Tag: consumer segmentation

Financial institutions have gone through a whirlwind in the last few years, with the pandemic forcing many to undergo digital transformations. More recently, rising interest rates and economic uncertainty are leading to a pullback, highlighting the need for lenders to level up their marketing strategies to win new customers. To get started, here are a few key trends to look out for in the new year and fresh marketing ideas for lenders. Challenges and consumers expectations in 2023 It might be cliche to mention the impact that the pandemic had on digital transformations — but that doesn't make it any less true. Consumers now expect a straightforward online experience. And while they may be willing to endure a slightly more manual process for certain purchases in their life, that's not always necessary. Lenders are investing in front-end platforms and behind-the-scenes technology to offer borrowers faster and more intuitive services. For example, A McKinsey report from December 2021 highlighted the growth in nonbank mortgage lenders. It suggested nonbank lenders could hold onto and may continue taking market share as these tech-focused lenders create convenient, fast and transparent processes for borrowers.2 Marketers can take these new expectations to heart when discussing their products and services. To the extent you have one in place, highlight the digital experience that you can offer borrowers throughout the application, verifications, closing and loan servicing. You can also try to show rather than tell with interactive online content and videos. Build a data-driven mortgage lending marketing strategy The McKinsey report also highlighted a trend in major bank and nonbank lenders investing in proprietary and third-party technology and data to improve the customer experience.2 Marketers can similarly turn to a data-driven credit marketing strategy to help navigate shifting lending environments. Segment prospects with multidimensional data Successful marketers can incorporate the latest technological and multidimensional data sources to find, track and reach high-value prospects. By combining traditional credit data with marketing data and Fair Credit Report Act-compliant alternative credit data* (or expanded FCRA-regulated data), you can increase the likelihood of connecting with consumers who meet your credit criteria and will likely respond. For example, Experian's mortgage-specific In the Market Models predict a consumer's propensity to open a new mortgage within a one to four-month period based on various inputs, including trended credit data and Premier Attributes. You can use these propensity models as part of your prescreen criteria, to cross-sell current customers and to help retain customers who might be considering a new lender. But propensity models are only part of the equation, especially when you're trying to extend your marketing budget with hyper-segmented campaigns. Incorporating your internal CRM data and non-FCRA data can help you further distinguish look-alike populations and help you customize your messaging. LEARN MORE: Use this checklist to find and fix gaps in your prospecting strategy Maintain a single view of your borrowers An identity management platform can give you a single view of a consumer as they move through the customer journey. The persistent identity can also help you consistently reach consumers in a post-cookie world and contact them using their preferred channel. You can add to the persistent identity as you learn more about your prospects. However, you need to maintain data accuracy and integrity if you want to get a good ROI. Use triggers to guide your outreach You can also use data-backed credit triggers to implement your marketing plan. Experian's Prospect Triggers actively monitors a nationwide database to identify credit-active consumers who have new tradelines, inquiries or a loan nearing term. Lenders using Prospect Triggers can receive real-time or periodic updates and customize the results based on their screening strategy and criteria, such as score ranges and attributes. They can then make firm credit offers to the prospects who are most likely to respond, which can improve cross-selling opportunities along with originations. Benefit from our expertise Forward-thinking lenders should power their marketing strategies with a data-backed approach to incorporate the latest information from internal and external sources and reach the right customer at the right time and place. From list building to identity management and verification, you can turn to Experian to access the latest data and analytics tools. Learn about Experian credit prescreen and marketing solutions. Explore our credit prescreen solutions Learn about our marketing solutions 1Mortgage Bankers Association (October 2022). Mortgage Applications Decrease in Latest MBA Weekly Survey 2McKinsey & Company (2021). Five trends reshaping the US home mortgage industry

