Strategy
22 min read

How to position a Fintech when there are multiple customer profiles in 2023

Published on
January 12, 2023
Authors.
Patrick Mehrhoff
CEO | MEHRHOFF DIGITAL
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It is tough to address everyone at once - but that is precisely what many Fintech companies try to do when they have multiple customer profiles. The result is uniform marketing that appeals to no one.

Many Fintech have products that have gained acceptance in a well-defined industry and appeal to customers of all sizes.

This is an absolute growth nightmare. Institutional clients and individuals have very different needs, and it is challenging to appeal to them simultaneously. Unfortunately, many founders immediately blame their product for its lack of success, even though a simple change in positioning can make all the difference.

When we work with a Fintech company, they often have multiple customer profiles to reach. We have a process to help with this:

  • Identify if they are trying to target too many people at once.
  • Understand your marketing and growth objectives for the future.
  • Identifying the most appropriate customers based on metrics such as annual recurring revenue (ARR), lifetime value (LTV), customer satisfaction, commitment to the product, market penetration and desirability.
  • Repositioning in all areas for the most suitable customer.

How we helped a customer improve its positioning by narrowing its market.

Positioning works best when it is clear who a product is for. A business can say its product is for everyone, but that weakens the power of its message and product.

Our customer, a leading fintech startup for crypto trading infrastructure, has a product suitable for numerous use cases in that particular industry. The product is multi-faceted and diverse and can also be used by various audiences, from individuals to SMEs and Enterprise customers.

But the needs of one segment are fundamentally different from the other.

When we first started working with the Fintech, many of their customers liked the product, but there was also a lot of confusion in their marketing messages because their needs were different.

We found that our customer didn't address the specific problems of their target groups but talked in general terms about benefits and features.

The consistent messaging impacted growth and conversions.

With high growth targets ahead, we suggested the Fintech customer reevaluate their positioning and focus attention on a single customer segment.

Positioning and managing high-probability conversion targets

Saying "no" is part of positioning. Even though it may seem that your business is missing out on potential sales, you are creating an opportunity for tremendous success.

By identifying a targeted segment, you can focus on the positioning and messaging that works for a high-growth ICP and use these insights to expand into adjacent markets.

This also applies to positioning and market selection.

When Fintech companies spread themselves too thinly across many customer profiles, some consequences affect their bottom line, such as:

  • Confusion and alienation of prospects visiting their website
  • They cannot gain market share
  • Filling their pipeline with low-quality leads
  • They struggle to build a strong brand that inspires trust
  • Fintech, or businesses in general, that grow the fastest commit to a segment in their industry

This creates much better opportunities for you. Instead of having two diluted, ineffective messages, you can commit to one segment and tap into additional markets only if you can position yourself well.

How to use data to identify high-probability conversion targets

To position your Fintech efficiently, you must first identify your ideal customer profile (ICP).

Remember: you want fit customers who will stay loyal and pay you over a long period because your product solves their problems well. You don't wish to have valuable customers who only pay for a short period.

You have to look closely at your personas and customer data to find out what types of customers you serve.  

Try to create a maximum of 3-4 categories.

Once you have done that, take a look at the bigger picture:

What is the company's goal for the next 2-3 quarters?

This goal will determine how you approach positioning and help determine which ICP to focus on.

By mapping your company goals to your ICPs, you can better understand which segments have higher growth potential and where you want to be as a Fintech in the future.

Use data to identify your high-probability conversion targets.

To select your customers' best conversion groups or customer personas, focus on a small number of primarily revenue-oriented metrics.

Forgo vanity metrics and instead focus on data related to the things that made your business grow.

In doing so, be objective and gather inputs and recommendations based on revenue, engagement and internal support metrics. We recommend the following:

  • Customer satisfaction (NPS, CSAT)
  • Engagement with the product (in-product promotions and completion of onboarding).
  • Market penetration
  • Desirability (if you can't stand your customer, you will hate your working life)
  • ARR
  • LTV

When collecting data for your decision, focus on the quantitative data first.

It is helpful to talk to customers, but only after you have collected factual data. You need a theory about who your best market is, and this theory is best built using hard data, which also helps to craft your questionnaire.

Once you have this data, you can test your theory on different customer segments using qualitative methods, such as surveys and customer interviews.

You also have to interact with churned customers to learn more about their experiences and reasoning for cancelling or quitting their relationship.

Please include the information about the churned customers in your segmentation process and understand why they left (especially in your flagship customer segment, once you have identified which group that is).

With some foresight, you can prevent other customers in the same segment from churning.

Once you have this data, you should look at the following:

  • Which segment has the highest remaining market value for you?
  • Which segment has the best acquisition economics?
  • Which segment has the best economics and is one that you like?

Look at this data from our client example:

Going through the answers to the questions above:

  • The segment with by far the highest residual value is individuals.
  • The segment with the best acquisition economics is Enterprise - you could spend a lot to acquire a client with an LTV of $145,000 while also considering a significant longer sales cycle. (several months, if not a year)
  • The NPS of Enterprise is extremely poor, and the grade of customer support you have to grant to individuals is significantly higher compared to other segments while having been on the same level as Enterprise support.

Therefore, we have advised our clients to group the two middle market segments into one high-probability conversion segment, as their problems are similar. Further, the market is large, and the economics are significant when we group the other metrics!

Of course, once they have acquired enough resources to serve Enterprise customers adequately, they need to reevaluate the prioritisation of this model, considering they can achieve a more significant NPS for these clients.

Update your positioning and messaging to address the pain points of your ideal customers.

Review every piece of content on your website and in all areas with your ICP in mind. Take a critical look at everything from landing pages to ebooks to "thank you" pages. What questions does a prospect need to answer before they convert?

A positioning exercise is essential, but how you pitch your product will influence your prospects.

Prioritise updating your landing pages, but don't forget the following marketing materials either:

  • SEO Strategy
  • Content Strategy
  • Blogs & Articles
  • Website Copy
  • Landingpage Copy
  • Press Releases
  • Social Media Posts

Update all your marketing materials with the new messages.

To simplify this process in the future, keep a list of all internal and external marketing materials.

Once our customer identified their high-probability conversion target, we helped them to rewrite their marketing message. We changed the focus of the language on key pages and materials to address the specific needs of the ICP and highlight the benefits for this particular segment.

Review your positioning regularly

Your customers' needs constantly change, and your positioning should adapt accordingly. Reviewing your positioning quarterly or annually or whenever your business or growth rate changes significantly is advisable.

Here are some triggers for reviewing your positioning:

If your business is undergoing a fundamental change
  • Are you going through a period of transition where you are trying to improve or downsize the market?
  • Would you instead reach a whole new customer segment?
If you are experiencing rapid growth
  • Check regularly if you are moving fast and have high growth targets.
  • Critically assess whether your positioning is leading to success.

Conclusion

Many businesses struggle to reach different customer segments effectively due to a lack of focus in their messaging. The result is that they miss out on opportunities to connect with their target audiences. By identifying and addressing this problem, businesses can improve their chances of success.

Suppose you can adequately identify and manage the customer segmentation and positioning process. In that case, your Fintech business will excel in improved customer acquisition and retention metrics and have an overall impact on revenue-based metrics.

Precise positioning gives your business the clarity and customer focus needed to target your highest-growth customers.

There is no need to cater to every customer willing to pay for your service or product. Instead, you can focus on a smaller customer base that generates the most revenue with the least spending. This will save you time and money in the long run.