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LexisNexis Risk Solutions State of Risk Report Shows Better Marketing Practices Limit Risk for Communications and Media Service Companies

New study offers tips on how companies can best balance reach against the need to attract less risky customers

7/25/2017

ATLANTA – LexisNexis® Risk Solutions, a part of RELX Group, announced today the release of LexisNexis Risk Solutions State of Risk Series, Volume 1, ‘The Ways Communications & Media Services Companies Market Can Increase Risk to Their Business.’ This, the first in a series of four white papers, explores how communications, mobile and media industries can improve marketing practices to better target new prospects, while reducing business risk.

“The communications and media services industries face the challenge of balancing market growth through mass-marketing campaigns, with evaluating the risk that some of those new customers might not pay the bill, or might even be using someone else’s identity,” says Jim Rice, director, communications, mobile and media, at LexisNexis Risk Solutions. “The research LexisNexis Risk Solutions conducted for the State of Risk report examines the marketing and data tools which enable these companies to compete for customers with reduced business risk. We found that signing huge numbers of customers doesn’t necessarily translate to success—and can lead to significant losses. But limiting efforts to “good” prospects doesn’t work either. The good news is that these challenges are solvable.”

According to the report, three types of customer churn exist: voluntary, when a customer switches to another service or moves; involuntary, when a customer is unable to pay; and fraud, when a customer intentionally doesn’t pay. “When we look for the ideal candidate, it’s looking for the lower credit risk customer who is going to pay their bill once a month, potentially go onto auto pay and stay with us,” says a senior vice president of marketing for a broadband provider, who was quoted in the study.

Competition for these lower risk customers is fierce, so communications and media services organizations use targeted and broad marketing channels to attract them, including direct mail, digital ads, signage and TV ads. However, according to one fraud specialist quoted in the study, “When you put food out, it doesn’t mean you’re going to get one particular type of cat. You get all of the cats. And that’s basically what happens with publicly broad marketing campaigns.”

The LexisNexis Risk Solutions State of Risk report finds that sorting the good risk from the bad risk relies on communications and media services organizations having a clearer understanding of how new customers might act. Credit reports and a customer’s billing history don’t always give an accurate prediction of a customer’s future behavior. “We do a lot of modeling and look at lifetime value,” says a vice president of marketing for a wireless services provider, who was quoted in the study, “but we really need behavioral data about prospects instead of relying on our own customer data.”

The study also examines the alternative layers of data and predictive analytics that the communications and media services industry can use to better pinpoint higher value, less risky prospects. By developing more in-depth identity profiles, companies can gain an understanding of how a new customer might behave before on-boarding them. Now many more “thin file” customers, such as Millennials, are included, and communications and media services companies can increase their market share while limiting the risk to their business.

“Limiting new prospects to just those with good credit scores or a previous history of paying their bills on time isn’t the answer,” says Rice. “In such a highly competitive market, this overlooks potentially valuable customers with ‘thin file’ credit histories, such as Millennials. Communications and media services companies need to use socio-economic data and predictive modeling to target less risky customers. Currently, many of the marketing tools and data sources limit communications and media service companies’ on-boarding of these valuable customers.”

Contact Jim Rice, LexisNexis Risk Solutions, for more information at james.rice@lexisnexisrisk.com.

About LexisNexis Risk Solutions
LexisNexis Risk Solutions harnesses the power of data and advanced analytics to provide insights that help businesses and governmental entities reduce risk and improve decisions to benefit people around the globe. We provide data and technology solutions for a wide range of industries including insurance, financial services, healthcare and government. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX Group (LSE: REL/NYSE: RELX), a global provider of information and analytics for professional and business customers across industries. For more information, please visit www.risk.lexisnexis.com and www.relx.com.

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