Today’s changing economy is directly impacting consumers’ financial behaviors, with some individuals doing well and some showing signs of payment stress. And while these trends may pose challenges to financial institutions, such as how to expand their customer base without taking on additional risk, the right credit attributes can help them drive smarter and more profitable lending decisions. With Experian’s industry-leading credit attributes, organizations can develop precise and explainable acquisition models and strategies. As a result, they can: Expand into new segments: By gaining deeper insights into consumer trends and behaviors, organizations can better assess an individual’s creditworthiness and approve populations who might have been overlooked due to limited or no credit history. Improve the customer experience: Having a wider view of consumer credit behavior and patterns allows organizations to apply the best treatment at the right time based on each consumer’s specific needs. Save time and resources: With an ongoing managed set of base attributes, organizations don’t have to invest significant resources to develop the attributes themselves. Additionally, existing attributes are regularly updated and new attributes are added to keep pace with industry and regulatory changes. Case study: Enhance decision-making and segmentation strategies A large retail credit card issuer was looking to grow their portfolio by identifying and engaging more consumers who met their credit criteria. To do this, they needed to replace their existing custom acquisition model with one that provided a granular view of consumer behavior. By partnering with Experian, the company was able to implement an advanced custom acquisition model powered by our proprietary Trended 3DTM and Premier AttributesSM. Trended 3D analyzes consumers’ behavior patterns over time, while Premier Attributes aggregates and summarizes findings from credit report data, enabling the company to make faster and more strategic lending decisions. Validations of the new model showed up to 10 percent improvement in performance across all segments, helping the company design more effective segmentation strategies, lower their risk exposure and approve more accounts. To learn how Experian can help your organization make the best data-driven decisions, read the full case study or visit us. Download case study Visit us

When I worked as a junior analyst for one of the largest credit card issuers in the United States, the chief credit risk officer required the development of a “light switch report” and strongly encouraged everyone in her organization to read the report every day. She called it the light switch report because every morning when she walks into her office and the lights switch on, she would read the report and understand what’s going on with the business. I took her advice and developed the habit of reading the light switch report every morning — for more than a decade while I was with the organization. I knew the volume of applications, the approval rate and the average line of credit of approvals. I developed an informed idea of how delinquency rates would look six months into the future based on the average credit score of approvals today. Her advice was valuable, and the discipline she shared helped me develop my skill sets as a junior analyst, a people manager and head of a retail business line. Performance reports are foundational and are one of the key elements of a sound and prudent risk management framework. Regulators require effective monitoring reports and provide guidance on report generation as part of its examination process. (Office of the Comptroller of the Currency. Comptroller’s Handbook, Retail Lending Safety and Soundness. April 2017. Page 15.) While supporting lender clients on strategy designs and development, I have an opportunity to review various performance reports. I’d like to take this time to reiterate some of the basic components of a good performance report. Knowledge of audience is primary. Good performance reports are tailored for specific audiences who can make decisions that will affect specific outcomes. Performance reports for day-to-day monitoring would be different from reports designed for executive leadership. Transparency and accuracy are required and when reports are designed in support of areas of responsibility, those reports become meaningful and transformative. Relevant metrics matter. Once you identify the report’s audience, the metrics you choose to appear in the report become the next important exercise. Metrics should be relevant and consistent with the audience who’s expected, upon reviewing the report, to make statements such as the business is doing well and stable, or corrective action is needed. For example, a report on the predictive power of credit risk scores intended for model developers will likely contain metrics such Kolmogorov-Smirnov (KS), Gini index or worst scoring capture rate. Such reports won’t include the average handling time of an application, which will be more appropriate for an operations team. Metrics become even more powerful for decision-makers when calculated at a segment level. I’m a big fan of vintage reports. They tell the story of current lending practices (e.g., approval rates, average loan amount, average booked credit risk score), and more significantly they often foretell future performance (e.g., delinquency rates, charge-off rates). These foresights allow analysts and managers to plan and develop strategies today to manage the future state. If approve or decline decisions use a dual score matrix, generate a report showing the volume of applications on the dual score matrix. It’s quicker to spot unusual distributions compared to expectations when data is presented at this sublevel. The benefit is swifter modification or new actions when needed. If statistical designs are utilized, such as test or control segments and champion or challenger segments, metrics calculated at