Data and Analytics for Understanding Consumers
By: Steve Hotz, Principal, The Lead Group
As a continued series providing highlights from this year’s LEND360 Forum Sessions, one of the more intriguing and highly attended panels was “Successful Customer Acquisition Strategies for Consumer Lending.” These discussions come at a time when borrower preferences are moving away from traditional financial institutions such as banks, credit card products, etc. and towards credit that is more accessible and convenient. This shift requires new strategies to connect with customers. Assembled to discuss these topics was a diverse panel reflecting varying industry perspectives – ranging from online and offline acquisitions to data analytics and decisioning.
Approaching these customers requires a shift in tactics – marketing through different channels and utilizing a blended approach of mediums, be that search, social media and, yes, direct mail. There is also a growing trend that organizations are bringing specific strategies in-house, such as SEM/SEO and social media – all areas that in the past companies would have looked to outside support.
An area still handled by external organizations are affiliate and lead generation. In evaluating these specific options close attention needs to be paid to site responsiveness, making sure it allows for easy navigation, but most importantly, platforms must be mobile friendly.
One tactic on the rise is the use of Programmatic Direct Mail.  This, essentially, allows for the ability to take real-time, online activity and produce a physical direct mail piece that can make it to the mailbox of a consumer within 24 hours.
As we understand more about this new generation of customers, acquisition tactics will continue to evolve. A recent study by Experian found that 68% of consumers that reopen a new personal loan does so with the same company. From an acquisition perspective, this reiterates the importance of focusing on the right loan product at the right time.  Connecting with the consumers throughout the year, reinforcing product options, taking care not to overwhelm with unnecessary information – this holds true not only from a new account acquisition perspective, but from a portfolio marketing perspective as well.
Data and analytics will continue to be key in understanding these new customers. For example, millennials are not opening credit cards and use debit cards more frequently, shunning more traditional credit products.  Understanding this from a data marketing and underwriting perspective is important as companies adjust their strategies.
One wild card relating to this topic is the impact that regulatory compliance requirements will have on customer acquisition strategies. At this point in time, it is difficult to project the full impact of the Equifax data breach that occurred earlier in 2017 along with the growing sensitivity among consumers around privacy and how companies handle data. This could affect underwriting, but potentially the greatest impact could result from consumers freezing their credit which has been proposed in several legislative initiatives currently under consideration in Congress.
What is the outlook? Overall, it’s positive.  Through continued innovative underwriting and marketing to consumers, especially millennials, in a manner that creates ease and a “better” option than traditional financial institutions, we will continue to see growth. The space is very diverse but increasingly competitive as bigger banks enter the market. This makes understanding the consumer you are marketing to even more important and why successfully finding your niche is key.