Vision 2014: Driving Profitable Growth Through Emerging Consumer and Commercial Customers

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This session will share how Experian is helping DirecTV acquire more profitable customers by focusing on under served consumers and untapped commercial markets.

Text of Vision 2014: Driving Profitable Growth Through Emerging Consumer and Commercial Customers

  • 1.2014 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public. Driving profitable growth through emerging consumer and commercial customers Ben Arnold DIRECTV Paul DeSaulniers Experian #vision2014 Sung Park Experian

2. 22014 Experian Information Solutions, Inc. All rights reserved. Experian Public. G = R fP ne fl fi fe L G = number of advanced civilizations R = The birth rate stars like our Sun ne = number of planets like Earth per planetary system fl = The fraction of the Earthlike planets supporting life fi = The fraction of lifesupporting planets where intelligent life develops fc = The fraction of planets with intelligent life that are capable of interstellar communication L = Lifespan of such civilizations Accuracy of estimation The probability of a star supporting this type of civilization is 3,333,333,333 to 1! Dr. Frank Drake Astronomer, astrophysicist, founder of SETI Drake equation estimates number of civilizations capable of interstellar communication in galaxy 3. 32014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Girlfriend equation estimates the chances of finding true love in OC! G = ? Potential girlfriends Population 3,055,745 3,055,745 Female % 56% 1,711,217 Accuracy of estimation The probability of finding a girlfriend in O.C. is 161,878 to 1! Age 28-50 27% 462,029 Masters degree 5% 23,101 Single 50% 11,551 I find attractive 50% 5,775 Finds me attractive 10% 578 Likelihood of meeting 5% 29 Subtract my relatives 10 19 4. 42014 Experian Information Solutions, Inc. All rights reserved. Experian Public. 0% 2% 4% 6% 8% 10% 12% 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 % of applicant 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 % of applicant Accuracy of estimation No information: Cannot assess risk Oldest trade = 10 years Lower risk but imprecise Oldest trade = 10 years Current trades = 5 Lower risk more precise 0% 5% 10% 15% 20% 25% 30% 35% 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 % of applicant Assess the risk of a new applicant for credit or services 5. 52014 Experian Information Solutions, Inc. All rights reserved. Experian Public. DIRECTV Challenges and opportunities of evolving markets Extended ViewSM Providing credit risk insights of underserved consumer markets Allscore Custom commercial risk solution to score every business inquiry DIRECTV Implementation and results Agenda 6. 62014 Experian Information Solutions, Inc. All rights reserved. Experian Public. DIRECTV Expanding market needs 7. 72014 Experian Information Solutions, Inc. All rights reserved. Experian Public. DIRECTV overview Note: All numbers reflect estimated 2013 Y/E performance DIRECTV Revenues: $32.8B SKY Brasil (93% owned) Subscribers: 5.4M PanAmericana (100% owned) Subscribers: 6.3M SKY Mexico (41% owned) Subscribers: 6.1M (Not consolidated) DIRECTV Latin America Subscribers: 17.8M Revenues: $6.8B Game Show Network 42% owned (Not consolidated) Sports Networks Subscribers: 5.9M Net Revenues: $0.2B DIRECTV U.S. Subscribers: 20.2M Revenues: $24.7B DIRECTV is the worlds largest pay TV provider with over 37 million subscribers 8. 82014 Experian Information Solutions, Inc. All rights reserved. Experian Public. 20142010 The increasing breadth of competition has transformed the Pay TV market 2005 Most of these new and disruptive services are complements to Pay TV; however, there is a small but growing cohort of consumers replacing Pay TV with these services Source: No Pay TV Analysis , April 2013 9. 92014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Over the same time period, Pay TV penetration has plateaued 2013 85% 2012 85% 2011 86% 2007 86% 2006 85% 2005 84% 2010 86% 2009 88% 2008 87% Overall Pay TV Penetration Percent Source: SNL Kagan 10. 102014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Rising SAC adds pressure to incremental gross adds decisions 2007 2008 2009 2010 2011 2012 2013 Avg. SAC per Sub $692 $715 $712 $796 $813 $859 $873 $- $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 USDs($) Average Subscriber Aquisition Cost per Sub 11. 112014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Residential 1M 1.5M unique applications per month Results in 300k 400k gross activations per month Fee/no fee decision based on credit Very few fee customers activate Pre-extended view ~10% of applications were no hit All charged a fee Very low activation rate Who walks through the door 12. 