these levels become insightful. They allow validation of a randomized process and support statistical analysis and statements. Timeliness of reports is critical. Some reports for operational or technology purposes require constant and continuous reporting. Daily reports are important especially when new strategies are implemented. Sometimes daily reports are far more relevant within the first two or three weeks of a new strategy implementation. When daily reports show stabilization and alignment to expectations, switching to weekly or monthly reports is acceptable. Most retail products are designed for review on a cycle or monthly basis. Monthly and quarterly reports are milestones and provide good health checks of the business. Don’t forget formats. If a picture is worth a thousand words, then use charts and graphs to display data and capture audience attention. We’re all used to seeing data presented in tables, but there are far more applications today that allow us to read reports with compelling graphics, trendlines and patterns that grab our curiosity and draw us into the story. I like narratives even if they appear as headlines on a report. Succinct comments show discipline and convey understanding of a report’s contents. Effective performance reports evolve as the business changes. Audience, metrics and segments will change, but the basic components provide general guidelines on developing consistent and relevant reports.

It’s December, and if you’re like most credit union leaders, your strategic plan is distributed, and the 2020 budget is approved. Before you know it, you and your team will be off and running to pursue the New Year’s goals. Another thing most of us have in common is a strategic membership growth priority. New members are needed to help us take loan and deposit growth to the next level. Specifically, who are you looking for? It’s surprising how many credit union leaders have a difficult time clarifying their ideal member(s). They usually come up short after they have called out younger borrowers, active checking account users, prime credit, middle income, homeowners, etc. The reality is in today’s competitive market, these general audiences are not definitive enough. Many then go to market with a limited universe that is too generic to be highly effective. Savvy marketers have a much deeper understanding of who they are reaching and why. First, they have clearly defined the ideal member i.e. product profitability, relationship profitability, referrals, how they access the credit union, etc. Second, they use data, analytics and demographic segmenting to refine their search further to reveal the ideal member. They leverage information to understand what drives the potential members decision making. They understand that every potential member does not live the same type of life. They segment markets into groups to understand their shared values and life experiences. These segments include geographic, demographic, financial behavior, and motivation that includes psychographics and social values. Thus, armed with this information, they align the consumer’s needs with the credit union’s products, purpose and strategic goals. This clarity allows them to invest their marketing dollars for the best possible result. Most credit unions would identify “younger borrowers” as a desired member, so we’ve laid out two examples of just how different this member can look. Ambitious Singles – is a demographic segment comprised of younger cutting-edge singles living in mid-scale, metro areas that balance work and leisure lifestyles. Annual Median income $75k - $100K Highly educated First time home buyers Professionals, upwardly mobile Channel preferences for engaging with brands (and their offers) is while watching or streaming TV, listening to their favorite radio apps or while browsing the web on their phones. They are also quite email receptive (but subject lines must be compelling) Families Matter Most – This segment is comprised of young middle-class families in scenic suburbs, leading family focused lives. Annual Median income $75K - $99K Have children 4-6 yrs. old Educated Homeowners Child-related purchases Credit revolver and auto borrowers (larger vehicles) Go online for banking, telecommuting and shopping Both segments represent younger borrowers with similar incomes, but they have different loan needs, lifestyle priorities and preferences for engaging with a marketing offer. These are just two examples of the segmentation data that is available from Experian. The segmentation solution provides a framework to help credit unions identify the optimal customer investment strategy for each member segment. This framework helps the credit union optimize their marketing between differentiating segments. For some segments the investment may be directed toward finding the ideal member. Others may be made to find depositors. While many credit unions don’t have infinite marketing budgets or analytical resources, segmentation help marketers more efficiently and effectively pursue the best member or develop member personas to better resonate with existing members. The feedback we have heard from credit union leaders is that the solution is the best segmentation tool they have seen. Learn more about it here. What your team is up against Today, credit unions face national competitors that are using state-of-the-art data analytics, first-rate technology and in-depth market segmentation to promote very attractive