Freemans Grattan spreads risk from marketing

FGH, part of the world’s largest mail order company Otto Group, is expanding its use of KXEN analytics to bad debt propensity scoring. It is forecasting a reduction in bad debt of up to a third as a result.

“We’d used KXEN successfully in marketing for three years and saw no reason to consider a different solution for credit risk modeling,” said FGH head of customer management Andy Bryan. “The target was to improve our ability to predict which customers would default. The new KXEN scorecard has significantly improved our authorisation process and retrospective analysis suggests we can cut debt by as much as 33 per cent with only a 3 per cent lower acceptance rate for credit.”

FGH has 1.5 million customers and sales of over £250 million. One of its key selling points is the availability of credit to consumers who are unable to get it through other sources. The new approach to risk analytics will use customer data at a granular level combined with external information.

“We’re still accepting a similar number of credit orders. The big difference is that now we’re accepting more orders from good customers and fewer from bad customers. That’s because with KXEN we’re able to use things we know about how customers have managed their accounts with us in the past, rather than having to rely on a single external score,” said Bryan. “It also means that our long-standing customers who have built up a level of trust with our brands are being treated fairly.”

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