Segmenting the client base for effective marketing and service

1. Segmenting the client base for effective marketing and service Presented to: Securities & Investment Institute Presented by: Martin Heale Date: 19 February 2008

2. Why segment? • One organisation cannot satisfy the needs and wants of all consumers • In other words, you cannot be all things to all people • However you can discover common wants, needs, behaviours and attitudes, both in your existing client base and in a desired marketplace, and successfully build your business in these clusters or ‘segments’ • Is it understanding what the client feels to better service them or is it manipulating them? © Kleinwort Benson, 0208 0924, page 2

3. Benefits of segmentation • Better matching of customer needs and wants • Enhanced profits – variables in disposable income creates variables is sensitivity to price. Canny businesses understand sensitivities in segments and can raise average prices • Better opportunities for growth – increased level understanding of what customers want and need now, want and need more of, now and in the future • Retention – understand lifecycle of consumer, varying needs and wants at each stage and be primed to respond to these changes at key milestones will undoubtedly aid retention • Growth of share of market and wallet • Targeted marketing and sales activity – less scattergun, more cost effective © Kleinwort Benson, 0208 0924, page 3

4. We should have been doing this years ago… • Financial services, especially private wealth management slow to catch onto segmentation and its benefits • Surprising we were slow to catch on to segmentation given an abundance of data at individual level and enjoy highly intimate relationships with our clients equipping with us a knowledge of needs, wants, aspirations, behaviours and attitudes that other industries can only dream of! • FMCGs have been doing it longer and better but they would kill for our level of data and the access to and intimacy with the consumer • Segmentation can and will save (and make) time and money – allows us to differentiate between profitable and less profitable clients and therefore enhancing long term profitability of business © Kleinwort Benson, 0208 0924, page 4

5. Homogeneity in each segment Heterogeneity between segments Segments that are measurable and identifiable Segments that are actionable and accessible Segments that are large enough to be profitable Successful segmentation requires © Kleinwort Benson, 0208 0924, page 5

6. Geographical Region Country Density of area (i.e urban, semi-urban, rural) Climate Types of segmentation © Kleinwort Benson, 0208 0924, page 6

7. Demographical Age Sexuality Gender Race Religion Language Occupation Education Family size Lifecycle Types of segmentation © Kleinwort Benson, 0208 0924, page 7

8. Behavioural Benefits sought Decision making unit Product usage rate Brand loyalty Product end usage Readiness to buy Types of segmentation © Kleinwort Benson, 0208 0924, page 8

9. Top down, bottom up (George Day, 1980) Top down Dividing whole market into defined segments Bottom up Start with single customer and build on that profile Types of segmentation © Kleinwort Benson, 0208 0924, page 9

10. ‘Bottoms up’ at Kleinwort Benson • Traditional PWM industry segmentation purely by wealth thrown out the window • Existing client base profiled and single profile emerged and developed • Depth segmentation utilised - demographic, behavioural, psychographic analysis • Clearer picture of wants, needs, behaviours and attitudes emerged – position statements • Clearer understanding of how all above affected by lifecycle © Kleinwort Benson, 0208 0924, page 10

11. ‘Bottoms up’ at Kleinwort Benson • Eight main profiles identified • Internal segment experts or ‘champions’ identified and key teams developed • Deeper mining ongoing to understand further client needs, wants, aspirations, attitudes and behaviours within • Happy realisation our products and services fit segments already or need very little tailoring • Segments however will never take precedence over the ‘individual’ • The best banker for the individual, regardless of segment © Kleinwort Benson, 0208 0924, page 11

12. The difference • Language • Product design • Events planning • “People like people like them” • Matching bankers and clients • Gap analysis • Segmenting the segmentation © Kleinwort Benson, 0208 0924, page 12

13. Pitfalls of segmentation • Will not deliver on ROI unless based on robust management information strategy and platform • Don’t publicise what could be perceived as pigeonholing – remember Mondeo Man? • Don’t think because you’ve identified a segment that it’s worth targeting for growth, segments have lifecycles and therefore limitations • You don’t necessarily have to create a series of products and services for every single segment – clever companies tailor what they have to the individual needs of each segment or pinpoint common wants and needs © Kleinwort Benson, 0208 0924, page 13

14. In conclusion • We have always been segmenting in our own minds • Good bankers already understand the triggers for their clients • Segmentation simply formalises great service © Kleinwort Benson, 0208 0924, page 14