Partner Article

The customer acquisition race: addressing the key challenges

Although already a competitive marketplace, the complexity of lending to individuals has risen further in recent years. Product and price comparison sites are now far more accessible, and as a consequence, price sensitivity and reduced margins have come into fruition. With people expecting a slick, efficient application process, and more often than not, a seamless online experience, there’s a lot to deliver.

All organisations, large or small, that lend to individuals face these issues, which need to be tackled head on. Overcoming them can enable businesses to turn problems into competitive advantages, providing them with that all important edge.

Understanding is key

Crucial to accepting new customers or offering new products to existing customers, is understanding them well. Put simply, without knowing them, you won’t understand the right products and rates to offer them. Many factors will effect being able to confidently ascertain whether a person is a good fit for a lending product, and if they are who they claim they are. Not knowing your customers comes with many risks; such as not meeting regulatory requirements on affordability, seeing high default levels and suffering losses from fraudsters.

Simplify your processes

With today’s customer being immersed in our 24/7 ‘always on’ culture, they expect easy access to products and services, and don’t expect to wait for it. Businesses taking too long to progress customers’ applications must be aware that customers will lose patience. Fast. This is massively amplified when businesses expect users to switch channels, for example, starting the process online and then expecting them to visit a branch with documentation to complete it.

Experian research highlights that three in four firms believe that the largest losses that come from abandonment of business are caused by friction and subsequent customer fall-out. This is indicative of the lack of simple processes – if your applications are perceived to be taking too long or are too difficult, it’s likely that you could be losing business.

Change with the market

Businesses that offer consumer credit will be looking to stand out in such a competitive market place, and will be on a constant look out for developing trends, new opportunities or new sectors. The political, economic or regulatory landscape is always changing, which means that the market is evolving, providing opportunities as well as challenges for businesses. For those businesses who can’t or don’t adapt or respond quickly to change with appropriate products and services, it is likely that they will experience the loss of any market share they may have had, as well as missing key opportunities.

Although businesses who can easily tackle these issues are naturally at a competitive advantage, the barrier still remains in having the right tools. Many newer or growing businesses that lend to consumers are still notably relying on manual processes, because discovering a solution that matches their specific business requirements, is affordable and gives them the specialist support they need, has been a bigger challenge. The assumption has been that automated real time decision making solutions, encompassing everything from credit scoring to affordability checks, are only available for larger companies with deep pockets.

However, this assumption is far from the case, as proven by a handful of companies who have discovered Experian’s PowerCurve OnDemand SaaS platform. The key to new and growing lenders being able to effectively handle customer acquisitions lies with confident lending decisions, something businesses of the future must take on.

By Nick Evans, Director of Product and Propositions at Experian Decision Analytics, Experian

This was posted in Bdaily's Members' News section by Nick Evans .