The first step in a behavioral segmentation strategy/ tiering strategy is to of course break down organizational silos, access comprehensive data on the customer’s engagement with the bank and analyze it. Data can be categorized into demographics and socio-economic factors, geographical data, and behavioral data. Behavioral data can include but is not limited to factors such as spending, saving and investment trends, risk, credit scores, custom score, etc. Based on this comprehensive data, customers are segregated into various behavioral segments/ tiers.
This segmentation can help the service providers give personalized and preferential treatment to the respective segments. They can be used to vary the rewards and benefits, transaction charges, fee waivers, discounts, free services, and even personalized offers based on the tier the customer is in. For example, a customer who does not have a large portfolio with the bank or has minimal savings would likely be in Tier 1. They would perhaps get movie tickets to a recently released blockbuster by way of rewards. But another customer with substantial share of wallet would likely belong in Tier 5 or the highest segment and be rewarded with movie tickets, valet parking, health club membership, airport transfers and more, based on their financial behavior and lifestyle choices.