With the rise of personalisation came the expectation of personal accuracy – it is more important than ever to truly know your customers, and act accordingly. One of the key ways to achieve this is through understanding their Spend Personality. This approach is about understanding the nuanced ways in which people spend, offering invaluable insights that can help businesses improve customer engagement, refine product development, and sharpen their overall strategy.
What is Spend Personality then?
Spend personality refers to the unique ways people use their money across different categories of spend. Each transaction a person makes provides a view of their lifestyle choices, values, and what they prioritize. By analyzing these patterns of spend, one can identify different spend personalities, which can then be used to tailor strategies for engagement, wellness, and customer interactions. ecosystem.Ai has identified six distinct spend personality types:
- Intentional
- Industrious
- Experiential
- Enthusiastic
- Introvert
- Extrovert
Developing a spend personality model involves understanding human behavior through psychological theories like Jung’s introversion and extroversion, the Big Five traits, and cognitive biases from behavioral economics, which highlight how spending habits may differ from traditional personality traits. The model also incorporates sociological influences, recognizing that societal norms and institutions can shape spending behaviors, helping businesses distinguish between individual preferences and externally driven spending patterns.
Translating these psychological and sociological theories into actionable insights involves developing sophisticated algorithms that analyze transactional data. These algorithms identify patterns in spending habits and categorize individuals into specific spend personalities. The goal is to move beyond traditional segmentation methods and create a dynamic model that evolves with the customer.
One key element of this model is the time, place, and act trifecta, which looks at when, where, and how transactions occur. By understanding these factors, businesses can infer the purpose behind each transaction and develop a clearer picture of a customer’s spend personality. For example, habitual spending on certain categories might indicate a highly organized and deliberate personality, while more spontaneous, varied spending might suggest a more experiential or enthusiastic personality.
Some practical applications of Spend Personality!
Once a customer’s spend personality is identified, it can use it in several practical ways. Examples include:
- Tailored Customer Engagement
- Personalized communication strategies can be crafted based on spending motivations. For example, intentional spenders prefer clear, direct messages, while experiential spenders respond well to promotions offering new experiences.
- Customer Retention
- Monitoring changes in spend personality allows businesses to keep their offerings relevant, enhancing retention. If spending patterns shift, engagement strategies can be adjusted accordingly.
- Cross-Selling and Upselling
- Insights into spend personality guide more targeted recommendations, making cross-selling and upselling efforts more effective.
Spend personality offers a powerful framework for understanding and engaging with customers. By moving beyond traditional demographic segmentation and incorporating psychological and sociological insights, it is possible to create more personalized and relevant experiences for customers.
As the financial landscape continues to evolve, those who can effectively use spend personality insights will be better positioned to meet the needs of their customers, driving long-term loyalty and success. Whether it’s through tailored product offerings, enhanced communication strategies, or even improved risk assessments, understanding spend personality is key to boosting customer engagement.
