With the integration of Strategy Science within the Fair, Isaac MarketSmart Decision System^® platform, credit card issuers can now deploy analytically driven strategies with leading-edge campaign execution software.

"In 2001, US solicitation volume rocketed to five billion pieces, while response rates collapsed to 0.6%," says Richard Howe, vice president of Fair, Isaac's Global Marketing Solutions. "Issuers are clearly challenged to increase revenue within a decreasing mail universe. Fair, Isaac analytics can not only help them find new marketing opportunities, but develop optimal credit offers that are attractive to customers and profitable for them.

"Just as issuers are implementing Strategy Science within TRIAD™ adaptive control system for account management, they can now implement Strategy Science within MarketSmart for account acquisition," notes Howe. "We have built MarketSmart to be the ideal platform for rapidly deploying complex strategies and analytics."

Our analytic marketing capabilities allow issuers to match the right offer to the right customer and channel, as well as:

• Incorporate business constraints and goals — e.g., profit, risk, response and NPV — into campaigns
• Shorten campaign cycles by building optimal offers in less time
• Improve speed-to-market with sub-second real-time campaign execution
• Leverage results of past campaigns to improve future performance
• Test offers without the time and expense of mailing, using a Web-based pre-market survey
• Adapt to changing business conditions by easily modifying strategies
• Gain consistency and speed across channels by integrating marketing data

Fair, Isaac's analytic database marketing solution tightly integrates analytics, optimization technology and campaign execution. At its core is an analytic data mart that allows you to leverage the results of past campaigns to improve future performance.

Determine the optimal combination of offer, segment and channel

Now our marketing clients can choose from a range of capabilities (see Figure 1) to meet current goals, and implement new technology as these goals or business conditions change. The solution includes Strategy Science, analytics and campaign management tools.

Analytic data mart

At the core of our solutions is an analytic data mart that enables a "recursive" or iterative learning loop for constant offer improvements. A subset of a data warehouse, the analytic data mart allows for model development, as well as reporting and tracking to take place. Within this platform, analytic techniques help issuers gauge the results of past campaigns — including customer profiling and "what if" simulations — to improve future performance.

Scoring

The scores that issuers already use to better understand customer behavior and build offer strategies can be fed into the analytic data mart. This includes industry-standard Fair, Isaac scores such as NextGen FICO^® risk scores, classic FICO scores and bankruptcy scores.

Pre-Market Offer Testing

Fair, Isaac's Pre-Market Offer Testing (PMOT) allows card issuers to test a much larger set of offers and variables within a fast-feedback, Web-based test environment. By targeting a controlled online population, the approach allows users to quickly identify the best offer choices, which are then rolled out for in-market testing.

The PMOT service can reduce testing costs by 20%-30% and increase speed-to-market of the most effective offers. While in-market testing cycles may take many months, our pre-market testing takes just weeks from inception to results. Furthermore, clients can test many more offers in a controlled environment — off competitors' "radar screens." (For more information, see our previous PMOT article.)

Experimental design

Using the results from pre-market testing, Fair, Isaac experimental design can project results for all customer segments, including those not directly tested. This analytic technique allows for significant costs savings by minimizing the number of required mailings. (For more information, read "Learning Strategies: a map for moving into new strategic territories.")

Decision modeling/offer optimization

Leveraging the field of decision analysis and optimization, Fair, Isaac's Strategy Science technology delivers marketing offers optimized for a set of business objectives. The technology provides an analytically driven means of determining the optimal offer for each prospect while meeting multiple, and often conflicting, business goals.

Let's say a company wanted to set up a customer acquisition strategy aimed at maximizing revenue while keeping losses even. Strategy Science would not only deliver optimal actions, automatically, for every prospect on this portfolio, but it would also provide a platform for inputting alternate business constraints and viewing the differing outcomes. (For more information, refer to "Strategy Science takes guesswork out of marketing strategies.")

Campaign execution

The campaign management and strategy execution tools in Strategy Science and MarketSmart seamlessly deploy optimization and experimental design strategies. The user interface empowers clients to dynamically modify and execute campaigns. Results from campaigns are fed back into the analytic data mart for analysis, to improve future offers.

MarketSmart can include a component that allows real-time offers to be made through direct consumer interaction channels. Clients have successfully used this through their branch tellers for cross-selling, with response and approval rates in the 20%-40% range.

Expert database and consulting services

Our analytic marketing services are available to companies that have data warehouses in place, and can dramatically improve the return on their investment. In addition, Fair, Isaac can build and host a client's data warehouse. We currently manage 190 terabytes of client data and 48 billion database transactions per year. From their desktops, our clients analyze data across product lines to gain up-to-the-minute, profit-enhancing insights — from the depth and number of relationships with customers to detailed response history.

In addition, Fair, Isaac consulting can help clients implement solutions quickly for fast, measurable results tailored to specific constraints and opportunities.

Compared to basic direct mail metrics, Fair, Isaac marketing clients regularly perform above industry averages. One large issuer experienced a $15 lower cost per account and a 57% higher response rate, while increasing earnings and maintaining risk levels. Mailing 6% of the year's total card solicitations, the client booked 10% of new accounts — an impressive ratio.

A history of marketing success

Each year, Fair, Isaac manages 16,000 marketing campaigns, and 4 billion of our scores drive prescreen solicitations. Currently, more than 100 customers trust Fair, Isaac marketing solutions to improve bottom-line results.

A large credit card issuer using Fair, Isaac marketing technology, for example, enjoyed a 57% higher response rate than the 2001 industry average (see Figure 2). The issuer was able to achieve this increased response rate while maintaining a high portfolio credit quality. In addition, incremental earnings from these new accounts totaled $180 million through the end of 2002.

"Fair, Isaac marketing solutions leverage the same expertise used to build our industry-standard risk solutions, such as the FICO score and TRIAD," adds Howe. "With five decades of experience, we are the only company to offer the technical breadth of superior analytics, solid data management and flexible campaign execution."

For more information, contact your Fair, Isaac representative or email info@fairisaac.com.