Banks: Target How Many Market Segments? November 4, 2009Posted by nichebanking in Niche banking, Nicheruptive, The Long Tail of Banking.
Today, in my normal Twitter activity (@nichebanking), I came across this good post on BankInnovation.net, called Target Niche Markets with Enhanced Online Experience. It starts out with a good, simple question: ”How many different market segments should banks target?”
I’d like to respond to a slightly different question: ”how many different market segments should the banking industry target?” My answer: infinite. This is exactly what the long tail of banking is all about–going further and further down the tail, “slicing and dicing” customers into lots and lots of unique segments based on psychographics rather than demographics or geography. Right now, as the article points out, the industry’s idea of segments is “consumers, small businesses, and micro-businesses.” These segments are about .2 centimeters down the tail. Instead, there is an opportunity for banks to go MUCH further down the tail, as the article (and the speaker at the BAI Retail Delivery Conference) points out.
As for the question of how many different segments an individual bank can target, that answer is depends on the bank’s ability to commit to a new model of doing business. Based on the Nicheruptive way of thinking (and I believe what Harris Bank‘s Nate Wehunt was insinuating), a “bank” could target dozens of different segments…and the customer wouldn’t even know or care. That’s because the key, of course, is that it may just technically be one entity (a “bank”) but in practicality and customer experience, it would appear as dozens of different banks.