> White Paper
Real-time Credit Marketing at the Point-of-Sale
Why Real-time Prescreen-of-One Should Get a Bigger Share
of Your Marketing Budget
Andrew Skillen
October 2008
Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Three, Two, One — Approved! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Prescreen vs. Cross-selling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Why Lenders Should Adopt Real-time Prescreen Solutions . . . . .2
The Best Solution is a Holistic Solution . . . . . . . . . . . . . . . . . . . . . . .3
About Equifax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Introduction
Faced with lower response to direct mail credit offers as well as
economic pressures to reduce marketing costs, lenders are looking
for practical strategies to meet growth objectives. Many lenders are
adopting more sophisticated direct mail prescreen practices, such as
lifestyle analytics, in an attempt to reach the right prospects. While
effective, these “off-line” prescreens, as they are known, are only
one part of the solution. The bigger opportunity for lenders is to
augment the off-line prescreens with real-time — whenever the
opportunity arises.
Using a real-time prescreen system, a bank teller or call center
operator can, for example, immediately determine for which
products or services a consumer is pre-qualified. The teller can then
make a firm offer of credit for these products while the consumer is
still at the point of sale.
This approach is a powerful complement to a lender’s overall
account acquisition strategy. While direct mail still remains an
important line of attack, lenders who don’t adopt next-generation
solutions to better market their products will be left at a competitive
disadvantage.
Three, Two, One — Approved!
With an online prescreen
solution, lenders can
make pre-approved credit
offers within seconds.
Real-time prescreen solutions offer lenders the ability to confidently
extend credit to pre-qualified individuals at the point-of-sale. Once
a prescreen-of-one solution is implemented, the ongoing cost of
cross-sell initiatives is much lower than other marketing activities.
As a result, real-time prescreen is one of the most effective ways
to increase wallet share and customer retention. Solutions can be
easily deployed in call centers, at the teller line, or through the
online channel.
What can a smart real-time prescreen solution deliver? For starters,
it can facilitate credit offers within three seconds. Some lenders
have experienced a 40% increase in pre-approval rates. Or, even
better, increased their customer acceptance rates by 20 percent.
Prescreen versus Cross-selling
While the terms “prescreen” and “cross-sell” are often used
interchangeably, there are differences between the two. Crossselling generally occurs when a consumer has made an application
for a specific product. As part of the application, the lender pulls a
credit report to determine whether or not the individual is eligible
for that specific product. The lender can then evaluate other
products and services for cross-selling.
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Prescreen-of-one, on the other hand, leverages the consumer’s
presence at the point-of-sale even though they haven’t applied for
any specific product. During a real-time prescreen transaction, a
consumer’s creditworthiness is evaluated in seconds. When a
consumer passes the prescreen criteria, federal law dictates that a
firm offer of credit must be made.
Why Lenders Should Adopt Real-time Prescreen
Solutions
The effectiveness of direct mail is waning. In 2007, lenders mailed
out 5.3 billion new credit card offers, according to market research
firm Synovate. (The more consumers are deluged with direct mail
or “off-line” prescreen offers, the less apt they are to respond to
your offers.) It’s clear there is a legitimate place in marketing
budgets for direct mail offers. But if lenders are to fully maximize
opportunities to grow organically as well as through new customer
acquisition, they must find an optimum balance of both off-line
prescreen and real-time prescreen strategies.
Real-time prescreen solutions can lead to higher ROI. Direct mail
offers from high variability: every mailing has costs for market
analytics and list selection, creative costs, printing costs, mailing
costs and conversion costs. In contrast, a real-time prescreen
solution can be significantly less expensive over the long term.
That’s because it is implemented online, with little ongoing variable
cost once the solution is implemented.
Lenders don’t have to invest in robust prescreen solutions at the
outset. Instead, they can “walk” before they run and upgrade later
to more complex prescreen-of-one marketing programs that
perform real-time optimization to determine which product best
matches the needs of a particular consumer.