122014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Commercial Only for specific business segments (public, private, and business viewing) If hit at Experian no fee is charged, regardless of score ~35% of applications were no hit Activation rate falls by half when fee is charged Who walks through the door 13. 132014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Experian solutions for emerging markets Extended ViewSM for consumer 14. 142014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Approximately 34 million U.S. households 68 million people are financially underserved The underserved population Source: FDIC 2011 Household Survey Banked 86 million 72% Underbanked 24 million 20% Unbanked 10 million 8% Total underserved (% of U.S. households): 28% Percentage of ethnic groups who are underserved 55% Black 48% Hispanic 41% American Indians 20% White 19% Asian 15. 152014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Underserved doesnt necessarily mean lower incomes Underserved income distribution 28% 12% 5% 2% 0.50% 22% 26% 23% 19% 14% Less than $15,000 $15,000-$30,000 $30,000-$50,000 $50,000-$75,000 At least $75,000 Underserved households by income Underbanked Unbanked Source: FDIC 2011 Household Survey 16. 162014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Built from: Premier AttributesSM Rental data Full file public records Score range 400-990 The higher the score the more creditworthy the consumer 1214 month performance window Extended ViewSM Score No hit to bureau No trades on bureau (inquiry and/or public record only) External collection trades only Less than five open or closed trades on bureau No open trades with updates in the last six months Untapped! FCRA compliant credit score designed to assess the creditworthiness of underserved consumers who have limited or no traditional credit history 17. 172014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Population distribution No credit trades Thin file: External collection only Thin file: Stale credit; no trades reported in six months Thin file: four or less credit trades Full file: five or more credit trades 82% 8% 3% 6% 1% 18. 182014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Extended ViewSM Score Risk levels Prime 30% Subprime 70% 82% 6% 8% 1% 3% 30% of the underserved population will perform as prime credit consumers 19. 192014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Retail Point-of-sale Utilities Auto Telecommunications, energy and cable Bank card How are clients using this tool today? 20. 202014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Experian solutions for emerging markets Allscore for commercial risk assessment 21. 212014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Established businesses have business credit and commercial credit score Emerging business credit risk lacking or non-existent Creditor challenge how to accurate assess commercial risk? Deposit assessment decreases acceptance Experian solution: Allscore score every commercial inquiry! Customized scoring solution using Traditional business credit bureau attributes Geographic risk of client portfolio Geographic risk of all businesses in U.S. Cannot be used for declination! Allscore background 22. 222014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Allscore background Client portfolio Bad rate by 5-digit ZipTM Number of businesses ZipTM 12347 Bad rate 7% ZipTM 12343 Bad rate 4% ZipTM 12344 Bad rate 6% ZipTM 12346 Bad rate 4% ZipTM 12345 Bad rate 5% 23. 232014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Allscore background Client portfolio Bad rate by 5-digit ZipTM Number of businesses Client portfolio Zip CodeTM 12345 and 12346 have enough businesses ZipTM 12347 Bad rate 7% ZipTM 12343 Bad rate 4% ZipTM 12344 Bad rate 6% ZipTM 12346 Bad rate 4% ZipTM 12345 Bad rate 5% 24. 242014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Allscore background Client portfolio Bad rate by 5-digit ZipTM Number of businesses Client portfolio Zip CodeTM 12345 and 12346 have enough businesses Client portfolio Zip CodesTM without enough businesses get bad rate for the SCF = 3 digit ZipTM of 5.2% ZipTM 123 Bad rate 5.2% ZipTM 123 Bad rate 5.2% ZipTM 123 Bad rate 5.2% ZipTM 12346 Bad rate 4% ZipTM 12345 Bad rate 5% 25. 252014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Logistic regression modeling method New geo-risk attributes Attributes based on geographic location 5 digit ZipTM, SCF (ZipTM 3), CBSA Core Based Statistical Area, state, population Risk of client portfolios commercial customers by geography Allscore model development methodology Geographic risk stabilized by business