offers to win new members, deposits, checking accounts and loans. Their offers have a look, feel, message and offer that are relevant to the person receiving the offer. Here are a few recent “offer” examples that we have heard of that should give you pause: Fintech companies, like the Lending Club offering auto loan refinances (the offer provides an estimate of refinance interest savings). The ad we saw had an estimated monthly payment of $80. PayPal Cashback Mastercard® – with a $300 early use cash bonus and 3% cash back on purchases. High limit personal loans that take minutes to apply and to be funded. Banks acting alone or in partnership with a fintech to offer online checking accounts with new account opening bonuses ranging from $300-$600. and of course, Quicken® Mortgage promoting low rates and fast and seamless origination. These are just a few recent examples from thousands of offers that are reaching your ideal member. Besides offering great rates, cash back, low fees and seamless service – these offers are guided by robust data analytics and consumer segmentation to reach and engage a well-defined, ideal consumer. Why it matters The 2020 race is on. Hopefully your team has clarity of the member(s) they want to reach, access to robust data analytics, in depth consumer insights, reliable credit resources and marketing tools they will need to compete in the toughest financial market any of us have likely ever seen. If you’re afraid that you can’t afford the right tools when it comes to marketing, consider what the dealer fee is for purchasing an indirect auto loan. What if the 2% or more fee was reallocated to finding organic loan growth with consumers you’re more likely to build a relationship with? Or consider the cost of consistently marketing to the wrong consumer segments with the wrong message, at the wrong time and in the wrong channels. What if you could increase your market engagement rate from 5% to 10%? Perhaps the best strategic question is can you afford NOT to have the best tools that support future membership growth? If you don’t win your ideal member, somebody else will. Learn More About Scott Butterfield, CUDE, CCUE Principal, Your Credit Union Partner Scott Butterfield is a trusted advisor to the leaders of more than 170 credit unions located throughout the United States. A respected veteran of the CU Movement, he understands the challenges and opportunities facing credit unions today. Scott believes that credit unions matter, and that consumers and small businesses need credit unions to now more than ever.

I believe it was George Bernard Shaw that once said something along the lines of, “If economists were laid end-to-end, they’d never come to a conclusion, at least not the same conclusion.” It often feels the same way when it comes to big data analytics around customer behavior. As you look at new tools to put your customer insights to work for your enterprise, you likely have questions coming from across your organization. Models always seem to take forever to develop, how sure are we that the results are still accurate? What data did we use in this analysis; do we need to worry about compliance or security? To answer these questions and in an effort to best utilize customer data, the most forward-thinking financial institutions are turning to analytical environments, or sandboxes, to solve their big data problems. But what functionality is right for your financial institution? In your search for a sandbox solution to solve the business problem of big data, make sure you keep these top four features in mind. Efficiency: Building an internal data archive with effective business intelligence tools is expensive, time-consuming and resource-intensive. That’s why investing in a sandbox makes the most sense when it comes to drawing the value out of your customer data.By providing immediate access to the data environment at all times, the best systems can reduce the time from data input to decision by at least 30%. Another way the right sandbox can help you achieve operational efficiencies is by direct integration with your production environment. Pretty charts and graphs are great and can be very insightful, but the best sandbox goes beyond just business intelligence and should allow you to immediately put models into action. Scalability and Flexibility: In implementing any new software system, scalability and flexibility are key when it comes to integration into your native systems and the system’s capabilities. This is even more imperative when implementing an enterprise-wide tool like an analytical sandbox. Look for systems that offer a hosted, cloud-based environment, like Amazon Web Services, that ensures operational redundancy, as well as browser-based access and system availability.The right sandbox will leverage a scalable software framework for efficient processing. It should also be programming language agnostic, allowing for use of all industry-standard programming languages and analytics tools like SAS, R Studio, H2O, Python, Hue and Tableau. Moreover, you shouldn’t have to pay for software suites that your analytics teams aren’t going to use. Support: Whether you have an entire analytics department at your disposal or a lean, start-up style team, you’re going to want the highest level of support when it comes to onboarding, implementation and operational success. The best sandbox solution for your company will have a robust support model in place to ensure client success. Look