While today’s consumers expect a smooth, frictionless digital experience, many financial institutions still rely on outdated technology and manual reviews to acquire new customers. These old processes can prevent lenders from making accurate and timely credit decisions, leading to lost opportunities, revenue, and goodwill.
By optimizing their customer acquisition strategies, financial institutions can allocate their resources effectively and say yes to consumers faster. This guide will walk you through the current challenges facing customer acquisition and how robust optimization strategies can help.
Current challenges in customer acquisition
To stay competitive and engage high-value customers, you’ll need an efficient customer acquisition process that weeds out both fraudulent actors and risky consumers. However, achieving this balancing act comes with a unique set of challenges.
Because today’s consumers can access goods and services almost anywhere online at any time, more than 54 percent of customers expect a heightened digital and frictionless experience. Failing to meet this expectation can lead to huge losses for lenders.
Some of the most common challenges in customer acquisition include:
- Although 52 percent of consumers prefer digital banking options over visiting branches in person, many lenders still rely on paper documents, which can add weeks to the onboarding process.
- Requiring consumers to provide substantial information about themselves during an application process can lead to abandoned applications. 67 percent of consumers will leave an application if they experience complications.
- Verifying consumer identities is growing increasingly important. In fact, about 35 percent of customers drop out of digital onboarding because their identity can’t be confirmed.
- Poorly defined campaign planning can cause businesses to market to the wrong population segments, resulting in wasted time and resources.
What is optimization for customer acquisition?
Customer acquisition optimization is the process of implementing new methods and solutions to make acquiring new customers more efficient and cost-effective. For lenders, this means streamlining steps in the credit decisioning process to focus on the right prospects and reduce friction.
What types of processes can be optimized for customer acquisition?
You might be surprised just how many processes can be optimized for customer acquisition. Here are just a few examples:
- Having a holistic view of consumers allows you to take the guesswork out of targeting so you can better identify and engage high-potential customers.
- Utilizing predictive and lifestyle data enables you to pinpoint a more precisely segmented audience for marketing.
- Digital application solutions that reach across multiple channels, allowing applicants to leave one channel and pick up right where they left off in another.
- Real-time identity verification and fraud detection during onboarding and after, helping expedite approvals and mitigate risks.
- Utilizing API integration to leverage multiple metrics beyond credit scores when screening applicants’ financial situation.
- Building custom risk models that pair to your existing data so you can say yes to more customers and better manage portfolio risk.
Benefits of customer acquisition optimization
Optimization can bring numerous benefits to your business, providing a faster return on investment. Here are some examples.
- By better pinpointing your marketing through predictive and lifestyle data, you can achieve increased conversions.
- Faster onboarding with less friction helps retain more customers.
- Real-time fraud detection and identity verification reduce customer roadblocks, allowing you to realize significant growth.
- Custom risk models and decisioning platforms can pair your data with additional data elements, providing more than just a credit score rating for your applicants. This can help you say yes to more customers.
- Using AI and machine learning tools will reduce the need for manual reviews and thus increase booking rates and applications.
A real-life example of these benefits can be found with the Michigan State University Federal Credit Union (MSUFCU.) With over $7.2 billion in assets and 330,000 members, the client was manually reviewing all its applications. Experian reviewed the client’s risk levels and approvals, comparing their risk and bankruptcy scores to determine which were most predictive. This analysis led Experian to recommend a new decisioning platform (Experian Decisioning) for instant credit decisions, an alternative data score tool, and Experian Advisory Services for risk-based pricing. After implementing these optimization solutions, MSUFCU saw a 55 percent increase in average monthly automations, four times improved online application response time and began competing more effectively in the marketplace.
How Experian can help
Experian offers a number of customer acquisition tools, allowing companies to be more responsive in an increasingly competitive market, while still reducing fraud risk. These tools include:
Acquisition optimization marketing
Experian offers a web-based platform that lets clients manage their marketing efforts all in the same place. You can upload and enhance client files, identify lookalike prospects, and use firmographic and credit data to get a holistic view of your clients and your prospects.
Data-driven acquisition and decisioning engine
Experian Decisioning is a data-driven decisioning engine that accepts applications from multiple channels, automates data collection and verification and proactively monitors decision results. It’s flexible enough to reach across multiple channels, letting customers set aside their application in one digital channel and resume where they left off in another. It also provides businesses with access to comprehensive data assets, proactive monitoring and streamlined development with minimal coding.
Enhanced fraud detection and identity verification
Experian’s Precise ID® is a risk-based fraud detection and prevention platform that provides analytics to accurately verify customers and mitigate fraud loss behind the scenes, ensuring a smoother onboarding process.
Robust consumer attributes for better customized models
Experian gives clients access to a wider berth of consumer attributes, helping you better screen applicants beyond just looking at credit scores.
Trended 3DTM attributes let you uncover unique patterns in consumers’ behavior over time, allowing you to manage portfolio risk, build better models and determine the next best actions.
Premier AttributesSM aggregates credit data at the most granular and meaningful levels to provide clear insights into consumer credit behavior. It encompasses more than 2,100 attributes across 51 industries to help you develop highly predictive custom models.
Enterprise-wide credit decisioning engine
Experian’s enterprise-wide credit decision platform lets you combine machine learning with proprietary data to return optimized decisions and quickly respond to requests. Robust credit decisioning software lets you convert data into meaningful actions and strategies.
With Experian’s machine learning decisioning options, companies are realizing a 25 percent reduction in manual reviews, a 25 percent increase in loan and credit applications and a 26 percent increase in booking rates.
Highly predictive custom models
Experian’s Ascend Intelligence ServicesTM can help you create highly predictive custom models that create sophisticated decisioning strategies, allowing you to accurately predict risk and make the best decisions fast. This end-to-end suite of solutions lets you achieve a more granular view of every application and grow portfolios while still minimizing risk.
Experian can help optimize your customer acquisition
Experian provides a suite of decisioning engines, consumer attributes and customized modeling to help you optimize your customer acquisition process. These tools allow businesses to better target their marketing efforts, streamline their onboarding with less friction and improve their fraud detection and mitigation efforts. The combination can deliver a powerful ROI.
Learn more about Experian’s customer acquisition solutions.