Prescreen-of-one can better focus on consumer needs. Real-time
prescreen solutions can work for many credit products, from credit
cards and credit-based overdraft protection to home equity lines.
This offers lenders the power and flexibility to increase wallet share
with minimal effort. And it offers consumers the satisfaction of
being approved instantly.
Example of real-time prescreen at a large bank
Equifax recently helped a bank with a nationwide footprint and
more than $500 billion in assets to implement a real-time prescreen
system for multiple products across all sales channels. This bank’s
primary goal was to quickly prescreen consumers for new credit
cards when they come to the bank to conduct transactions on their
existing accounts. The bank implemented an enterprise-wide
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prescreen solution deployed across all platforms and channels to
allow for one universal online prescreen process.
Whether national or regional in scope, best-of-breed prescreen-ofone solutions have shown the ability to:
• Process prescreen offers for multiple products simultaneously
• Extend offers within several seconds
• Achieve offer acceptance rate of 15 to 20 percent
Within the same
organization, there is
typically one department
working on mailing
credit card offers and
another working on
optimizing credit card
offers at the point of sale.
Is your organization
optimizing both online
and off-line prescreen?
Another important metric any good prescreen solution should track
is in the area of offer management. For our customers that do not
have an “Offer Management” system that tracks prescreen results,
Equifax provides an Offer Table that tracks responses and offers for
each transaction. This gives customers the ability to monitor both
approval rates and offer acceptance rates.
There is no single best practice to improve prescreen take rates.
Many factors can affect the take rates from business line to business
line, as well as between channels. Below are sample best-of-breed
acceptance metrics from a prescreen-of-one solution.
For private label prescreen offers for credit cards, acceptance
rates can range anywhere from 10% to 90%. In the case of a
lender with a highly loyal customer base and a well trained call
center, combined with a competitive credit card offer — you
might see take rates as high as 90%. Call centers are generally
the most effective channel for prescreen of private label credit
cards, with average take rates between 20-30%.
Prescreen-of-one is very effective at the teller line when a
consumer is doing their branch banking, but not necessarily
applying for any new type of bank product. A good
presentment of a prescreen offer at the teller window can result
in take rates as high at 60%.
What is certain is that prescreen-of-one for credit cards is a low-cost
acquisition strategy, compared to other marketing initiatives. Once
implemented, prescreen at the point-of-sale requires limited
incremental marketing investment and the lender has total control
over when and what to offer, which helps further improve ROI.
The Best Solution is a Holistic Solution
Direct mail, in spite of its shortcomings, is a proven way to acquire
new customers. In fact, direct mail was the source of 32 million
applicants for new cards in 2007, according to Synovate. That’s why
off-line prescreen remains an essential weapon in the marketing
arsenal.
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Banks experience measurable life when they target their mailings
more intelligently. For example, early adopters are leveraging
analytical tools that can segment prospect lists for prescreening
based on changes in consumer credit behavior over time. A typical
solution from Equifax allows our customers to select high-value
prospects utilizing up to 26 weeks of consumer credit history.
Prospects can be prescreened using credit criteria that includes up
to four scores and 175 credit attributes. In addition, Equifax offers
demographic and lifestyle data that can be used to segment creditqualified prospects for off-line and online offers.
In addition to delivering real-time credit data, Equifax also offers
an enormous amount of non-credit household and personal data
that can also be delivered in real-time to personalize marketing
offers. The charts below summarize non-credit data that can also
be accessed in real-time to help select the best product or service
for evaluation of a prescreen offer.
