Calculating Marketing Costs

Now from an accuracy point of view, credit based data (or soft inquiry data) is timely since you can make a good part of your lending decisions based on the information provided in a credit report. Credit Bureaus offer a soft inquiry file that from what I have seen, converts better than any other database on the market.

However, the cost associated with true credit based data can reach up to 25, 35 or 40 cents a record. Is it worth the price?

The analytics of cost really come into play here - let's look at the mean retail value of both databases:

9 cent modeled Court House Data

Mortgagor Credit Data

Something to notice are the fixed cost of mailers and cost of telemarketing not including data (print and mail) ($.30-$1.00). Hourly callers pay $12 x 5 hours per shift or $60 per day). This equates to $300 per week, $1,200+ per month excluding revenue sharing commissions to telemarketers.

Since we are working with credit based data and modeled data, let us assume that the credit based data will conservatively convert 25% more qualified mortgagors than the modeled data. In other words, 25% more respondents will be qualified with the credit bureau data conservatively because it is scored to fit your loan programs.

Additionally, the Credit bureau database is more accurate so we can assume that it conservatively converts 20% more callers. What does this combined effect of more conversions and more qualified mortgagors do to the overall response on a 5,000 piece mailer and 2 week calling program?

Assume a conservative 1% call in rate for the modeled data and 1.2% (20% more) for the EQ data. Assume 10% closing ratio for modeled data and 12.5 (25% more) for the credit based data.

Read More Financial Marketing News