Benefit segmentation by factor analysis: an improved method of targeting customers for financial services

Abstract

Banks and building societies typically focus on geographic, demographic, socio‐economic, and psychological characteristics to segment the market for financial services, although these are not efficient predictors of future buying behaviour. To correct this shortcoming, benefit segmentation by factor analysis has been used for the first time to group building society customers in relation to their particular attitudes and behaviour. Identifies eight benefits (listed in order of their popularity): personal service, investment, limited banking, accessible cash, cash card, advice, money management, and full banking. Incongruities between certain of the benefits, and the differing customer profiles for each benefit segment were analysed. Makes suggestions on how building societies and banks could use benefit segmentation to improve the effectiveness and efficiency of their marketing strategies.

Citation

Singh Minhas, R. and Jacobs, E.M. (1996), "Benefit segmentation by factor analysis: an improved method of targeting customers for financial services", International Journal of Bank Marketing, Vol. 14 No. 3, pp. 3-13. https://doi.org/10.1108/02652329610113126