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Trend spotting

Experian Credit Services' TrendView solution offers fresh opportunities and effective risk management to financial services companies.

As the economic climate appears increasingly treacherous, consumers are tightening their belts, while companies are turning away from expensive acquisition strategies and refocusing on retention and maximising return from customer value. Likewise, building customer profiles and recognising trends has become increasingly important. Traditional segmentations that use discriminators such as age, disposable income, and internal company/product behaviour are no longer providing the insight required to both determine who your valuable customers are and how to maximise your relationship with them. To address these issues, Experian Credit Services has launched TrendView, a credit card segmentation tool that helps identify value opportunities with existing customers by trending a customer's behaviour across all their credit card relationships.

TrendView, a profiling tool that is already a success in the US; provides seven new segments that target customer value by evaluating trends in customers' credit behaviour. By looking at characteristics such as credit card balances and associated movements between accounts over time, TrendView allows credit card providers to determine customer value, as well as establish effective and appropriate credit campaigns, directly aligned to their customer portfolio strategy.

Trendview is the only full segmentation that uses CAIS history to determine the customer behaviour that underpins performance. It monitors seven key behaviours to create the segmentation.

The seven segments identified by TrendView are:

• Credit Rookies - newest to the credit card or loan market, Credit Rookies have only one credit account with the company, so are nurtured to gain their loyalty. They are usually young, but mature consumers can also enter this segment
• Simple Lifers - the loyal bedrock for the card or loan issuer they choose, this segment likes to keep things easy. They rarely switch, have a very controlled approach to spending, and reject temptation to adopt more disloyal behaviour.
• Practical Shoppers - they have multiple active cards or loans, but use them practically. This segment also likes to make the most of store cards, so they can get the best offers. They often have a number of inactive cards, so companies like to nurture them
• Rate Surfers - a well-known phenomenon where the consumer takes the best offer of credit or loan, and then switches as soon as a better offer is available. No sign of financial stress, but lenders frequently need to deal better with this group, as they can be costly
• Credit Maximisers - with more than one card but no major financial stress, these consumers like to spend, sometimes stretching beyond their means
• Plate Spinners - these are heavy users of credit cards and loans, often switching balances between accounts, rather than using offers to pay down their overall debt. They are a hidden risk phenomenon in today's society, with the easy availability of credit
• Credit Strangers - this group shows behaviour patterns that fall into no specific segment, either because the issuer has lost touch with the individual, or because their information cannot be processed

Evaluating customers based on their credit data will enable providers to extend their view beyond their own customer database, and outside of a single company/product view. By basing customer decisions on this external customer behaviour information, credit card providers will also benefit from more effective risk management, cross-selling, retention and simulation of profitable behaviour, without the risk of encouraging over-indebtedness. Using this information, companies are now able, for the first time, to manage customers by anticipating their likely future behaviour.

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