Focus-USA Names Good Payers

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List compiler Focus-USA, Hackensack, NJ, last week introduced a new list selection aimed at helping continuity, book club and other mailers that make free-trial or "bill me'' offers target prospects with a high likelihood to pay.

Developed in conjunction with consumer reporting agency The Credit Index LLC, the Good Payer Select identifies and eliminates any names on a compiled list from Focus-USA that also appear on the 60-million record Credit Index cooperative database of direct response credit risks. The Credit Index, Mount Arlington, NJ, populates its database with names from more than 50 direct marketers that use the firm's models to reduce risk.

The Good Payer Select is expected to help credit mailers increase profitability by lowering the risk of nonpayment.

Each of Focus-USA's more than 80 mailing lists are run through a risk model in advance to produce the select, saving mailers the time and expense of modeling names themselves, said Focus-USA president Chicca D'Agostino. The firm builds its lists from a database of 95-million households, which is constructed with data from three of the four major compilers combined. The charge for the Good Payer Select starts at $25/M and drops to as low as $10/M for larger quantity orders.

While all mailers want to reach only prospects that will pay, D'Agostino said the select is not simply an added charge for a list and may not be applicable in all cases. "Mailers are always testing lists but don't know the bad-payer rate until they test it. If they test a list and the bad-payer rate is low they wouldn't want the select," she said.

D'Agostino has found an inverse relationship between response and willingness to pay and said younger prospects tend to skirt payments more than older ones.

Focus is building custom models for clients to identify good payers and score them by decile rank. Custom selects would enable a mailer to pick only the highest deciles of a list. Focus and TCI also plan to develop industry-specific models for catalog, publishing and credit card mailers.

"We're expanding the targetability of compiled lists with sophisticated modeling," D'Agostino said.

Carl Tomasello, vice president of the Credit Index, said any direct marketer that is at risk of not being paid needs a system to eliminate bad prospects, whether it be by purchasing pre-qualified lists or running lists through a purge database. TCI compiles data similar to a credit bureau but focuses on smaller-ticket purchases that are made on credit. Its clients include Doubleday Book Club, Time-Life and BMG Music.

TCI can model a list prior to a mailing or process names in real-time during the back-end order process. Audio Book Club, Boca Raton, FL, uses TCI to pre-screen its direct mail lists and to screen all its orders from other channels such as the Internet. Individual risk assessments can be returned in a matter of seconds, while batches of orders take only a few minutes. "It definitely adds to the quality of our membership base," said Jesse Faber, Audio Book Club president adding that he is unaware of any list that offers such a qualification as a select.

ABC will not process an order until the name is screened but will mail a request for further information to buyers with minor credit problems. Potential buyers are informed if they are deemed a risk and may call or write to TCI to question their payment history.

In addition to Focus-USA, TCI is working with Polk and Abacus Direct to enhance the benefits of their performance models. Tomasello said running risk models with prior history of payment data is more predictive than modeling the ability to pay using straight demographic factors such as household income or home ownership.

"We are adding another variable in their model," he said. "It's a yes or no situation. If someone was on our file in the last year, that is a strong indicator of risk. Some of these individuals may be in there once and are not really bad but just underperforming. Our job is to delineate someone who is a poor performer with someone that is a risk."

Consumers who elected to take a free-trial offer and return the merchandise may be on the TCI database and not realize it. Tomasello said if a consumer makes a return but fails to dispute a bill that comes later, the marketer of that merchandise writes them off and sends their name to TCI. Such consumers with no other nonpayment records can remove their names by contacting TCI.

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