how to balance marketing, risk and profitability - etouches · pdf file7 ©experian...

How to balance marketing, risk and profitability

Introducing:

Brian Bork Capital One

Brett Brandau Barclaycard US

Jeff Tracey Sallie Mae

Craig Wilson Experian

Lynn Brunner Experian

©Experian 3

“Constructing an effective financial services growth strategy isn’t as simple as casting

Alec Baldwin for television spots…

Real success stems from the creation of an environment where marketing is an

integrated part of all operations, ranging from underwriting to customer retention. ”

— Source, J. Pilcher, CEO, The Financial Brand

Experian Public Vision 2017 4/17/2017

©Experian 4

• Shift of focus and spend from traditional direct mail

• Direct mail is still preferred channel for some segments and products

• Seeing a migration to digital – supporting and substituting

• How to manage risk?

The traditional sales funnel is changing

4/17/2017 Experian Public Vision 2017

Website visit

Mobile Ad

Purchase Direct Mail

Facebook

TV commercial

Email

©Experian 5

Make the right decisions for profitability

Transactional marketing

Marketing based on credit and risk management

Pure relationship marketing

Understanding customer needs and wants to tailor offerings accordingly

Integrated marketing

Creating long-term relationships and value while recognizing the impact of transactions and risk management


©Experian 6

Optimizing marketing programs through CRM Driving value using relevant and meaningful data and communication

6

Customer value

• Customers value models

(current and potential)

• Share of wallet analysis

and modeling

• Life-cycle journey mapping

Where to invest

Identify customers

whose behavior we

can most influence

Shopping behavior

• Behavioral segmentation

• Response modeling

• Offer optimization

What to say

Build relevant offers

based on historical

and predicted behaviors

Customer demographics

• Demographic segmentation

• Consumer view / attitudinal

segmentation

• Ongoing testing and learning

How to say it

Drive tone and treatment

based on preferences

and demographics


©Experian 7

Leveraging the power of consumer marketing data


We used brand and shopping habit data

69% of consumers with an active Cap One partner credit card are most likely to spend $2000 or more annually within the retail category of this partner card

We can use this for targeting, offer value and look-alike modeling

Web &

search

behavior 650+ psychographics

Attitudes and

opinions

Brand & shopping

habits

Demographics

& lifestyles

Traditional &

digital media

Digital & mobile

device use

©Experian 8

Combining with credit data for a new view of the consumer


Metrics Cap One Active and

Partner Active

Cap One Active and

Partner Inactive

Cap One Inactive

and Partner Active

Cap One

Inactive and

Partner Inactive

Number of consumers 66% 0% 9% 25%

TA

PS

Total annual retail spend $3,000 $2,400 $850 $1,180

Other retail revolving card

annual retail spend 50% 75% 94% 97%

Partner credit card annual

retail spend 50% 25% 6% 3%

Ca

p O

ne

Cap One 12 month purchase

transaction spend $1,630 $430 N/A N/A

Pa

rtn

er

Partner 12 month transaction

spend $1,360 N/A $850 N/A

Active partner

consumers with an

active Cap One

credit card spend

1.6 times more at

partner venues

annually then those

with an inactive card

We can use this

for share of wallet,

loyalty and

engagement

Note: Numbers are representative of what we saw with one of our Partner Card accounts

©Experian 9

• New product launch considerations and market sizing

• Data for developing the target market

• Evaluation of risk appetite and credit trends

• Identification of data attributes to drive targeting differentiation

• Development of custom origination model(s)

• Go to market strategy

– Pilot, test and learn, roll-out

– Leveraging both traditional direct mail and digital channels

Making the right decisions around data, insight and decisioning


©Experian 10

Balancing proactive and passive channels helps meet market and engagement challenges


Proactive Passive

Regular batch

offers

Call center,

browsing

interactions

Website,

mobile app

Direct mail

prescreen:

• Targeted

• High conversion

• Declining

response

• Expensive

Maximize

engagement:

• Use every

consumer

touchpoint

• Link to

proactive

activity

After log-in:

• Prescreen offers

• Waterfall to

prequalification

Not logged-in:

• Prequalification is

default

Challenges

1. Broaden the acquisition funnel and meet budget constraints

2. Increase conversion at the time of underwriting

3. Target effectively across all marketing channels

4. Maximize customer profitability, not just manage credit risk

5. Balance learning for roll-out with meeting funding goals in Y1

©Experian 11

• Scorecard distribution

• Balance curves / pre-payment rates

• Price testing

• Take rates – Display impact on take rates

• Preparing for open market

• Score band expansion

• Copy testing, envelope testing, etc. (brand)

• Product testing (loan limits, fees, other open market not being debt consolidation)

• ACH and auto-pay testing

• Income and employment verification testing

• Response curves

• Marketing creative, channel, audience, etc.

Developing test plan and priorities is key


©Experian 12

• Balancing core data with new marketing elements for targeting

• Working across internal stakeholders to deliver the product strategy

– Marketing

– Credit

– Finance

– Governance and control

• Credit prescreen data provides sound targeting for pull through

• Marketing data and response models enable the funnel to capture more opportunity

• Open new market opportunities with proper risk controls

Getting the launch of a new personal loan product right


Product

Marketing

Credit

Finance

Control

©Experian 13

Key success factors

Unsecured personal

loan definition

Overview of the

market

Initial review of the

entire personal loan

market

Sizing volumes of

originations and

understanding

seasonality

Unsecured personal

installment loans

were defined using

enhanced type codes

from Experian’s BI

definition of an

unsecured personal

loan

Based on the

difference from month

0 to month 3,

consolidators and non-

consolidators were

identified.

24 and 36-month

performance periods

were analyzed, and

reports were created

to return to Barclays

Analysis and

reporting

Consolidators and

non-consolidators

1. Marketing

understanding

2. Product definition

3. Analysis


©Experian 14

1. Smart use of data, insight and targeting can mean success, even in a saturated market

2. The key is to leverage credit and marketing insight – setting up a framework to allow for integration, meeting compliance and risk requirements

3. The new ways to use engagement and fulfillment options across multiple channels also contributes to an improved ROI

Key take aways


©Experian 15

Experian contact:

Craig Wilson [email protected]

Lynn Brunner [email protected]

Questions and answers

Experian Public Vision 2017 4/17/2017

©Experian 16

Share your thoughts about Vision 2017!


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