H O U S E H O L D D ATA
Field
Description
Number of Contributing Sources
Indicates the # of incoming sources contributing to the composition of this
household record
Household Verification Date
The year and month this surname and address was most recently verified by
the most current source list
Telephone Area Code
National directory assistance data and self-reported information
Telephone Number
National directory assistance data and self-reported information
Telephone Suppression Source
Source that provided information to suppress phone number
Telephone Transaction Date
The year and month of most recent telephone transactions from phone source
data
Household Age Code
Age Code of the Household
Household Age Indicator
Use in conjunction with Household Age Code to determine degree of source of
the age code
Ethnic Group Code
Modeled field that identifies the ethnicity of the household
Home Ownership Code – Renter vs. Buyer
Derived from county assessor, USPS and self-reported information
Household Marital Status
Marital Status of household. Compiled/Self-Reported/Inferred based on other
data in the household
Equifax ValueScore
Equifax ValueScore is a predictive model that leverages Lifestyle Selector and
TotalSource XL data in order to fine-tune profitability in marketing results
Income (Raw)
Household Income, -25% self-reported, with the majority modeled based on
individual and household demographic and self-reported data
Income Model Indicator
Use in conjunction with Income to determine source
Number of Children in Household
Number of Children in household
Number of Adults in Household
Number of adults in household (18 years old or older)
Length of Residence Code
Indicates the length of time a household has been identified at current
address. Derived from both Assessor data and the origination date
Combined Market Value of All Vehicles
The sum of the household’s car and truck current market value. Compiled
from vehicle registration and title household data. Market value is assigned
using current National Auto Dealers Association (NADA) statistics.
Occupation Code
Occupation title associated with someone in the household, from self-reported
and compiled data sources
TXL Emerging Flag
Indicates whether the household has an individual on the credit file
Age of Child
Birth date of child in the household (unique data field available for first,
second, third and fourth child)
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Field
Description
Birth Date Indicator for Child
Source of child’s birth date (unique data field available for first, second, third
and fourth child)
Gender Code for First Child
Gender of child (unique data field available for first, second, third and fourth
child)
Net Worth Segmentation Code
The estimated value of the household’s assets minus liabilities
Income Producing Assets Segmentation Code
The estimated value of household assets which produce income, such as
deposit accounts, securities and mutual funds
Presence of a Credit Card(s) in Household
Number of credit cards present in the household
Product Purchase Medium – Mail Purchase
Household has made purchase via mail
Product Purchase Medium – Internet Purchase Household has made purchase via the Internet
Product Purchase Medium – Telemarketing
Household has made purchase via the telephone
Product Purchase Medium – Sweepstakes
Household has made purchase via sweepstakes
Mail Responder
Household has responded by Mail. Sourced from Buyer sources (e.g., retail
catalogers, magazine subscriptions, etc.)
Mail Buyer
Household has made a Purchase by Mail. Sourced from Buyer sources (e.g.,
retail catalogers, magazine subscriptions, etc.) who perform transactions with
consumers by mail.
Books/Reading
Self-reported interest that is attributed to the household
Collectibles
Self-reported interest that is attributed to the household
Contributors
Self-reported interest that is attributed to the household
Cooking/Wines
Self-reported interest that is attributed to the household
Crafts/Sewing
Self-reported interest that is attributed to the household
Health Choices
Self-reported interest that is attributed to the household
Investments
Self-reported interest that is attributed to the household
Entertainment
Self-reported interest that is attributed to the household
Pets
Self-reported interest that is attributed to the household
Gardening
Self-reported interest that is attributed to the household
Recreation/Outdoor
Self-reported interest that is attributed to the household
Sports
Self-reported interest that is attributed to the household
Travel
Self-reported interest that is attributed to the household
Dwelling Type
Type of home. Compiled/Inferred based on other data in the household
Equifax Home Valuation Model
Equifax model identifying the value of the home
Home Sale Date
Date of home sale per deed
Home Sale Price
Home sale price at time of purchase
Mortgage Expiration Date
Mortgage (term) expiraiton date (or refinance)
Year Home Built
Indicates construction year of home
Number of Generations in Household
Number of generations present in the household
Family Composition
Family makeup of household
Niches 2.0
Niches 2.0, classifies every household into one of 26 clusters (or 108
“SuperNiches”) based on lifestyle and demographic data that describes the
household’s life stage
PRIZM NE Segmentation Code Household
PRIZM NE, a Claritas segmentation system, classifies every household into
one of 66 consumer segments (14 social groups, 22 life-stage groups) based
on the household’s purchasing preferences.
