SPSS - UK Customers

Standard Life

Matching customers to mortgage products for more efficient marketing

The situation

Standard Life is one of the world's leading mutual financial services companies. Its mutual status is a key factor in its success. Mutuality brings many benefits, the chief one being that there are no shareholders to satisfy – only customers. All the firm's actions are therefore driven by the need to benefit them. The Standard Life group includes the Standard Life Assurance Company, Standard Life Bank, Standard Life Healthcare and Standard Life Investments.

The challenge

Standard Life Bank launched its Freestyle Mortgage product in January 1999 with extensive TV and press advertising campaigns. Soon afterwards, a number of similar products appeared from rival providers, so it became essential that Standard Life Bank could both consolidate and continue to expand its share of the mortgage market. To achieve these aims the company had to:

Identify the key attributes of clients attracted to the mortgage offer
Cross-sell Standard Life Bank products to the clients of other Standard Life companies
Develop a re-mortgage model that could be deployed on the group Web site
Examine the profitability of the mortgage business being accepted by Standard Life Bank.

A major part of the project was to develop models that could identify the customer characteristics that were relevant to particular mortgage products. Donald MacDonald, customer data analyst at Standard Life explains: "Our vision was to increase both the speed at which we build our models and the sophistication of those same models. This ultimately leads to improved customer communications as well as greater returns on the bottom line."

The solution

With IBM SPSS Modeler* data mining software from SPSS Inc., Standard Life can undertake a growing number of projects. With the aid of IBM SPSS Modeler, the company’s analysts were able to build a propensity model for the re-mortgage offer that showed the types of clients attracted to this product. This model is easily portable and applicable to other client databases.

Using the propensity models, a re-mortgage mailing campaign was planned and executed by the Customer Data Analysis team in conjunction with Standard Life Bank. The model allowed the bank to focus its efforts on the best prospects for the re-mortgage product, and create scores for each customer. These scores enabled them to achieve more targeted direct mail and to score prospects with similar characteristics who were visiting its Web site. The mailing also included a randomly selected control group.

The effective targeting of our outbound communications achieved through data mining consistently produces significant cost savings for the company. I can honestly say that IBM SPSS Modeler has already paid for itself many times over…
Donald MacDonald
Customer Data Analyst
Standard Life

The results

Overall, Standard Life's data mining enabled it to better understand the characteristics of its mortgage clients so that it could more accurately search for potential new clients. Also, the bank now has the capability to profile incoming prospects quickly, and personalise their Web experiences accordingly. As a result of its data mining efforts, Standard Life:

Built a propensity model for the Standard Life Bank mortgage offer to identify key customer types. The model can also be applied across the whole group prospect pool
Discovered the key drivers for those purchasing a re‑mortgage product
Achieved a nine times greater response with the model than was achieved by the control group
Secured £ 33 million (approx. $47 million) worth of mortgage application revenue.

Donald MacDonald sums up a highly successful project by explaining: "The effective targeting of our outbound communications achieved through data mining consistently produces significant cost savings for the company. I can honestly say that IBM SPSS Modeler has already paid for itself many times over, and will continue to do so for many years to come."

Interested in identifying customers’ characteristics? Download the Standard Life PDF here.

*IBM SPSS Modeler, formerly called Clementine®, is part of SPSS Inc.’s Predictive Analytics Software portfolio.