Auren Hoffman, the CEO of Rapleaf, talked about “Personalization.”  His 65-person company with $15M in funding has data on more than 1.3 Billion email addresses that it provides to its customers to help increase relevance and reduce spam.  This has become technologically possible at low cost due to essentially free open source software in data centers.  Whereas it used to be difficult to process just a few variables in a customer database, now one can analyze hundreds just by loading up more servers with that free software. 

Mr. Hoffman made a good point about customers not wanting to have to re-enter data when they have called for service.  It seems that service representatives always start at the beginning.  If I ask:  “Why don’t you look at everything I spent the last 5 minutes keying in?” the answer is invariably “I don’t have access to that screen.”  Not that I can do anything about it, but I’m glad someone in the industry is focused on this problem.  I spent months arguing off and on with an outsourced collection agent for Piedmont Hospital over a $90 payment due.  I could see my 4 accounts online (no idea why I have 4), all totaling to $0.  The collection agent could only see one account that showed a $90 balance.  I even sent over screen shots and confirmed directly with the hospital by telephone.  As best I could tell, Piedmont eventually came up a new $90 charge to make all this go away and pay the collector!

Hoffman also said there is more attention being made to match callers with service agents who are most like themselves in terms of age, ethnicity, etc.  The trust level certainly goes up.  (This provides a straight line for all kinds of possible jokes, but I wish not to offend.)

However, the major theme of this presentation was that companies are shifting more resources toward learning about their current customers than trying to learn about new ones.  The dollars spent on retention gets a better return than on acquisition, and Mr. Hoffman cited Amazon as being particularly good at this.  It’s pretty obvious that your best customer is the one you already have and not the one you’re looking for, but applying some science to this is good business for Rapleaf.

Ken Lin, the CEO of Credit Karma, then talked about his business that has developed a very successful “lead gen” revenue model.  Around since 2008 with now $3M in funding, this company has 2.6 Million members and is adding organically about 125K per month. 

I encourage you to take a look at this site.  It gives you a free credit check from TransUnion, and it provides a simulator that uses your data to show how different actions might move your score up or down.  You are then presented credit offers that match your circumstances and where you are more likely to approved.

Mr. Lin said it costs financial institutions $20-50 to acquire a lead and $3-10 to underwrite that lead, yet decline rates can be as high as 80%.  There is no good way to get a return on the cost because the customer is probably insulted and won’t come back.  (Picture this in a car finance setting where the customer has made a brand decision but is sent elsewhere because of marginal credit.)  Credit Karma is trying to soften this negative by offering a suite of online tools and guidance to show the consumer how to achieve the score necessary to get that car or credit card of his or her dreams.

Both these companies are good examples of applying technology to more personalized marketing.  And, though they are based in San Francisco with all the right investors, they’re not out on the cutting edge of the Consumer Internet.  They’re dealing with the basic pocketbook issues of taking care of your customers.

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