Abstract
<p>Purpose-The goal of this study is to identify the main clusters of bank customers in order to help commercial banks to better identify their customers and design more efficient marketing strategies.</p><p>Design/methodology/approach–Data from 250 bank customers were analyzed by using two-step scalable clustering.</p><p>Findings-Five different clusters of bank customers were identified, namely, favorite customers, creditworthy customers, non-creditworthy customers, passers, and friends. The findings indicated that disparate clusters of bank customers are extremely different based on their loan amount, default risk, account balance, degree of loyalty and profitability for the bank.</p><p>Practical implications-The differences which were observed between these five clusters of bank customers accentuate the importance of customer clustering and market segmentation in the financial services industry. Customer clustering can help financial institutions to augment their competitiveness by shifting from traditional marketing strategies to target marketing and segmentation-based marketing approaches.</p><p>Originality/value-The most important contribution of this study is the incorporation of a wide range of factors that can potentially affect customer clustering in the analysis, whereas, the majority of previous studies only focused on a limited number of variables in order to determine the customer clusters. Specifically, the customer clustering in this study was performed by using demographic variables, profitability, loan amount, default risk, account balance, loyalty, account type, account closure history, customer location, and account currency. </p>
Highlights
Marketing strategy is concerned with effective and harmonic allocation of resources in order to achieve organizational goals in a specific market for a particular product/service
As described in the methodology section, five clusters were identified for the bank customers using a two-step scalable clustering algorithm
According to table 2, the majority of business accounts belong to customers in cluster one, while the majority of personal accounts are held by customers in cluster five
Summary
Marketing strategy is concerned with effective and harmonic allocation of resources in order to achieve organizational goals in a specific market for a particular product/service. A large portion of strategic marketing decisions are focused on identifying target markets and performing market segmentation. In order to improve product/service quality and to augment the degree of competitiveness, companies should identify the key needs of their target customers and should develop a strategy in order to satisfy these needs. The most salient issue in designing a marketing strategy is the fact that all customers are not the same and should not be treated . Studies in services marketing have shown that in most cases, firms should not provide services to all customers in a similar fashion. Customer segmentation and customer relationship management are among the most important determinants of business viability (Ansari & Riasi, 2016a). Customer relationship management helps the firms to enhance the customer value and enables them to retain their valuable customers
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