Behind the scenes - A tool to help you predict future customer behaviour

AFG 4 April 2022 3:53:37 PM

Sometimes, we can become so focused on getting customers in the front door, we miss the ones wandering out the side exit. This ‘churn’ can be a significant cost to busy brokers like you.

This is why AFG undertook a definitive review of customer communications and how SMART affects retention.

The importance of customer communications

This insightful and data led review inspired a new enhanced Red Alerts machine learning model which we successfully rolled out for all SMART members in December last year.

The model processes hundreds of thousands of data points across the entire broker data set and uses that insight against individual broker and customer data to then predict and identify which loans are at the highest risk of discharging in the next 6 months. Recently, you may have seen an increase in the number of Red Alerts raised as a result.

We also used the data to look at the differences between broker churn for those with and without SMART and those using and not using the Red Alerts automated emails. Being top of mind and having a clear and consistent communications program with customers after they are onboard will make a significant difference for the average broker.

So, what did we uncover?

We looked at over 3000 brokers’ data and 420,000 loan accounts and the findings were quite an eye opener.

For brokers not using SMART and Red Alerts, on average, they retained only 15% of customers who discharged a loan apply for another loan. In practical terms – 85% of customers never came back after their first experience.
For Brokers using SMART and Red Alerts they retained 32% of customers who discharged a loan apply for another loan.
Simply put – a structured communications strategy doubles retention and increases your repeat business by 17% points

Using Machine Learning to predict the future

SMART puts Artificial Intelligence (AI) into action for brokers. It does this by making them more efficient in the process by anticipating their customers’ evolving needs.

Traditional email automation based on fixed triggers works well in some situations but using it in combination with predictive analytics is cutting edge technology for brokers.

The result is not only improved broker efficiency, but better service for customers, who will receive an almost serendipitous contact from their broker right at the moment they are likely to be thinking about new options.

The system is now able to predict not only who is likely to change their loan arrangements, but it also suggests why. For example, a new homeowner looking for their next property or an existing price conscious homeowner looking for a better rate.

So, what does a Red Alert look like?

As a SMART broker, a Red Alert campaign gives you a list in FLEX each month of customers who are likely to discharge their loan and could take their business elsewhere.

In simple terms it finds the customers and hands them to you!

Turning data into insight - developing more meaningful conversations with your customers

How does the process for a Red Alert work? A change in your customer’s circumstances that may trigger their need to discharge their loan will result in them being added to a priority list. If you’re part of the email component of the campaign, your customers will then receive a mid-month email from you, offering information on a range of alternative solutions (known as the “Next Best Action”). We’ll let you know how you can opt out specific contacts before the email is sent

It is important to note that the system is designed to fine tune the service you provide your customers, not replace them.

It means you can be more efficient as the system brings the customers you should be focusing on to the forefront and allows you to anticipate their evolving needs. Put simply, it gives you context and a hint at what the best next conversation to have with your customers, well beyond the initial settlement of their home loan.

What has changed?

SMART Red Alerts will now:

Include a comment in FLEX to explain the main reason for the customer being picked up as a Red Alert, and
Red Alert email campaigns include customised wording that ensure your customer receives the right information for their circumstance.

These circumstances include:

Fixed rate expiry
Balance changes
Term expiry
High net worth
Construction loan communications
Life stage communications
Price consciousness
Other

You can find out more information about the SMART Red Alert email wording here.

Brokers using SMART and Red Alerts retain 2x more customers

Red Alerts Machine learning algorithm uses 120+ data points from over 420,000 loan accounts
Most recently, 75,000 loans that discharged in the six months to 30 Sep 2021 were analysed
On average, for AFG brokers not using SMART, only 15% of customers who discharge a loan apply for another loan with the same broker within 3 months
For brokers using SMART Red Alerts, this jumps to an average of 32% (2.2x higher than the baseline)

Looking for more information?

If you’d like to learn more about Red Alerts, please reach out to your Partnership Manager who will be happy to help.

Further resources you can read: