Finding Qualified Leads: Using a TIP Score to Maximize Marketing Budgets
It’s safe to say that marketing dollars count more than ever in today’s fluid economy. While credit card companies could once cast a large net and hope to catch as many customers as possible, recent economic turmoil and a bumpy recovery have made it even more vital to cast a smaller net in a better pond and reel in more qualified leads. Smarter banks now know that they can make the most out of their marketing budgets by quantifying whether an individual is likely to open a new account. That is where the TIP Score comes in.
What’s a TIP Score? “TIP” stands for “True In-Market Propensity” scores. It’s a way to assign a value to a potential cardholder based on criteria that allow banks to rank potential business, so they can essentially market to those who are most likely to open a new card. It means that marketing campaigns — and particularly direct-mail marketing — no longer waste time and resources on those who don’t meet credit criteria and who have a low propensity to open a new card.
What’s the Advantage? After piling on a ton of debt — and then suffering a years-long hangover after the economy crashed — Americans have largely dug themselves out from under the worst of their prior obligations, according to a June 2013 Equifax National Consumer Credit Trends Report. Debt levels continue to decrease, but that doesn’t mean consumers are abandoning credit cards. The report found that consumers are in better financial shape, but continue to use credit card debt. This bodes well for banks looking to grow portfolios based on those who are likely to not only open a new card, but also become stellar cardholders.
How does it Work? The TIP score takes a variety of factors into consideration when assigning rankings to potential card openers. Equifax found that when the TIP score increases, the open rates increase as well. That said, higher rankings are applied to those consumers who are in the market and who are “approvable,” first and foremost. A lower score is assigned to consumers who either have a high fail rate or who are unlikely to open a new card due to low demand. The result? You clearly see which qualified leads to target through your marketing campaigns, saving money and time while simultaneously lowering your risk.