Hybrid segmentation of internet banking users
Abstract
Purpose
The objective of this paper is to present and discuss the development of a transaction‐based model for segmenting users of internet banking. It aims to employ a random sample of clients of a large Canadian bank in generating the hybrid segments.
Design/methodology/approach
The basic transactional profile of the bank's clients was merged with Mosaic's financial segments contained in the Generation5 database. A random sample of 3 percent of a large Canadian chartered bank's clients was drawn from its transaction database. The transaction database employed contains clients from Quebec and the Maritime provinces. The sampling frame consisted of close to one million clients. Two‐step cluster analysis was employed to generate the transaction segment and later merged with the Mosaic financial segment to produce hybrid segments.
Findings
Two‐step cluster analysis identified four generic transaction segments which, when cross‐tabulated with the Mosaic financial segments, produced highly stable and interpretable segments. These hybrid segments are clearly superior to conventional life style or psychographic segments produced by classical segmentation methodologies.
Practical implications
The results of this study clearly demonstrate the functional and analytical superiority of hybrid customer segments. Hybrid segmentation, by cross‐tabulating transaction and Mosaic's financial segments, provides banks and financial institutions with superior strategic insights in customer understanding, customer segmentation, customer communication, customer prospecting and targeting.
Originality/value
This paper is the first to present, explain and to demonstrate the nature and the operational procedure to develop hybrid customer/client segments. More importantly, it is the first that goes beyond conventional approaches to segmenting banks' clients who engage in internet banking by integrating clients' transaction profiles and Mosaic financial segments. The resulting hybrid segments are radically different than the conventional, one‐dimensional segments produced by conventional cluster‐based segmentation.
Keywords
Citation
Zuccaro, C. and Savard, M. (2010), "Hybrid segmentation of internet banking users", International Journal of Bank Marketing, Vol. 28 No. 6, pp. 448-464. https://doi.org/10.1108/02652321011077698
Publisher
:Emerald Group Publishing Limited
Copyright © 2010, Emerald Group Publishing Limited