How to leverage analytics for more effective marketing

Editor’s note: This column first appeared in the March issue of the magazine, prior to the coronavirus outbreak in the U.S.

Technology and demographics are changing borrowers’ expectations of the loan-application process, and lenders are taking notice of the opportunities. Lenders can boost sales and marketing results by evaluating the efficiency of their current loan-origination process and identifying evolving trends and opportunities within their loan portfolios. Analytics, tightly integrated with loan origination, can uncover actionable insight in portfolio data to drive a more effective marketing strategy.

When evaluating the current process, lenders should ask themselves four questions.

• Can loan applications be submitted via mobile devices? Customers want a completely digital experience, including any required documentation, and anytime-anywhere loan submissions. Millennials and Generation Z consumers live via mobile. You need a mobile channel for the generations that now comprise most borrowers.
• How quickly can you return an offer? The internet and mobile commerce enable near-instantaneous transactions. A completely digital loan-submission process facilitates rapid decisioning using workflows, decision rules and auto structuring. In many instances, applicants who match credit policies can receive an offer in seconds.
• Are you accurately assessing applicant financial credentials and offering competitive deals? For many applicants, a credit score — or lack of one — doesn’t adequately portray their financial standing. Trended credit data can show that an applicant’s financial position is improving and therefore qualifies for better terms than indicated by credit score alone. Better quality decisioning produces more accurately priced loans.
• Are you missing lending opportunities because you underestimated an applicant’s financial strength? Applicants with no files or thin credit files might automatically be declined. Alternative credit data sources can fill in the gaps, providing evidence of the applicant’s ability to pay. Booking deals that you would have otherwise declined may be one of the easiest methods to boost sales.

Today’s loan-origination solutions give lenders the ability to improve the quality and quantity of booked deals by engaging borrowers in their preferred channels, accelerating lending decisioning, and offering competitive terms that mirror an applicant’s ability to pay.

Drive your marketing strategy with portfolio analysis

Loan portfolio data can be a financier’s greatest resource for marketing guidance. Lending professionals using analytics can explore the portfolio to identify trends that present new marketing opportunities. These are a few answers that analytics can provide lenders:

• attributes or demographics of your most successful market segments, since marketing channels and targeted messaging can engage more clients in these segments;
• regions that contribute the most to your loan portfolio, and the broadcast, print, web or social media investments in those regions that could boost sales; and
• services to offer in order to gain follow-on business and maintain customer loyalty as borrowers approach payoff.

Lenders focused on improving their marketing impact should use analytics to obtain a detailed understanding of their market segments, and use that insight to develop a marketing strategy that differentiates their services.

With more than 20 years of experience in the auto finance industry, Lana Johnson leads the charge to drive innovation as chief client officer at defi SOLUTIONS, the technology partner of Auto Finance Excellence, a sister service of Auto Finance News.