Tuesday, February 19, 2008

Smarter Marketing: Using Modeling to Improve Direct Marketing Success

By now, you probably know that we are huge proponents of utilizing an analytical approach to direct marketing. As a matter of fact, our clients have told us that this is the core competency that sets us apart from our competitors. As such, we love it when someone has come up with a new analytical idea that assists direct marketers in more effectively reaching a specific audience.

DM News reports today that TransUnion and Edgar, Dunn and Company have come up with such an idea, and have built a model that is currently in the testing phase with one of their largest customers to do just that -- help credit card companies more effectively target consumer revolving credit card users. According the the article "The Revolver Model is marketed primarily to credit card issuers, banks and other financial institutions that issue credit cards. It shows consumer preferences on managing credit card balances, credit card use and use of other forms of payment, such as debit cards and cash, and is intended to help card issuers manage and segment product portfolios and focus offers to new and upgrading customers."

We've all seen credit models used before for prescreening potential consumers -- particularly in the financial services market. This one is a bit different in that it looks specifically at the consumer -- as opposed to past behavior data from a single card issuer. In looking at all of the credit cards that a consumer utilizes, you can really determine their spending behavior, how open they are to revolving debt and how they use cards over time. As Beth Costa, director at Edgar, Dunn and Company states: "“The Revolver model gives a holistic view of the wallet and can bring in what is the consumer's attitude towards revolving balances and rewards, and how they use debit cards, cash, checks and the whole equation.” Pretty darn nifty!

The article reports that this model was built on a survey of more than 10,000 consumers that the two companies conducted in 2007. It will be interesting to see how effective this analytical tool works for the financial services market.

As you plan your direct marketing campaigns, we urge you to consider utilizing an analytical approach. Put simply, integrating analytical intelligence with your DM campaigns will make each campaign much more successful -- both in the present and in the future. We've written an Analytical Workbook that may be of interest to you if you're heading down this path. Let us know if you'd like a copy and we'll be happy to send it your way.

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