Instant prescreen technology integrates with a financial institution’s customer channels, allowing the institutions to prescreen any existing customers for additional credit products whenever and however those customers contact them, the report said. The offers can be prioritized based on relevancy or appeal to customer as well.

Stephen Margrett, CEO of The Turning Point Inc., Sedona, Ariz., sees instant prescreening as a method to keep customers in the loop, literally.

“It’s a way of maintaining the customer lifecycle, keeping customers in orbit around the company,” Margrett said. “The more data available, the richer the set and the more intelligent the communication will be. There are really no limits in how much we can bring in to the decisioning—using technology to interpret that data intelligently to support high quality relationships.”

Traditional acquisition strategies such as direct mail prescreen also aim to fulfill the same purpose of expanding a financial institution’s customer base, but have proven to be inefficient in terms of cost and time to implement, yield low return on investment and are environmentally unfriendly, Johnson said.

The report cites data from Chicago-based Synovate Mail Monitor that revealed a meager 0.3 percent return on the 6 billion credit card offers that were sent out in 2005—18 million credit card applications.

“Direct mail is by far the most commonly used method for acquiring new customers in the financial services industry,” Johnson said. “There is an inverse relationship associated with direct mail prescreen. As the volume of prescreen offers increases, the response rate for those offers decreases. In 1992, the response rate was at an all-time high, and the financial services industry mailed nearly 1 billion offers to generate roughly 25 million applications. However, in 2006, nearly 6 billion offers generated a similar response, about 29 million applications.”

Zoot Enterprises reported a 20 percent acceptance rate of its instant prescreen product, Prescreen-of-One, since its inception in 1995. Because acceptance rate is based on the type of product prescreened and customer interaction used, it can range from 5 percent to 40 percent.

“Customers have a much greater propensity to accept offers that are specifically tailored to their needs and presented to them in real-time that they already know and trust,” Johnson said. “Instant prescreen is also satisfying for the increasingly time-sensitive consumer. As society becomes more and more enthralled by the concept of instant gratification, consumers become less and less willing to wait for the results of traditional financial services.”

Johnson said adopting instant prescreening would be a competitive advantage for institutions today, achieving operational excellence to differentiate from competition while increasing profits.

“As competition in the financial industry continues to rise, every customer becomes more valuable, and that customer’s wallet becomes a background,” Johnson said. “The more services a customer has at a financial institution, the less likely it is that the customer will switch those products for a competitor’s. By focusing on expanding wallet share rather than overall customer base, instant prescreen enables financial institutions to create deeper, more loyal, more profitable relationships with existing customers.”

In light of the mortgage meltdown, however, customer relationships may be shaky at the moment—perhaps trust has become an issue.

“Trust is really a function of a relationship," Margrett said. "If you are a provider of a product or service like a mortgage, which is an infrequent purchase, complex and expensive and perceived to be a risky undertaking by the customer, then there is a requirement on the provider of that mortgage to create and maintain a high quality relationship. Customer retention is about maintaining and creating high quality relationships. Trust naturally evolves out of the relationship—you can’t create it directly. What you can create is confidence and belief; trust evolves out of that.”

Margrett advocated maintaining contact with the customer on a regular basis. But he said the messaging has changed given the circumstances. “Messaging has to deliberately address rebuilding trust without referring to an actual loss of trust." he said. "We’re seeing a larger emphasis on credentials—years in existence, knowledge of the local market and so forth.”

Judy Margrett, president of The Turning Point Inc., said, “Consumers are fear-fatigued—it’s constantly about the bad mortgage people. The power of referral is really big right now and it can’t be downplayed. It’s about foundation marketing which is building loyalty and constant communications for a strong relationship. Customers get fearful when they are hearing all sorts of things in a mixed-message environment.”

"It used to be that business was so easy and customers were seen as as business transactions rather than relationships," she added. "It doesn’t have a lot of gain at the commercial level, but you have a relationship. Keeping the relationship going is important."
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