for solutions that offer hands-on instruction, flexible online or in-person training and analytical support. Look for solutions and data partners that also offer the consultative help of industry experts when your company needs it. Data, Data and More Data: Any analytical environment is only as good as the data you put into it. It should, of course, include your own client data. However, relying exclusively on your own data can lead to incomplete analysis, missed opportunities and reduced impact. When choosing a sandbox solution, pick a system that will include the most local, regional and national credit data, in addition to alternative data and commercial data assets, on top of your own data.The optimum solutions will have years of full-file, archived tradeline data, along with attributes and models for the most robust results. Be sure your data partner has accounted for opt-outs, excludes data precluded by legal or regulatory restrictions and also anonymizes data files when linking your customer data. Data accuracy is also imperative here. Choose a big data partner who is constantly monitoring and correcting discrepancies in customer files across all bureaus. The best partners will have data accuracy rates at or above 99.9%. Solving the business problem around your big data can be a daunting task. However, investing in analytical environments or sandboxes can offer a solution. Finding the right solution and data partner are critical to your success. As you begin your search for the best sandbox for you, be sure to look for solutions that are the right combination of operational efficiency, flexibility and support all combined with the most robust national data, along with your own customer data. Are you interested in learning how companies are using sandboxes to make it easier, faster and more cost-effective to drive actionable insights from their data? Join us for this upcoming webinar. Register for the Webinar

With Hispanic Heritage Awareness Month underway and strategic planning season in full swing, the topic of growing membership continues to take front stage for credit unions. Miriam De Dios Woodward (CEO of Coopera Consulting) is an expert on the Hispanic opportunity, working with credit unions to help them grow by expanding the communities they serve. I asked Miriam if she could provide her considerations for credit unions looking to further differentiate their offerings and service levels in 2019 and beyond.   There’s never been a better time for credit unions to start (or grow) Hispanic engagement as a differentiation strategy. Lending deeper to this community is one key way to do just that. Financial institutions that don’t will find it increasingly difficult to grow their membership, deposits and loan balances. As you begin your 2019 strategic planning discussions, consider how your credit union could make serving the Hispanic market a differentiation strategy. Below are nine ways to start. 1.  Understand your current membership and market through segmentation and analytics. The first step in reaching Hispanics in your community is understanding who they are and what they need. Segment your existing membership and market to determine how many are Hispanic, as well as their language preferences. Use this segmentation to set a baseline for growth of your Hispanic growth strategy, measure ongoing progress and develop new marketing and product strategies. If you don’t have the bandwidth and resources to conduct this segmentation in-house, seek partners to help. 2.  Determine the product gaps that exist and where you can deepen relationships. After you understand your current Hispanic membership and market, you will want to identify opportunities to improve the member experience, including your lending program. For example, if you notice Hispanics are not obtaining mortgages at the same rate as non-Hispanics, look at ways to bridge the gaps and address the root causes (i.e., more first-time homebuyer education and more collaboration with culturally relevant providers across the homebuying experience). Also, consider how you might adapt personal loans to meet the needs of consumers, such as paying for immigration expenses or emergencies with family in Latin America. 3.  Explore alternative credit scoring models. Many credit products accessible to underserved consumers feature one-size-fits-all rates and fees, which means they aren’t priced according to risk. Just because a consumer is unscoreable by most traditional credit scoring models doesn’t mean he or she won’t be able to pay back a loan or does not have a payment history. Several alternative models available today can help  lenders better evaluate a consumer’s ability to repay. Alternative sources of consumer data, such as utility records, cell phone payments, medical payments, insurance payments, remittance receipts, direct deposit histories and more, can be used to build better risk models. Armed with this information – and with the proper programs in place to ensure compliance with regulatory requirements and privacy laws – credit unions can continue making responsible lending decisions and grow their portfolio while better serving the underserved. 4.  