Student lenders often rely on internal models and other publicly available data to define the target audience for new student loan prospecting campaigns, resulting in targeting a large population of sub-optimal prospects and potentially low response and booking rates. In order to identify optimal candidates and enhance ITA targeting, student lenders need new insights on household financial capacity and borrowers’ ability to pay financial commitments.
A backend analysis was conducted on a file from a previous student lending direct mail campaign to identify the financial profile of all accounts, responders, and booked segments based on IXI measures. Select IXI measures were analyzed: Aggregated FICO® Scores, Discretionary Spending Index (DSI), and Income360.
The results showed that by better understanding the estimated financial profile of booked accounts based on IXI measures, the lender could have decreased the target audience by 30% and still achieved the same or better response and booking rates. When comparing booked accounts to all accounts and responders, booked accounts tended to:
- Have higher Aggregated FICO® Scores (approximately 30 points higher for ‘booked’ over ‘responders, not booked’)
- Shift toward Mass Affluent households, with higher estimated total income and discretionary spending
In addition, the analysis revealed that combining measures provides additive results in targeting power.
Lender could have saved $150,000: Assuming the lender’s prospect target list included 500,000 consumers and each direct mail piece cost $1.00, then by applying IXI’s measures, the lender could have narrowed the target audience by approximately 150,000 consumers and saved $150,000 in direct mail costs.