Charging Forth: CompuCrecdit invests millions in outbound prospecting

Atlanta-based CompuCredit Corp. is tapping the $54 million raised in a recent IPO to expand its database-driven outbound telemarketing efforts.

CompuCredit has acquired close to 750,000 unsecured credit cardholders with inbound and outbound teleservices programs, says Richard W. Gilbert, chief operating officer and director. The number of new customers generated through phone and mail prospecting is about equal. This summer, online banner ads also became part of the process.

Richard R. House, Jr., chief credit officer at the three-year-old company, says his firm has “dramatically ramped up” its marketing efforts since 1998. CompuCredit mails about 3 million pieces annually (with the help of Harte-Hanks Direct Marketing and Creative Solutions) and outsources close to 70,000 hours of telemarketing monthly.

About six teleservices agencies make outbound prospecting calls to sell credit cards on behalf of the company. “Two of them do the predominant amount of calling and we’re always conducting tests with about four others,” House notes.

Four primary scripts are used as controls for testing and monitoring outbound campaigns. “We believe outsourcing is the best way to do outbound telemarketing,” says House.

Inbound calls generated with direct mail and online advertising are outsourced to Total Solutions, Inc., Columbus, GA. Besides answering inbound calls for CompuCredit, Total Solutions makes outbound teleservices collections calls for delinquent credit card accounts.

Inbound calls are typically answered in 14.4 seconds. Total Solutions also makes about 14,000 collection calls daily for CompuCredit, says Rachel Creech, marketing manager at Total Solutions.

Total Solutions uses 96 different inbound telemarketing scripts and more than 500 database variables to answer inbound customer service calls on behalf of CompuCredit, and will soon begin making outbound prospecting calls for the company as well.

Inbound reps at Total Solutions ask respondents to read their “reservation number” indicated on direct mail offers. These are used for data tracking of statistical models created by CompuCredit to select and target prospecting offers.

CompuCredit uses data from the three major credit bureaus for database modeling and creating credit scores. “We target the [subprime] market below where banks stop issuing cards,” House says.

Bank credit card issuers typically use two credit scores, while CompuCredit often uses about 20 scores to determine who will be offered a credit card, he says.

CompuCredit targets what it calls the “underserved market” which consists of about 80 million consumers who qualify for credit from retailers but typically not a bank.

These consumers tend to be in their mid-30s with a $36,000 household income; shop at stores such as J.C. Penney, Sears and Wal-Mart; and dine at chain restaurants like Red Lobster. Such consumers receive on average about five credit offers annually, compared to the U.S. average of 60, says House.

“Now we’re marketing to about 25 million consumers and conducting tests so that by the year 2000 we’ll be marketing to 35 million or 40 million consumers,” he says.

All inbound calls are routed through an interactive voice response system allowing customers to directly access the database to answer standard questions, such as amount of available credit and payment due dates.

Recorded promotions used in conjunction with IVR systems are used to promote CompuCredit’s DM club offerings, which include credit insurance, travel services and discounts on various consumer products.

Except for transferring club-related calls to CompuCredit’s customer service department, Total Solutions does no other phone work for the DM clubs. “We only cross-sell for them during the IVR pitches,” says Cliff Mason, president of Total Solutions.

“The IVR is an excellent, non-obtrusive way to pitch products,” says House. >From the second quarter of 1998 to the second quarter of this year, CompuCredit increased DM club penetration of it credit cardholders from 1% to 10%.