Credit Limit Assignment
Balancing Each Customer's Opportunity and Risk
Limits Drive Profitability
HIGHER LIMITS BOOST ACQUISITION, ACTIVATION
Some customers find higher suggested credit limits very attractive. This can lower acquisition CPAs and lift activation rates. Both are crucial in modeling program profitability.
HIGHER LIMITS ALSO INCREASE CREDIT RISK
The increased exposure to individual accounts naturally raises the average loss amount when accounts go bad. The question is whether the added risk is safely more than offset by added revenues.
PRICING DRIVES REVENUES, ADDS BALANCES
Product pricing influences usage and behavior. Lower rates can lead to higher revolving balances and better retention. Together these can help offset higher levels of risk.
Determining what impact credit limits have on your business requires detailed analysis relying on a complete set of time-series data. Do you have this foundational requirement for success?
Methodical but quick, our structured approach will deliver the answers you need
Do you have the data you need? Is it complete and reliable? How well do you understand what you have?
Asking the right questions guides the work to the right answers for each product and customer segment
Performing detailed analysis settles on an approach that delivers a method to assign limits
Early on we consider how the 'answer' will be used to speed implementation and ease of use
Credit Limits Drive Profitability
And Vice Versa
It's Not A Game
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