Centex Home Equity - Predicting A Need (1,430 words)
Centex Home Equity Uses Database Marketing to Determine the Best Prospects for Its Products
By Alicia Orr
How does a provider of second mortgages and home equity loans find the right prospects for its products—people who are in need of ready cash but also will have the ability to repay? The answer is: by using smart database marketing to help it cost effectively target prospects most likely to generate profitable home equity loans.
That's the strategy Dallas-based Centex Home Equity Corp. has used to enable it to grow despite a tough year for some in the sub-prime home equity lending market. The sub-prime market segment, which offers loans to people with less-than-perfect credit or needing debt consolidation, experienced a tough year in 2000 with the demise of brands like The Money Store and First Plus Financial, to name a few.
"The reason why some of these sub-prime lenders got into trouble was because they were overly optimistic about the overall market's ability to support these loan portfolios. What our research has found is that you can't just target homeowners," says Steve Scruton, senior vice president for Marketing Information and Technology Inc. (MITI). "You have to match homeowners against other data in order to predict, or model, both a homeowner's willingness to borrow, and willingness and ability to repay."
Scruton and MITI, a leading provider of databases and database analysis software to formulate prospecting solutions, have been working with Centex for more than three years, to help it achieve a competitive advantage by creating a "strong" functional prospect database.
Building a Strong PROSPECT Database
Identifying the right prospects is the key to the success of Centex's direct-to-consumer marketing efforts, which are carried out through a direct sales unit and a network of more than 60 retail branches. (Centex also does business through mortgage brokers.)