UICCU Credit Limit Increase Campaign Case Study
University of Iowa Community Credit Union (UICCU) determined its credit card portfolio was not preforming well as it could. The leadership of CU decided to take help of IQR to increase the wealth of card portfolio. IQR, TMG and UICCU team has created the segments using the Decision tree and using a Segmentation approach based on statistical models the team has finalized the optimal credit line for each member. The team has also identified the observations related to Credit Limits and card performance.
After the credit line increase campaign, the profit per card per month is up by 12%. There were 4,511 cards who were given CLI in the year 2014 & they are eligible for revising their credit line in 2015 as well
For 2015, the Credit limit performance has increased and the total incremental exposure is $29.8 MM.
Data-Driven Cross Selling Campaign Yields Double-Digit Growth
of Credit Card Portfolio
1st USCU was facing the issues with year over year card portfolio growth. The issues were low card penetration and Portfolio maturity. IQR helps 1st USCU to grow the card portfolio using segmentation and look alike analysis. IQR has designed the cross selling program for the matured card holder accounts which are 12 months older. We used the approach to target the right audiences with an attractive promotional offers and communications.
As a result, 1st USCU first raised its maximum credit line from $15,000 to $25,000. The 2-month cross selling campaign achieved an overwhelming response from non-cardholder members with a rate above 10 percent. Ultimately, the campaign led to 13-percent year-over-year increase in portfolio size.
Why Convenience Checks Remain Relevant
Every card issuer is using the convenience checks to increase the usage of the cards issued. The convenience checks have their own risks and disadvantages. Again to issue the convenience check to the targeted customers during the holiday season or vacation season, will be beneficial for the issuers. IQR help the CU to identify the targeted customers using the 12 month performance data. Using the segmentation approach IQR identifies the offers for the targeted customers.
As a result of the campaign the response rate was 4.22% and the amount raised per respondent is $3089. There is also 108% Increase in Balance Transfers Year over Year.
Multi-Segmentation Approach to Increase Card Usage
Every Card Issuer wants their card to be at top of wallet during the holiday season. Deere Employees Credit Union (DCCU) was no different in their desire to target their clients with an offer that would motivate their members use their DCCU card more often than any other means of payment during the festive season. IQR Consulting helped them achieve their goal by building a holiday marketing campaign using a multi-segmentation approach that helped target the right member with the right offer and resulted in increasing card utilization for the season.
DCCU realized a 61% increase in income and a 154% lift in profit from sales alone. The average card purchases also increased by 49% compared to the pre-campaign average.
Member Loyalty Hinges on a Great First Impression
Studies have shown that initial perceptions are difficult to change. For financial institutions, this illustrates an important aspect of member loyalty – members who are happy early on are more likely to remain so for the long term. IQR helped a financial institution build a well-crafted onboarding strategy that not only increased the chances of securing loyalty; but also reduced costs of serving long-term members and improved the success rates of cross-selling efforts.
Among the targeted, there was a 20-percent increase in the average number of products and services used per household at the onboarding program’s 12-month mark.
Getting that Big Marketing Spend to Work
Today, financial institutions are taking advantage of new technological and analytical tools to improve the return on their marketing investment, upping campaign response rates and saving money while generating more revenue. IQR helped a financial institution analyze the effectiveness of the $1.5 million it was spending on a series of direct mail campaigns. IQR successfully identified those segments of the organization’s prospect population that would most likely respond to their direct mailing campaigns.
By mailing to the target audience, this financial institution expects to add 2,400 new profitable and asset-enhancing checking accounts. These accounts are predicted to add more than $500,000 to their liquid assets, vital for its regulation-mandated cash reserve levels.
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