How Data and Advanced Analytics Can Help Lenders Optimize Reach and Retain Customers

The current economic environment is leading many lenders to reevaluate their business strategies in order to reach their goals while navigating complex business challenges. As such, lenders are looking for ways to effectively reach new customers and retain their current ones to maximize their budgets and account for business constraints.

While the ask may seem simple, there are a lot of factors that ultimately shape their decisions. This can include identifying who is in the market for a credit product, what their specific needs are, what their preferred channel of contact is, timing of messages, the needs of existing customers and how to marry that all with the needs of the business.

At the same time, consumers have higher expectations for the businesses they encounter. With the ease of access and instant nature of the digital ecosystem, consumers expect quick, seamless and positive experiences. Experian’s 2023 U.S. Identity and Fraud Report found that 37% of consumers said a bad experience caused them to take their business elsewhere. Now more than ever, lenders need both internal and external processes that can meet consumer’s rising expectations, and this includes offering the right products to the right people.

To reach and retain customers, lenders should be thinking about three key components – how to market to the right customers at the right time, how to ensure they are presenting appropriate offers, and implementing good portfolio management practices. To achieve this, lenders need the right data and insights to help them make better, faster decisions that help them reach their business goals while meeting customer needs and expectations.

Reaching the Right Customers at the Right Time

Many lenders may be contending with limited budgets and other business challenges that require them to take a look at how to optimize their customer outreach strategies. A spray-and-pray approach to bringing in new business will likely end with lost dollars and less return-on-investment.

The key to maximizing their marketing strategies lies in identifying the right customers in market for a product. However, it doesn’t stop there. Lenders need to know what type of offer would meet their customers’ needs, the best channel to reach them and the best timing. This combination will result in them being most likely to gain new business.

Trying to navigate the decisioning process through more traditional processes costs both time and money, and ultimately may produce lackluster results. Instead, lenders need the power of data and advanced analytics to help them understand the best path forward for each customer so they are putting the best possible offer in front of the right person.

The decisioning process also requires lenders to balance the needs of their portfolio with the needs of the customer in order to create an effective offer that satisfies both. Leveraging data, technology and advanced analytics can help lenders set factors like loan amounts, terms and rates in order to increase the likelihood of gaining new business while meeting business goals.

That’s why many successful lenders are employing mathematical optimization across the credit lifecycle, from acquisition to customer and account management decisioning through recovery, to reach their portfolio goals. Optimization allows financial institutions to assess the effect of different actions, decisions, limits or terms on profit and other business metrics. Until fairly recently, the challenge of assessing and analyzing many different actions for millions of customers was too great. But now with scalable optimization algorithms, organizations can maximize their overall profit by determining the best strategy for each individual customer while still ensuring a minimum acceptance rate, capital exposure, and more.

Portfolio Management is Key to Customer Retention

While acquiring new customers is crucial, so is retaining current ones. Portfolio management is a key component to keeping current customers engaged and interested in future business. Lenders need the right data and insights in order to deliver offerings that their current customers could use. This could mean identifying when a responsible credit line increase may be necessary, offering promotional interest rates and awards, and other deals that could help customers see value in a continued relationship.

Between an increasingly challenging environment and the fluid needs of consumers, lenders need to adapt their decisioning process so they can make faster, smarter decisions. Working with a trusted partner to incorporate innovative solutions that harness the power of data and analytics can make this process easier and ensure that lenders have the right plans in place to meet their goals.

Lenders that leverage data and analytics can see a direct impact and rapid return on investment in their business. It can help them address shifts in consumer behavior quickly, make better decisions based on their specific goals, automate business decisions to reduce operational expenses and incorporate constraints to account for any business limitations or restrictions, such as exposure, bed debt and more.

At the end of the day, a more streamlined decisioning process that leverages data and advanced analytics can help lenders stay competitive in a challenging environment. It provides lenders with the flexibility to support a variety of business needs across the entire customer lifecycle through an easy-to-navigate process so they can focus on making the best decisions for their business and for their customers.

Author: Mark Soffietti, Analytics Director at Experian Decision Analytics in North America