Introduction

As IT systems have evolved, the amount of information financial services organizations maintain about individuals and the speed at which they can process information has increased dramatically. One consequence of this development is a paradigm shift in the way organizations manage their relationships with consumers. At one time, when dealing with large populations, standard practice was to segment people into relatively few homogenous groups, and then apply an identical relationship management strategy to everyone in each group. Take the case of a provider of home insurance wanting to launch a promotional campaign to recruit new customers. The marketing department may have decided, somewhat arbitrarily, that its target audience were white collar families with children. Its promotional strategy would be to send identical mail shots to all households in middle class suburbs where it was believed the majority of its target audience resided. Some mailings would be received by the intended audience, but many would be wasted because they would be sent to singles, the unemployed or those on low incomes who just happened to live in middle class suburbs. Similarly, white collar families living in inner cities or rural communities represented a missed opportunity because they lived outside the target areas.