Case Study
Customer Segmentation
Top US Electronics Retailer: Next Gen Customer Segmentation of Credit Card Portfolio
Objective
01
- Drive profitable incremental sales for Retailer Card program
- Increase cardmember engagement & reduce attrition
- Reduce cost of sales – shift purchases to store card from other payment tender
Approach
02
-
- Developed a 360º view of the cardholder base by combining issuer & retailer data
- Built a full composite of customers beyond traditional risk/profitability segmentation
Findings
03
- Retail & Payment Centric Solution
- Retailer customers spend $3B+ on other tender, majority of which on other 3rd party credit cards
- Portfolio had significant credit share in tickets > $600
Actions
04
- POS: Changes in associate prompts
- Online: Pre-populated credit product information in account
- Field Sales: Identified “Right To Win” Stores
- Marketing Strategy: Customized offers & messaging by segment
Driving Value
Client
- Issuer of Credit Cards on behalf of Retailers
- Business model is B2B2C (Business – to Business – to Consumer)
- Retailer Brand is customer facing
- Retailer bears reputational risk if things go wrong
- Issuer owns the customer relationship
- True partnership arrangement: issuer in business to drive profitable sales for client
Client
- Largest electronics retailer in the U.S
- Growing fast with constantly changing customer behavior
- Retailer has Customer Insights & Analytics team, focused exclusively on driving retail sales
- > $10B in Assets for issuer, with > 10MM cardholders
- $5B+ in total card sales annually, $40B+ total annual retailer sales
Business Problem
- Drive profitable sales from cardholder accounts
- Increase customer engagement & reduce attrition
- Reduce ‘one & done’ behavior
- Increase credit share
- Reduce cost of sales – shift purchases to store card from other tender (3rd party, debit card, cash & check)
Approach
- Build a 360º view of the cardholder base by combining internal and retailer tender data
- Build full composite of customer beyond traditional risk & profitability segmentation
- Create retailer centric segmentation that incorporates breath of customer engagement with retailer across tender types
- Leverage existence of Tender Neutral Loyalty Program (TNLP) to create Payment Segmentation
Multi Channel Strategy to Drive Incremental Card Sales
Point of Sale
- Primary source of Card Origination
- Acceptance – ‘May I’
- Account Number lookup if Card not present
Digital Channels
Incremental sales across all digital channels:
- Digital wallet
- Online profile
- All digital assets
Field Sales Associates
- Primary objective is to increase card integration in-store through physical visits
- Work closely with retailer store managers & associates
Traditional Marketing Channels
- Email, Direct mail, Social media (every marketing channel available)
- In store signage, & Statements
- All collateral
Results
Generated over $250 Million in incremental credit sales
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