Perhaps the most reliable mailbox tenant, thick envelopes splashed with “limited time offer” or other flashy designations offering various card and credit products – otherwise known as prescreen offers – are a mainstay in many households.
What is prescreen?
Prescreen is a process that happens behind-the-scenes where a lender screens a consumer’s credit to determine whether to extend a firm offer of credit. The process takes place without the consumer’s knowledge and without any negative impact to their credit score.
For lenders and financial institutions, a prescreen is a way to pick and choose the criteria of the consumers you want to target for a particular offer – often in the form of better terms, interest rates or incentives. Typically, a list of consumers meeting specific credit criteria is compiled by a Credit Reporting Agency, like Experian, and then provided to the requesting lending institutions or their mailing service.
In other words? Increase response rates and conversion by targeting the right consumers and eliminating unqualified prospects. Additionally, prescreening consumers also reduces high-risk accounts, targeting the best prospects in order to reach them at the right time with the right offer for their needs.
Important to note: a prescreen is not the same thing as a prequalification.
Gone are the days of batch-and-blasting. It’s expensive and a challenge for constantly limited marketing budgets. Prescreen decreases acquisition and mailing costs by segmenting a lender’s prospect list. In one case, a lender experienced a 10% lift in its overall conversion rate with a single campaign by targeting individuals who were most likely to respond to their over.
Governed by the Fair Credit Reporting Act (FCRA), lenders initiating prescreen campaigns for credit products must also adhere to certain rules. What qualifies one of these campaigns?
- A firm offer of credit
- An inquiry posting is required (though it is a “soft” inquiry)
- Consumers also have the option to opt out of preapproved and prescreen credit offer lists
In addition to acquisitions via direct mail, there are various types of prescreen tailored to the multiple channels where marketing takes place in today’s world. For example, Instant Prescreen can increase new account acquisitions by performing the preapproval process in seconds, while the customer is on your website, on the phone with you or at your business.
Similar to how you might screen calls on your cell phone by letting them go to your voicemail inbox or screen candidates’ resumes before inviting them for an interview for an open position at your company, a prescreened credit offer is not much different. Focusing on your audience that is most likely to respond to your offers is an easy way to increase your ROI and should be considered a best practice when it comes to your marketing efforts.