If you were to ask the President of a Community Bank or Credit Union, "how well do you know the market that your institution serves?" Chances are the vast majority would tell you that they know their markets "inside out." To their credit, they really do believe their response to be true.
Unfortunately, most of the time, their perception of the markets they serve is based on observations and intuition and do not accurately reflect the true composition of their market.
Fortunately, the cost of obtaining market data has decreased significantly over the last couple of years enabling community banks and credits unions to gain access to the same data that their regional/national competitors have had for years.
Through market segmentation, management has the capability to look at the composition of their markets, identify those household with the highest propensity to purchase specific products, gain knowledge of the balances those households maintain, and can even determine the delivery channel they prefer and how best to reach those households with a pertinent offer.
Sometimes this type of analysis confirms how management views their markets, but most of the time this type of analysis is a real "eye opener."
Using this type of analysis as the basis for strategic planning enables the institution to set quantifiable, achievable goals. Being able to communicate how the goals were set, makes it easier for management to get "buy in" from the individuals responsible for achieving those goals.
Do we really understand the market we serve? If we take advantage to the tools that are available, the answer can be a resounding "yes"!
Have a great week/weekend!
Mike
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