“One of the hard set, and many times hidden premise of customer analytics is that customers are rational. Well, they are not, and it is especially tangible in banking customer analysis. There are many underpinning data to this, yet data scientist still tend to believe that customers are making decision based on math. KYC – know your customer, and realize that majority of them are irrational.
We have done a small study with one of our client in banking, we tried to 1) segment and 2) scale the irrationality of the customers. Part of the job was to test their belief about their banking usage and reality, looking at the results, we were somewhat surprised to learn the incredible hiatus between their memories and reality: 1) Majority of the customers recalled their general ATM-usage wrong; 2) Vast majority of the customers had not even a general idea about the fees applicable to wire transfer; 3) A large part of the customers has not chosen the optimal package for them.”
My take: These assumptions, and the study’s findings, underscore the confusion that many marketers have regarding the concepts of rational/irrational and logical/emotional decision making.
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