The Impact of an Accurate Customer Segmentation Model for Old Mutual

Author: Donnelly, John
Supervisor: Professor. Dr. Andre Watkins
Date: March 2009

Old Mutual is one of South Africa’s largest Financial Services institutions with 3.2 million individual retail customers. With such a large customer base it is essential to segment the base so that customers that have similar incomes at similar life stages, receive a similar value proposition. The key issue however is that customer segments are based on gross monthly income, while Old Mutual does not have an accurate view of what each customer’s gross monthly income actually entails. This results in major inaccuracies and inefficiencies within the current segmentation model impacting adversely on Old Mutual customers, as they currently receive an incorrect service and product offering.

The objective of this research is to determine the extent of the level of accuracy in the current model by means of a research survey and then formulate a model to establish accurate customer segmentation. This will involve proposing and implementing an improved segmentation model, which would bring about significant benefits for Old Mutual and the associated customer base.