerful fundraising strategy. This approach may include a traditional gift-matching program or be implemented as a challenge, in which a larger donation will be made if a certain threshold is met through the combined efforts of several small and mid-level donations. 

Dunham maintains that the “true match” approach is the stronger of the two gift matching fundraising initiatives. Explaining his preference for a true match gift challenge, Dunham argues that true match has more of an impact, “especially if there’s some sort of a time frame on it, that if you run the potential of losing a portion of the match, and the donor’s intent is to get people to really be engaged” this approach can be very effective in getting people to commit to giving. 

The doubling effect of a person’s gift is also a powerful tool. If a donor realizes meeting a certain gift threshold will result in their donation being doubled—increasing the impact for the organization—their incentive to give is increased. 

For these types of programs to be efficient, it is vital that fundraisers have a firm grasp on the capacity for giving among their potential donors. This information allows nonprofits to set realistic fundraising goals. 

We Analyze assists organizations by monitoring and tracking donor giving history. This gives organizations a more accurate prediction of how gift-matching initiatives will perform.

8. Host Virtual VIP Events

Virtual tours and online performances help organizations remind supporters that they’re still offering value to the community and that their societal impact, as well as their financial needs, continue even as the nation works to emerge from “stay in place” restrictions.

However, interest in virtual tours has tapered off as the pandemic has progressed, so organizations need to get creative about differentiating themselves. Virtual events like webinars, live music, speaking engagements, or other distinctive experiences are still seeing success.

Virtual events have proven to be effective tools for cross-promotion and working cross-functionally with other organizations with whom you have established relationships, enabling you to expand your reach to a wider audience. Virtual events also offer ample lead time in promotion and can be used in conjunction with email messaging.

Before scheduling an event, organizations should consider how their donor audience will react to the offering. Ask yourself whether featuring the content online makes sense or if it feels forced; proceed with the event only if you feel that what you’re offering will truly appeal to your core audience.

Key Takeaway: Intentional Messaging Fuels Fundraising in the Time of Coronavirus

Although the pandemic is at the forefront of everyone’s mind, nonprofit organizations remain committed to their founding mission statements. Now more than ever, certain sectors of society depend on the assistance offered by nonprofits, making fundraising and garnering continued financial support for these organizations increasingly essential.

Organizations must pivot their messaging and delivery systems to show donors the importance of continuing to support them. Being honest about your needs, staying true to your mission, and being careful about how you construct messaging and virtual offerings are all essential for fundraising in uncertain times.

To learn more about the full assortment of tools included in the WealthEngine platform that elevates fundraising initiatives in uncertain times, sign up for a WealthEngine demo today.

Retail Banking Customer Segmentation

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Retail banking, also known as consumer banking, offers financial services to the general public. Typical services offered by retail banks include checking and savings accounts, personal loans, credit card access, and mortgage loans. 

This guide covers definitions of retail banking and customer segmentation and a discussion exploring common types of retail banking customer segmentation, how data analytics are used in customer segmentation and the benefits of segmentation.

What Does Customer Segmentation Look Like in Retail Banking?

Retail banking services are commonly provided by financial institutions at physical locations, or branches, where customers can manage their money and speak in-person with a banking agent regarding other financial services or products offered. 

Most services can be provided at ATMs or through mobile banking platforms, which in recent years have gained substantial traction. Since these institutions have a broad customer base, banks often group their customers into categories based on similar traits, a process known as customer segmentation

Customers that make up a retail bank’s user base can vary widely by numerous factors including age, gender, income, lifestyle, etc. Banks can segment their customers into lists dividing their consumers into groups based on certain key characteristics and take actions that better align with each segment. 

Obtaining and acting on customer data through the lens of segmentation can have a massive impact on marketing and sales, retention efforts, customer service, and more. 

Carefully analyzing such a high volume of customer data can be daunting. By using tools and software like WE Analyze, retail banks can easily capture data such as spending habits, frequency, and capacity, and then use this information to identify the most appropriate time to make a loan offer. In turn, this targeted action improves the likelihood of retail banks earning increased revenue through customer loans.

A bank’s customer segmentation approach can vary widely and must be based upon the organization’s business model and priorities. Segments can be quantitative, such as by age and gender, or they can be qualitative, such as separation by values and interests.

Maximum value is obtained when banks merge both types of data to better understand the wants and needs of their customer segments, allowing them to offer the right product or service at the right time.

 

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Common Types of Retail Banking Customer Segmentation

There are numerous ways to segment customers. Traditionally, segments are demographic, geographic, or product based. With basic demographic and geographic information, a retail bank can tailor its marketing efforts so they are personalized to meet consumer demand. 

Here are some of the more traditional segmentation categories retail banks may consider:

  1. Location: Marketing efforts geared toward specific geographic areas.
  2. Gender: Beneficial when promoting male and female-specific products online.
  3. Age: Improve age-based predictions about customers. For instance, millennials are more responsive to digital marketing strategies, with most having an email account dedicated to promotional content and over 95% of them subscribing to email lists after “liking” a company’s Facebook page, whereas baby boomers tend to be more financially stable and have higher brand loyalty.
  4. Wealth models are helpful because they convert certain qualitative attributes into qualitative scores. Wealth modeling enables banks to know where to focus their acquisition and marketing efforts to target customers who yield the highest return on investment.

Once this information is gathered, banks refine these segments by analyzing the spending habits and capacity of their customers to increase revenue by knowing which product or service should be offered and when. In recent years, more emphasis has been placed on segments that incorporate customer spending behavior or interests, often getting quite granular with the variables, as there are many factors that impact a customer’s willingness to spend. 

