Learning Objectives:

  • Define customer segmentation and its importance in banking.

  • Apply segmentation techniques to retail and corporate customers.

  • Understand the role of needs analysis in targeting.

7.1 Defining Customer Segmentation

Customer segmentation is the process of dividing a customer base into groups with similar characteristics and needs. The Coursera course covers “Retail & Corporate Customer Segmentation” as a core topic . The University of Exeter module includes “Customer Segmentation and Targeting: Retail vs. corporate client needs” .

7.2 Segmentation Bases

Common segmentation bases in commercial banking include:

  • Demographics: Age, income, occupation, life stage .

  • Geography: Location, region, urban vs. rural .

  • Behaviour: Transaction history, product usage, loyalty .

  • Needs: Specific financial goals and requirements .

  • Profitability: Customer value and contribution to bank earnings .

7.3 Retail vs. Corporate Client Needs

Segmentation approaches differ for retail and corporate clients:

  • Retail Clients: Segmented by life stage, income level, and financial goals. Products are often standardised .

  • Corporate Clients: Segmented by industry, size, and complexity of needs. Solutions are often customised .

7.4 Needs Analysis and Targeting

Needs analysis is the process of understanding what customers require from their bank. The Coursera course covers “Customer Relationship Management & Grievance Redressal” and the importance of understanding customer needs . Needs analysis informs targeting:

  • Targeting: Selecting the most attractive customer segments to serve .

  • Positioning: Tailoring products and services to meet the identified needs of target segments .

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