Consider how you can help more Hispanic members realize their desire to become homeowners. In 2017, more than 167,000 Hispanics purchased a first home, taking the total number of Hispanic homeowners to nearly 7.5 million (46.2 percent of Hispanic households). Hispanics are the only demographic to have increased their rate of homeownership for the last three consecutive years. What’s more, 9 percent of Hispanics are planning to buy a house in the next 12 months, compared to 6 percent of non-Hispanics. This means Hispanics, who represent about 18 percent of the U.S. population, may represent 22 percent of all new home buyers in the next year. By offering a variety of home loan options supported by culturally relevant education, credit unions can help more Hispanics realize the dream of homeownership.   5.  Go beyond indirect lending for auto loans. The number of cars purchased by Hispanics in the U.S. is projected to double in the period between 2010 and 2020. It’s estimated that new car sales to Hispanics will grow by 8 percent over the next five years, compared to a 2 percent decline among the total market. Consider connecting with local car dealers that serve the Hispanic market. Build a pre-car buying relationship with members rather than waiting until after they’ve made their decision. Connect with them after they’ve made the purchase, as well.   6.  Consider how you can help Hispanic entrepreneurs and small business owners. Hispanics are nine times more likely than whites to take out a small business loan in the next five years. Invest in products and resources to help Hispanic entrepreneurs, such as small business-friendly loans, microloans, Individual Taxpayer Identification Number (ITIN) loans, credit-building loans and small-business financial education. Also, consider partnering with organizations that offer small business assistance, such as local Hispanic chambers of commerce and small business incubators.   7.  Rethink your credit card offerings. Credit card spending among underserved consumers has grown rapidly for several consecutive years. The Center for Financial Services Innovation (CFSI) estimates underserved consumers will spend $37.6 billion on retail credit cards, $8.3 billion on subprime credit cards and $0.4 billion on secured credit cards in 2018. Consider mapping out a strategy to evolve your credit card offerings in a way most likely to benefit the unique underserved populations in your market. Finding success with a credit-builder product like a secured card isn’t a quick fix. Issuers must take the necessary steps to comply with several regulations, including Ability to Repay rules. Cards and marketing teams will need to collaborate closely to execute sales, communication and, importantly, cardmember education plans. There must also be a good program in place for graduating cardmembers into appropriate products as their improving credit profiles warrant. If offering rewards-based products, ensure the rewards include culturally relevant offerings. Work with your credit card providers.­   8.  Don’t forget about lines of credit. Traditional credit lines are often overlooked as product offerings for Hispanic consumers. These products can provide flexible funding opportunities for a variety of uses such as making home improvements, helping family abroad with emergencies, preparing families for kids entering college and other expenses. Members who are homeowners and have equity in their homes have a potential untapped source to borrow cash.   9.  Get innovative. Hispanic consumers are twice as likely to research financial products and services using mobile apps. Many fintech companies have developed apps to help Hispanics meet immediate financial needs, such as paying off debt and saving for short-term goals. Others encourage long-term financial planning. Still other startups have developed new plans that are basically mini-loans shoppers can take out for specific purchases when checking out at stores and online sites that participate. Consider how your credit union might partner with innovative fintech companies like these to offer relevant, digital financial services to Hispanics in your community.   Next Steps Although there’s more to a robust Hispanic outreach program than we can fit in one article, credit unions that bring the nine topics highlighted above to their 2019 strategic planning sessions will be in an outstanding position to differentiate themselves through Hispanic engagement.   Experian is proud to be the only credit bureau with a team 100% dedicated to the Credit Union movement and sharing industry best practices from experts like Miriam De Dios Woodward. Our continued focus is providing solutions that enable credit unions to continue to grow, protect and serve their field of membership. We can provide a more complete view of members and potential members credit behavior with alternative credit data. By pulling in new data sources that include alternative financing, utility and rental payments, Experian provides credit unions a more holistic picture, helping to improve credit access and decisioning for millions of consumers who may otherwise be overlooked.   About Miriam De Dios Woodward Miriam De Dios Woodward is the CEO of Coopera, a strategy consulting firm that helps credit unions and other organizations reach and serve the Hispanic market as an opportunity for growth and financial inclusion. She was named a 2016 Woman to Watch by Credit Union Times and 2015 Latino Business Person of the Year by the League of United Latin American Citizens of Iowa. Miriam earned her bachelor’s degree from Iowa State University, her MBA from the University of Iowa and is a graduate of Harvard Business School’s Leading Change and Organizational Renewal executive program.