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Sample Retail Banking Segments

Once a bank is able to categorize and understand the customer they are working with, they can use software to learn how to best assist them. These are three examples of retail banking segments and how they might be approached for relevant services and marketing:

    • A family living in the suburbs with two children under age six in a house less than 1200 sq ft, who have a net worth over $500k. This segment could be attractive to candidates looking for home loans to move into a bigger house.
    • An existing customer who has only a car loan for $30,000 with your bank, but is also a business owner. This segment can be approached for business banking, line of credit, or equipment loan/leasing.
    • An existing customer who has less than $50k in your accounts but who has also been flagged as an accredited investor. This segment could be open to your private banking or wealth management services.
    • An existing customer who has a net worth of over $500k and a child, aged 17, who has a debit card with your bank. This segment can be tapped for showing how to help their child build credit using a secured credit card. This works the same way as a debit card, (that their parents might be willing to fund), but their usage and payoff history is reported to the credit agencies to help start building a credit history.

For banks looking to get the most out of their segmentation, knowing how to use wealth and lifestyle information to target the right audience with the correct services is key to retaining customers, and predicting their needs.

How Data Analytics is Used in Retail Banking Customer Segmentation

Once retail banks begin collecting and screening key data from their user base, analytics can be used to turn customer data into actionable insights for each of their consumer segments. As previously stated, data analytics are most commonly used in retail banking customer segmentation to identify common traits or characteristics among customers to personalize service or product offers. 

Marketing software helps companies fill in the gaps in their customer database by using data enrichment, data cleansing, secure delivery and real-time updates to maintain high-quality data. Automation offers increased efficiency in comparison to resources lost when spent manually maintaining and updating databases, allowing more time to be allocated toward building stronger relationships with each customer segment.

 

Wealth screening through WE Screen uses proprietary wealth scores and ratings and merges them with current customer data, enabling companies to know more about consumers’ interests, political affiliations, net worth, and capacity to spend. These insights can be applied to segments to create a variety of initiatives such as reducing churn rates, improving satisfaction, and more. 

With WE Screen, banks can gather analytics on customers from their lifestyle segment using affinity scores applied to their data. 

Using a Look-alike Model

Using segmentation and affinity scores, banks can rank consumers by variables such as net worth or cash on hand to identify their most (and least) valuable customer segments, allowing them to concentrate special marketing efforts directly to their top consumers. 

Creating a look-alike model for these customers takes this application of data analytics further, allowing banks to target prospect segments they know will yield a higher profit. Look-alike modeling allows banks to gather and identify common traits from a certain customer segment and find new prospects who match those same criteria. 

Banks can use this information to create personalized messaging for potential customers who resonate with them from the very first interaction based on the segment(s) they fall into. This often increases conversions and builds stronger relationships with consumers.

Retail banks can use other basic consumer information to more quickly identify trends among customer segments and use it to further personalize interactions. Some of these data points include:

    • Acquisition source: Noting where a new consumer was acquired. This helps track where new customers are coming from, enabling banks to capitalize on those channels.
    • Initial spending: Banks can identify the first purchase a new consumer makes, helping them to make better predictions about customers’ future needs and purchases. 
    • Device usage: This enables banks to understand which devices customers use for various services, clarifying what actions can optimize those interactions and engagements.

Because there are so many pieces of customer data that can be analyzed, data mining is becoming increasingly popular for larger financial institutions. Banks use data mining to apply extensive analytics to current data and to spot trends that may not otherwise stand out. 

For instance, a bank can use data mining analytics to discover the top 5 attributes shared by customers with the highest lifetime value (LTV). Knowing those key characteristics, banks can concentrate their marketing efforts by creating personalized campaigns targeting high-value customers. 

Data analytics performed on customer segments can also be used to create more efficient predictive models for retail banks. When machine learning is integrated, it can use these models to create a smoother customer experience by better forecasting what customers need and when. 

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Machine Learning

Machine learning is gaining traction and is predicted to have a positive impact on nearly all aspects of larger technology-driven organizations, with 57% of technology professionals expecting machine learning to contribute toward improved customer experience.

Benefits of Retail Banking Customer Segmentation

Through a solid understanding of their customer segments, retail banks can personalize consumer experiences and quickly form genuine relationships with new and existing customers. Improving these efforts leads to reduced costs and increased revenue. A list of common benefits derived from customer segmentation follows: 

    • Lower Acquisition Costs

Through customer segmentation, banks can deploy more personalized initiatives that increase the likelihood of prospects becoming customers. Banks can also generate specialized efforts toward segments that yield the highest profitability. One way this can be achieved is by using a look-alike model

    • Increased Sales

By knowing customer interests, habits, and desires, banks can offer customers exactly what they are looking for when they need it the most, leading to increased revenue. 

    • Customer Lifetime Value (CLV) prediction 

CLV helps banks identify their most valuable customer segments so they can focus on acquiring customers who generate the most revenue over time.

    • Decreased Churn

Creating a personalized experience for retail customer segments increases customer satisfaction, often leading to increased customer retention and brand loyalty, decreasing churn rate.

    • Improved Marketing Campaigns

Using customer segments, retail banks can determine the best way to attract new customers, build brand loyalty, and promote specific products. Having a better understanding of the target segments will lead to increased conversion rates

Customer segmentation makes marketing, product development, and even customer service more effective by helping retail banks gain further insight into specific groupings within their customer base. 

To begin segmenting your customer list, visit WealthEngine today to see all of the powerful tools our platform offers to help organizations turn data into action.