In what it is calling a return to decades-old marketing tactics combined with new technology, credit-score giant FICO on Aug. 2 introduced a product designed to target credit card customer prospects more effectively in a sluggish market.
Fair Isaac Corp.'s FICO Bankcard Growth Solution is a compilation of software and algorithms that can slash by several weeks the typical time it takes for card issuers to refine a solicitation or promotion to get the maximum response, says Eric Wells, FICO senior director in analytics.
Moreover, the new product can assess new customers' card use immediately, a task that is becoming increasingly important as issuers stake out different strategies to reignite card use after declines in outstandings and profits over the past two years.
"Many issuers are beginning to pursue sharply different strategies for different consumer sectors, such as going after 'transactors' (who tend to pay off their bills each month), those who want rewards and those most likely to want to revolve balances," Wells says. "For issuers, it's become vitally important to learn right away whether consumers are actually behaving as their customer-acquisition systems predict."
Minneapolis-based FICO's new product uses updated analytic tools and technology to study consumers' reactions to a product offer quickly. Issuers then can apply the findings to marketing campaigns via a computer desktop, Wells notes.
The ability to gather feedback quickly enables card-marketing executives to tweak product features and specifics of card offers for maximum effect within a day or two of sending them via direct mail, the Internet, text message, a call center or through branches, he says.
"With this iteration of our tools, we are combining new technology with the sort of old-fashioned skill many issuers may have gotten away from, which is analyzing customers on a very granular level rather than on an automated, mass-market level, which had taken hold prior to the recession," Wells says. "The new capability enables issuers to take a closer look at the unique qualities of each prospective customer's habits and preferences for using a credit card, alter card offers very precisely, and keep experimenting with them daily to improve results in card activation and usage."
It is not the first time FICO and other purveyors of credit card customer-acquisition systems have made such a claim, according to Dennis Moroney, TowerGroup research director.
"These systems have been around for decades, but what is different with the new crop is the use of broader databases and inclusion of new-customer behavior," Moroney says. In general, "people are saving and spending their funds differently after the recession, and new customer groups, such as Hispanics, are entering the pool of prospects," he says. "And there are new tools available that help issuers take more specific action on these."
Zoot Enterprises Inc. last year introduced a suite of high-speed credit card instant-decisioning software tapping broader customer-credit information databases. FICO's latest product, which issuers can adapt alongside their existing customer-prospecting software programs, performs deep analytics with "unprecedented speed," the company said in a press release.
But FICO declined to say exactly how much an issuer could speed up marketing efforts.
"It depends on how many variables you're testing, but issuers can now test any aspect of a card-marketing campaign, through any channel, over any time period they want, with greater control and without involving a lot of information technology support," Wells says. "Issuers say they are more interested now in drilling down to each individual customer's propensity to use a credit card, and they can tailor products to suit their needs almost exactly. That's the goal."