The credit card marketplace is a crowded and complex landscape. Recent research by Experian shows the average U.S. consumer has 3.1 credit cards and 2.5 retail cards, with an average balance of $6,354 and $1,841, respectively. So how can you build upon your existing customer relationships and offer the right products to the right people at the right time? By understanding consumer behavior. Pretty simple concept. But targeting viable consumers and making enticing offers takes some detective work. Gone are the days of demographic-based approach to audience segmentation for credit marketing campaigns. Consumers are now engaged on their smartphones, laptops, tablets, fitness bands, across countless apps, browsers, emails and more. Simply knowing a person’s gender and age doesn’t provide any information about how he spends the day, his consumer behaviors, personal interests, unique wants or needs. Developing rich consumer personas based on transaction credit data can be a powerful tool to understanding consumers so lenders can design more relevant and personalized credit offers, experiences and products to a very targeted audience. Experian DataLabs can help by analyzing transaction data to understand the consumers in your portfolio. For example, looking at your portfolio of 40-year-olds in the U.S. provides basic demographic information. A closer look at transaction data could reveal unique details within the age group to help you group and target, such as: Frequent travelers: These road warriors log serious miles. If they’re not traveling for work, they’re cashing in miles for vacation. This unique group leads your portfolio in airfare, cruise line, car rental, hotel and travel agency spend. With so much time spent away from home, this group is rarely found in grocery stores. Local business owners: Advertising, computer equipment, and software are typical expenses of this segmented group. There may be an opportunity to capture spend outside their business activity or to ensure they have the right card to fit their business needs. Constant commuters: These consumers use their card for local travel and transportation. And they are less likely to use their card for expenses related to other types of travel or maintaining a vehicle. After a long day, they like to grab a drink while waiting for the train. Online Shoppers: Consumers in this group use their card with various online merchants, including Amazon, Etsy, iTunes, and PayPal. Online shoppers are also above average spenders in elementary education, child care services, and family clothing. Social hipsters: They can be found meeting with friends for coffee and drinks, and are more likely to rely on local transportation and tend to eat out instead of cooking in. Effective audience segmentation ensures that your marketing dollars are invested in real people who are most likely to respond on certain media, have already expressed an interest in your product, and are geographically accessible to a specific retail location. Every campaign should be as dynamic and unique as its consumers. The powerful combination of consumer and transaction data allows you to customize audience segments to maximize customer engagement and drive campaign success.

