Marketing strategy of credit card business - different client segments

customer segments marketing
New answer on Feb 19, 2020
3 Answers
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Anonymous A asked on Feb 18, 2020

I did a case about credit card business. In the case there is a chart: on one axis, it is the "share of wallet". on the other axis, it is the "average money spent by credit card". So there are 4 cluster segments:

1. High wallet share, high spending

2. Low wallet share, high spending

3. High wallet share, low spending

4. Low wallet share, low spending

I have tried to search on internet, but it seems that this metric is not so common and not many discussions were found. Could anyone point out what would be the specific marketing strategy be in these four segments? Also, what would be the sequence of priority of these 4 segments? (P.S. One thing that confuses me is that we don't know client's potential spending power. For instance, even though the current spending is low, it might be that clients are using competitors credit card. It seems that it's quite hard to know each segments' overall revenue potential. )

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Sidi
Expert
replied on Feb 18, 2020
McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 300+ candidates secure MBB offers

Hi!

Just apply common sense:

1. High WS, high spending: cultivate clients and make sure you protect this value pool

2. Low wallet share, high spending: here lies the potential for growth! If possible, invest heavily to reap the benefits of this huge lever!

3. High wallet share, low spending: opportunistically keep business, but don't invest heavily!

4. Low wallet share, low spending: deprioritize and channel resources into quadrant 2

Cheers, Sidi

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Clara
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Content Creator
replied on Feb 19, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

I would not tackle this by online research or any other tool that won´t be available for you in the day of the interiview.

This is the classic "brainstorming" question that will test your creativity, ability to think on your feet, etc.

Hence, use common sense to outline that you will tackle groups 2 & 3 initially, and brainstorm some creative ideas.

Hope it helps!

Cheers,

Clara

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Francesco
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Content Creator
replied on Feb 19, 2020
#1 Expert for Coaching Sessions (3.600+) | 1.300+ Reviews with 100% Recommendation Rate | Ex BCG | 8+ Years of Coaching

Hi Anonymous,

assuming you want to maximize the spending of clients and the potential revenues per group are the same, you could:

  • Apply a growth strategy to increase the share of wallet of group 2 (eg marketing)
  • Apply a growth strategy to increase the spending of group 3 (eg new product)

Groups 1 and 4 would be a second priority as more difficult to optimize compared to the previous ones.

Best,

Francesco

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Sidi gave the best answer

Sidi

McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 300+ candidates secure MBB offers
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