FGH (UK) Using Analytics for Credit Risk

Freemans Grattan Holdings (FGH, the UK arm of Otto Group, the world’s largest mail order group and the second largest retailer on the Internet) has deployed KXEN analytics in its credit risk team after three years of using the solution in marketing. With bad-debt-propensity scoring that relies on internal customer data as well as third party information, FGH is set to reduce customer debt by as much as one-third, according to predictions.

“We’d used KXEN successfully in marketing for three years and saw no reason to consider a different solution for credit risk modeling,” says 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 authorization process and retrospective analysis suggests we can cut debt by as much as 33% with only a 3% lower acceptance rate for credit.”

Combining three of the biggest names in the UK home shopping market, FGH holds a dominant position with some 1.5 million customers and sales of more than £250 million in its last financial year. Its customers come from all age groups and many of them are fiercely loyal, having shopped with FGH for years. The availability of credit to people who are unable to get it through other sources is a key USP.

“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,” says Andy Bryan. “It also means that our long-standing customers who have built up a level of trust with our brands are being treated fairly.”

“Now we can be much more granular in our approach to credit scoring. We have a better way of making decisions and a better way of limiting our exposure,” says Andy Bryan. “It’s having a major impact on debt but only a minor impact on overall sales.”

About KXEN
KXEN, with headquarters in San Francisco and offices in other US cities plus Paris and London, calls itself "The Data Mining Automation Company," delivering Customer Lifecycle Analytics solutions for CRM lifecycle analytics to drive improvements in customer acquisition, retention, cross-sell and risk applications. KXEN’s solutions are based on patented innovations and have been deployed at over 400 customers including Bank of America, Barclays, Cox Communications, Lowe’s, Meredith Corporation, Overstock.com, Rogers, Vodafone, and Wells Fargo.