A cross-sell campaign to your existing customers can be a relatively quick and profitable exercise compared to targeting external new cardholders. It takes advantage of all the performance history related to other products a customer holds with you, and gives you an opportunity to expand the existing relationship. Your customers will also be familiar with receiving communications from you and there may be an element of loyalty that can increase response and acceptance rates. This is where knowing your customer provides an advantage.
The following provides some ideas and considerations when designing your cross-sell campaign.
Data to Use
- Product – What products a customer already holds with you.
- Customer – Total exposure, balance, worst status etc.
- Delinquency – Payment history and use of the overdraft limit can highlight higher risk customers.
- Activity – How active are customers and how they use their product.
- Revenue/profit – How much revenue or profit a particular customer generates.
- Scores – Account, customer, response etc.
- Attrition – How likely is the customer to go dormant or close an account.
- Bureau – To understand the wider customer financial situation for risk and affordability purposes. For those countries where it is available you can use the FICO Score as a means to distill bureau information into a three-digit predictor, making it easier to immediately gauge a customer’s risk level.
- Open Banking – Provide further insight either in addition to bureau data or in place of in countries with no bureau option. This will also synch with the rapid digital transformations in the market.
- Preferred channel – Consider using a preferred channel to increase the response rate.
Example Target Groups
- Age >=18.
- Months on book >x for other products – Cross-sell to the more established customers as a reasonable length of time open will provide robust predictive data to utilize. 6 months will provide a good level of performance and allow for scores to become robust.
- Customers with active products – This will ensure more useful data is available and these customers will have demonstrated a propensity to use your products.
- Income stability – If salaries are banked with you, those whose income has not noticeably reduced since the pandemic which can indicate being on furlough.
- Those not currently on a payment break and who haven’t had a payment break in the recent past.
- Indebtedness <x – You may have a policy regarding an overall indebtedness cutoff, which can also be used for cross-sell targeting. This can be related to unsecured, secured or both types of debt.
- Debt to income ratio – Will help to identify those who can afford to take on extra credit. Bandings could be used to help set initial limits and pricing.
- No missed payments on any product in last 6 to 12 months.
- Under their current account overdraft limit.
- Those without several requests for extra credit on other products in last 3 to 6 months.
- Customers who have not been declined a request for extra credit or a new product, including being rejected for a credit card in the last 3 to 6 months.
- Those who have been targeted for any other cross-sell within the last 3 to 6 months, especially if there was no response.
- If the salary is banked with you, use a minimum cutoff for average available monthly funds, potentially linking this to initial limits and pricing.
- ‘Best’ customers based on scores – Option to run your target list through your card application scorecard and refine your target list. Take advantage of any other scores available to you, e.g., propensity to respond, customer score.
- Incorporate a loan-to-value ratio cutoff and select those with a lower value, who have demonstrated the ability to support their debt.
- Include those with valid contact details, especially if you are planning to make contact via multiple channels. Those identified with missing details could be sent to your trace process, which would aid future marketing campaigns as well as improve collection processes.
- Bureau data – Overlay bureau data to ensure that a wider picture of a potential cross-sell prospect’s financial situation is considered. You will want to minimize the number of those you proactively approach being declined, as this will send a very negative message and may damage the existing relationship you have.
Prioritization Options
- By number of other products held – This will provide the widest range of data and highlight your most loyal customers.
- Within products – If they have a savings account, target those with the higher savings. If they have a mortgage and the amount is decreasing, the customer may have more disposable income.
- By product type – If they only hold one product, prioritize the product held, e.g., current account above a loan.
- By previous response rates - If customers have been involved in previous cross-sell campaigns, make use of any historical response rates available.
- Ranking system - For example, related to salary, ranging from those with a salary that has not decreased in last 3 to 12 months, through an income held that was taken from an application 1, 2, 3, etc. years ago to no idea of income. For salary, try and incorporate updates on a regular basis so data does not become too old.
- By communication channel – Perhaps choose the accounts where you can send the invite via the lowest-cost method first.
- By likelihood of closing – If the customer displays signs of paying down loans and or a mortgage or is using their current account less, offering a new product can maintain the relationship.
- By value – You can target the customers of most worth to you whether based on revenue generated, longevity, most products held or likelihood to take further products.
Processing Considerations
- Monthly, weekly or daily – Decide the frequency in which the selection process takes place. Monthly is recommended as running more frequently can result in accounts qualifying multiple times, which complicates the analysis. If you run monthly, try to tie this in with any intra month update of data, e.g., a score or the bureau update. If you can exclude those previously selected within the last month, daily may be preferable.
Post selection
- Initial limits and pricing options – Once the accounts have been selected, you can determine your pricing and initial limit ranges. The risk levels will influence whether there is a low and grow approach, with lower limits and potentially higher pricing, or if risk levels are expected to be low higher limits and lower pricing.
Cross-Sell Campaign Optimization
Due to the abundance of data that is available, financial institutions that strive to lead the market will take advantage of data-driven and optimization techniques to ensure that the campaign meets targets. This approach can speed up the time to live and hence benefit realization by shortening the analysis, test and learn phases. Optimization can enhance the design of a campaign in various stages of the process.
- Selection process – Create an optimized customer target list based on your requirements, whether linked to revenue, risk, worth, likelihood to respond or a combination of objectives, scanning all the data available to the institution.
- Channel – Determine the best channel to use for every customer.
- Initial Limit – As part of the selection process or onboarding stage, you can optimize the initial limit offered to your customer.
- Pricing – Either linked to or independent of the initial limit setting, optimize the interest rate offered, etc.
All of the elements discussed here can be managed using FICO TRIAD Customer Manager or FICO Strategy Director.
If you would have any questions or would like to discuss further, please contact your FICO advisor or staceywest@fico.com.
