Credit Risk Insights

Revitalizing Invitation-to-Apply Marketing with Alternative Data

Manager, Solutions Consulting, Credit Risk and Marketing
LexisNexis® Risk Solutions

Driving response is about delivering the right offer at the right time to the right person. In the world of Invitation-to-Apply (ITA) strategies, marketers are often seeing high response rates but low approvals creating a growing need to better segment their targets for ITA’s. As a result of limited data to support fine-tuning target markets, ITA’s are becoming an underutilized tactic to grow business.

Financial Marketing – there is a place for ITA’s

Invitations to Apply (ITA’s) can be problematic.  Basically, you are sending out a notice to people inviting them to apply for a loan, credit card, etc. with little to no insight on their creditworthiness or their desire to actually repay. Typically the people that respond to these offers are less likely to qualify. So not only did the lender lose money on printing and postage, but they also burned resources underwriting the application.  It is for this reason that ITA’s are becoming an underutilized marketing tactic.
Least profitable prospects are most likely to respond to an offer creating high potential for adverse selectionBut what if you could better understand the stability of your sub-prime prospects and as a result only target the individuals with the highest likelihood to qualify?  Utilizing alternative data, marketers can focus their customer acquisition efforts on the most qualified prospects and revitalize their ITA efforts with powerful insights.

Additional insight through alternative data

I have a client that has a robust pre-screen marketing effort (most lenders do) but they also send out ITA’s. They found that the top responders to their ITA’s perform better than their lower-scoring pre-screen prospects so they engage in a swap-in/swap-out strategy.
96% of marketers say that adverse selection is a major issue in their ITA campaigns1 and the majority (72%) of Financial Institutions agree that more or better demographic and economic data could help control this issue.2
A recent case study of our own marketing product for Invitation-to-Apply shows how layering alternative data can help
We’ve found that alternative data is helpful in providing a comprehensive view of an organization’s best customer in order to model future campaigns to attract customers with similar attributes while also mitigating risk.  A recent case study of our own marketing product shows how layering alternative data can improve your campaign performance:
Learn more about the vital role of data in Invitation-to-Apply campaign performance. Download our infographic now.
About the author: John has a dual role in consulting on leveraging alternative data for marketing data analytics and consumer credit risk decisioning at LexisNexis™ Risk Solutions. These roles intersect at many points throughout the customer lifecycle starting with marketing strategy (branding, acquisition, cross-sell/upsell, customer service and retention) through credit underwriting and account management. The goal is to help companies increase organizational efficiencies and effectiveness using a pragmatic, empirical data-driven approach that allows for measuring, refining, and scaling customer insights throughout your enterprise.
1 Ibid.
2 LexisNexis Financial Marketing Survey 2017
7 LexisNexis customer data
8 Ibid.

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