The second in a series of articles aimed at identifying strategies that banks should follow for tapping into the potential value certain consumer segments hold for them…
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In a series of articles, different consumer segments (SME, Ladies, Young Families, and the Youth) that are relatively under-addressed but hold significant value for banks are being profiled, with best practices highlighted in addition to recommended actions for addressing the segments. The second segment to be discussed is the ladies segment.
Traditionally, ladies have been viewed by the banking sector as an important but secondary segment for targeting purposes, with segments composed mainly of males in the forefront. The perception has been that while women do play the lead role in controlling household spend and in influencing family financing decisions, they are not the account holders and thus the primary targets (with men making the decisions on which banks to take a loan from, where to invest their assets, where to buy insurance from, etc.).
The global banking market and these segments have evolved and changed, however. According to a recent report by research firm Aite Group regarding the US banking sector, for example, “A highly-educated ladies segment comprised of those leaving the workforce to raise children has created a new, highly lucrative consumer segment for financial firms.” The market, which the study calls “Ivy League Moms,” is sized at roughly 10 million households, with investable assets of $6.5 trillion USD.
In the Middle East, another region where this segment is growing in importance, ladies are estimated to control around $246 billion USD of the region’s wealth, projected to reach $383 billion USD by 2011.
Add to this the fact that women are joining the workforce at unprecedented rates globally and outlive men anywhere from five to fifteen years (varying by country), the importance of this segment is quite clear. Banks need to specifically address the ladies segment as they do other key segments, and create strategies aimed at acquiring, keeping, and growing them.
The preferences and need of ladies differ significantly from those in other segments, and thus, significant customization by banks around their products and services is required. For example, ladies have a much different risk tolerance than men on average – a research conducted in the UK revealed that only a tiny proportion of women banking customers prefer products that bear high-risk but promise possible high-performance; a majority were willing to accept lower returns in exchange for low to no risk, a preference not commonly stated by men.
A strategy for attracting, winning over, and keeping the ladies segment requires customization in sales, marketing, and customer care efforts across the bank, all designed around the customer micro-segments. Some banks have excelled at catering to this segment, doing all kinds of interesting things to win them over. Some examples include:
Caixa Geral de Depósitos: The bank mainly targets fashion conscious ladies, and to cater to this segment, publishes the “Caixa Woman” magazine, with a circulation of 20,000 copies. The magazine is distributed free at CGD’s banking branches and features on the cover Portuguese pop star Mariza, a world famous fado singer, who is one of the public faces of the bank. The content is similar to other women magazines, and includes articles on celebrities, food, and beauty. A section at the end deals with personal finance issues, with emphasis on the ways Caixa can meet the needs of their consumers. The ‘Caixa Woman solutions’ include:
- Online and ordinary savings accounts paying interest rates above the market average and offering the chance to win a house in a lottery
- Life insurance especially designed for women aged between 20 and 50
- Personal loans so “you won’t have to delay that purchase.”
- Special loans to pay for health treatments and home purchases;
- Discounts on Apple iPhones.
Caixa Woman is starting to show results by attracting new clients to the bank’s products and services. The bank attributes their success in issuing more than 2,000 new Caixa Woman credit and debit cards and collecting more than €10 million in deposits directly to this initiative.
Raiffeisen: Austria’s first bank for women was recently opened by Raiffeisen. The current set-up includes a welcome lounge that includes a play area to keep children occupied. All the employees are female, who are instructed to take their time in explaining products and services thoroughly to customers. The Bank has also partnered with ELLE Magazine to launch the ELLE-Raiffeisenbank MasterCard, which provides cardholders with 30% off discounts as well as other benefits at program partners. The cardholders have access to the ‘concierge lady’ service, from which clients can receive roadside assistance, call a taxi, get HR and pet care assistance, and also receive information on products, services, and leisure activities.
Kenya Women Holdings: There are several financial institutions providing micro-financing solutions to women entrepreneurs in less developed countries as well, with KWH being one of them. The Kenya Women Finance Trust, set up in 1981, has since grown significantly, serving the needs of women investors across the country. Now called Kenya Women Holdings, the bank has more than 400,000 female customers, boasting a loan portfolio of over $160 million USD.
BBVA: BBVA launched the fourth ‘New Baby’ Loan campaign, targeting mothers with newborns, with the aim to help them cover the expenses that a new child entails. With a 3-year repayment period and 0% interest (and no commissions), the campaign not only attract new female banking clients, but also earns the bank significant respect in the marketplace for its willingness to forgo profits through this campaign.
Legacy Bank: The relatively new start-up bank in affluent Scottsdale, Arizona, specifically targets affluent women through its business banking and private banking operations. Staffed mainly with female bankers, the bank provides wealth management and estate planning advice. Among its micro-segments are women who manage their own money, those recently widowed, and those recently divorced, with each group requiring a different approach and strategy for serving.
In developing a comprehensive program aimed at addressing the ladies segment, we recommend banks take the following three points into consideration:
1. Understand the Ladies Banking Micro-segments
Banks particularly need to focus on understanding the needs of the various ladies banking micro-segments, as their needs differ significantly. These micro-segments, such as young ladies, single moms, working professionals, retired professionals, widowers, and college students, have a different level of understanding around banking, as well as a complete different set of product and service needs. Each bank needs to examine its own customer base and the ladies in its own geographic market to understand the segments’ potential and needs.
Examining competitors’ practices will also help banks identify the shortcomings they can address in their product and service development efforts. Particular effort should be made to understand which micro-segments can be won over easily, which ones are particularly attracted to competitors, and which products and services drive their loyalty.
2. Customize the Offerings
Heavily influenced by the learnings in the prior step, propositions then need to be developed to win over the various ladies’ micro-segments. A significant segment of ladies (particularly in some developing countries) can be considered novices when it comes to finance-related matters, and thus, particular attention needs to be paid to keeping the products and services simple, with emphasis on clear and concise messages.
Other factors that should be considered when developing propositions for ladies consumers include privacy (in some countries more than others, ladies prefer interacting with women only), convenience (as women more so than men have little time to spare, busy playing numerous roles at once and on the run), and security (such that a sense of security is provided through the offering of low-risk products that are insured).
The lifestyles and lifestages of customers in this segment are very important to address here as well – having offerings that address these aspects of consumers lives is of critical importance, as they help build emotional bonds with the customer base. This can be done through adding partners (the way Raiffeisen has partnered with Elle) or through designing products to focus on the lifestages (they way BBVA targets soon-to-be expecting or new moms).
3. Change the Offerings
Understanding the ladies segment and customizing tailored products and services for them is necessary to start a relationship with ladies, but not enough to maintain that relationship. Consumers in the ladies segment are constantly changing the micro-segment they belong to, and with that change comes a shift in their needs and expectations.
A given female consumer will go through numerous different phases in her life, phases which require a bank treat the consumer differently each time. Banks need to be prepared to change their offerings to consumers based on the lifestage the consumer has moved into – i.e. offering a loan to help the consumer buy her first car, a loan for the new house and baby, investment advice to grow her savings, loans for her children when they enter college, retirement planning, inheritance advice, etc.
Accordingly, successful banks have triggers in place to help them know at which point in time in a consumer’s life they need to change their proposition strategies, changing up the channels, message content, and offer based on the lifestage of the targeted individual.
The ladies segment needs to be considered by all banks as a primary target immediately; not only is it a wise investment for the future, but it’s a lucrative one in the short-term as well (unlike the youth segment). Banks in those markets whose competitors have not so far targeted this segment stand to gain the most.
To learn more about developing strategies and products / services for the ladies banking segment, please contact firstname.lastname@example.org.