P$YCLE NE Segmentation Code Household
P$YCLE NE, a Claritas segmentation system, classifies every household into
one of 58 consumer segments based on the household’s usage patterns for
financial products and services.
CONNEXIONS NE Segmentation Code
Household
CONNEXIONS NE, a Nielson Claritas segmentation system, classifies every
household into one of 53 consumer segments and 10 life stage groups based
on the household’s adoption and usage of technology, voice, video and data
services
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P E R S O N A L D ATA
Field
Description
Verification Date of Person
The year and month this person was most recently verified by the most
current source
Number of Sources for Person
Indicates the number of incoming sources contributing to the information of
this individual
Person Gender Code
Gender code of person, from sources including public information and selfreported data, or derived from the person’s name, title (“Mr., Mrs., Ms.”), etc.
Person Birth Date
The year and month of birth
Two-Year Age Increments
Person’s age within two-year age increments
Product Purchase Recency
The freshest “catalog” transaction date for an individual that has had any
purchase activity (including off-line and online) in the last 24 months
Product Purchase Recency Online
The freshest “catalog” transaction date for an individual that has had any
online purchase activity in the last 24 months.
Product Purchase Recency Off-line
The freshest “catalog” transaction date for an individual that has had any
off-line purchase activity in the last 24 months.
Number of Products Ordered
The number of “catalog” product orders (including off-line and online) for an
individual within the last 24 months.
Number of Dollars Spent on Products
Calculates total dollars spent on product purchases for an individual within the
last 24 months.
Average Dollar Amount Per Order
This field calculates the average dollars spent on all product purchases for an
individual within the last 24 months.
Personal Family Member Relationship
Relative position within household. Derived using TXL business rules.
Bankruptcy Disposition Code for Individual
Bankruptcy Disposition
Bankruptcy File Date for Individual
File Date for Bankruptcy
Bankruptcy Status Code for Individual
Date of Bankruptcy
Bankruptcy Type Code for Individual
Bankruptcy type
Real-time or “online” prescreen is one of the most cost-effective and
flexible ways to quickly increase wallet share. However, direct
mail is still a substantial source of revenue for lenders big and small.
The best approach is to deploy a balanced blend of both strategies.
Equifax offers both real-time prescreen and direct mail prescreen.
Equifax can also help your organization implement marketing
strategies that grow your business the right way.
About Equifax
Equifax (NYSE: EFX) is a global information solutions company
and S&P 500 member, with a heritage dating back 109 years. With
more than 7,000 employees, Equifax’s presence spans three
continents and 15 countries. Leveraging its unique data assets,
technology leadership and advanced analytics, Equifax provides
solutions that help businesses make mission-critical decisions.
Businesses rely on Equifax for consumer and business credit
intelligence, portfolio management, fraud detection, decisioning
technology, marketing tools and much more.
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About the Author
Andrew Skillen, a director of marketing at Equifax, has over 18
years of experience in sales and marketing of business and
consumer products for such companies as Adobe, Macromedia,
Dole and Del Monte. Mr. Skillen is currently responsible for the
marketing of Technology Services at Equifax. He has a BA degree
in Computer Science and Economics, a Master’s degree in
International Management from Thunderbird School of Global
Management, and an MBA from ESADE, Barcelona.
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Equifax is a registered trademark of Equifax Inc. Inform, Enrich,
Empower is a trademark of Equifax Inc. Copyright © 2008, Equifax Inc.,
Atlanta, Georgia. All rights reserved. Printed in the U.S.A.
EFS-829-ADV—10/08