  With 1 in 6 U.S. residents being Hispanic, now is a great time for financial institutions to reflect on their largest growth opportunity. Here are 3 misconceptions about the multifaceted Hispanic community that are prevalent in financial institutions: Myth 1: Hispanic consumers are only interested in transaction-based products. In truth, product penetration increases faster among Hispanic members compared with non-Hispanic members when there’s a strategic plan in place. Myth 2: Most Hispanics are undocumented. The facts show that of the country’s more than 52 million Hispanics, most are native-born Americans and nearly 3 in 4 are U.S. citizens. Myth 3: The law prevents us from serving immigrants. Actually, financial institutions can compliantly lend to individuals who have an Individual Taxpayer Identification Number. There are many forms of acceptable government-issued identification, such as passports and consular identification cards. Solidifying the right organizational mentality, developing a comprehensive strategy based on segmentation, and defining what success truly looks like. These are all part of laying the foundation for success with the Hispanic market. Learn more>

When you think of criteria for prescreen credit marketing, what comes to mind? Most people will immediately discuss the risk criteria used to ensure consumers receiving the mailing will qualify for the product offered. Others mention targeting criteria to increase response rates and ROI. But if this is all you’re looking at, chances are you’re not seeing the whole picture. When it comes to building campaigns, marketers should consider the entire customer lifecycle, not just response rates. Yes, response rates drive ROI and can usually be measured within a couple months of the campaign drop. But what happens after the accounts get booked? Traditionally, marketers view what happens after origination as the responsibility of other teams. Managing delinquencies, attrition, and loyalty are fringe issues for the marketing manager, not the main focus. But more and more, marketers must expand their role in the organization by taking a comprehensive approach to credit marketing. In fact, truly successful campaigns will target consumers that build lasting relationships with the institution by using the three pillars of comprehensive credit marketing. Pillar #1: Maximize Response Rates At any point in time, most consumers have no interest in your products. You don’t have to look far to prove this out. Many marketing campaigns are lucky to achieve greater than a 1% response rate. As a result, marketers frequently leverage propensity to open models to improve results. These scores are highly effective at identifying consumers who are most likely to be receptive to your offer, while saving those that are not for future efforts. However, many stop with this single dimension. The fact is no propensity tool can pick out 100% of responders. Layering just a couple credit attributes to a propensity score allows you to swap in new consumers. Simultaneously, credit attributes can identify consumers with high propensity scores that are actually unlikely to open a new account. The net effect is even higher response rates than can be achieved by using a propensity score alone. Pillar #2: Risk Expansion Credit criteria are usually set using a risk score with some additional attributes. For example, a lender may target consumers with a credit score greater than 700 and no derogatory or delinquent accounts reported in the past 12 months. But, most of this data is based on a “snapshot” of the credit profile and ignores trends in the consumer’s use of credit. Consider a consumer who currently has a 690 credit score and has spent the past six months paying down debt. During that time, utilization has dropped from 66% to 41%, they’ve paid off and closed two trades, and balances have reduced from $21,000 to $13,000. However, if you only target consumers with a score greater than 700, this consumer would never appear on your prescreen list. Trended data helps spot how consumers use data over time. Using swap set analysis, you can expand your approval criteria without taking on the incremental risk. Being there when a consumer needs you is the first step in building long-term relationships. Pillar #3: Customer profitability and early attrition There’s more to profitability than just originating loans. What happens to your profitability assumptions when a consumer opens a loan and closes it within a few months? According to recent research by Experian, as many as 26% of prime and super-prime consumers, and 38% of near-prime consumers had closed a personal loan trade within nine months of opening. Further, nearly 32% of consumers who closed a loan early opened a new personal loan trade within a few months. Segmentation can help identify consumers who are likely to close a personal loan early, giving account management teams a head start to try and retain them. As it turns out, many consumers use personal loans as a form of revolving debt. These consumers occasionally close existing trades and open new trades to get access to more cash. Anticipating who is likely to close a loan early allows your retention team to focus on understanding their needs. If you don’t, you’re competition will take advantage through their marketing efforts. Building the strategy Building a comprehensive strategy is an iterative process. It’s critical for organizations to understand each campaign is an opportunity to learn and refine the methodology. Consistently leveraging control and test groups and new data assets will allow the process to become more efficient over time. Importantly, marketers should work closely across the organization to understand broader objectives and pain points. Credit data can be used to predict a range of future behaviors. As such, marketing managers should play a greater role as the gatekeepers to the organization’s growth.