Tel: +44(0) 113 242 4747
Fax: +44(0) 113 242 4646
webenquiry@eurodirect.co.uk
EuroDirect is part of the Callcredit Information Group alongside GMAP Consulting, Callcredit, Legatio, DecisionMetrics & Broadsystem
Gauge for Marketing
Individual risk scoring at marketing stage
For direct marketing of credit products, it is standard practice to use credit pre-screening before contacting customers and prospects. This process identifies consumers with adverse credit history, who would not be accepted for credit if they applied. Typically, around 10% of records are suppressed from a mailing file because of known bad debt information, but what about the remaining 90% of the file? How do you assess the credit risk associated with these individuals?
Gauge for Marketing allows companies to apply a pre-mailing credit risk score to any file of UK consumers. It enables further suppression of high risk individuals who would be unlikely to be approved by the credit application process. This ensures that the remaining people contacted have the right risk profile for the product being promoted, and the number of declined responders is minimised. Not only will this optimise campaign response rates, it will also help to save you money by reducing mailing costs.
What is Gauge for Marketing?
Gauge for Marketing is a robust statistical model that predicts future credit risk. It has been developed using data from our sister company, credit referencing agency Callcredit. It attempts to emulate the new business application scorecards employed by lenders, so that probable score rejects can be removed at the time of mailing.
Gauge for Marketing scores are available for the Data Exchange consumer universe and they can be used to select or suppress prospects from the 39 million individuals available. Gauge for Marketing scores can also be appended to a client’s own prospect and customer files to support customer acquisition and cross-selling.
How does Gauge for Marketing work?
Gauge for Marketing scores range from 0 –1000 (the lower the score, the higher the risk), but are also banded into 20 equally sized groups, with each semi-decile representing 5% of the UK population. A score of 1 represents the lowest risk and a score of 20 represents the highest risk. These bands are ideal for profiling, segmentation and targeting where a specific audience is required (e.g. sub-prime).
For credit pre-screening purposes, EuroDirect’s Financial Services team can advise on an appropriate cut-off score to optimise the suppression of potential rejects. This is determined from a retrospective analysis of responders to a previous campaign. The result is a tailored solution to fit each organisation’s specific acceptance criteria. Lenders can thus follow the principles of responsible lending by ensuring that their marketing activity is directed at those individuals with a good chance of being accepted should they respond.
What scorecards are available ?
We have built two Gauge for Marketing models to meet the requirements of different lenders, depending on their market focus and their membership of SHARE – Callcredit’s credit reference database.
The choice of Gauge for Marketing scorecard also depends on the type of service required, and whether the scorecards are used for marketing to prospects or existing customers. The following models are available:
- Public – for targeting and suppression by any organisation on customer and prospect files
- Partial SHARE – for suppression only on prospect or customer files by SHARE members.
What data is used to build Gauge for Marketing ?
A variety of data sources is used to calculate individual level credit risk scores and optimise the prediction of future payment performance. These include previous bad debt information (including CCJs, Bankruptcies and IVAs), demographic and lifestyle variables, and a range of financial characteristics derived from property price and shareholder information. The SHARE versions of Gauge for Marketing also use default and delinquent data summarised at individual level across both current and previous addresses, and including any linked alias records.
The combination of variables used to build Gauge for Marketing ensures that the models perform well at both ends of the risk spectrum. Investor data helps to identify low risk non-responsive individuals, while incorporating the full range of previous bad debt information identifies high risk indebted individuals, who represent poor risks for lenders.
What are the benefits of using Gauge for Marketing ?
Gauge for Marketing goes beyond traditional credit screening to provide additional efficiency gains for direct marketing campaigns. It enables lenders to restrict their marketing to those customers and prospects whose risk profile qualifies them for the promoted product. By reducing the number of responders subsequently declined, Gauge for Marketing helps to preserve consumer goodwill and maintain positive brand values for its credit products. It also enables users to improve response rates and cut mailing costs.