Date:         Thu, 24 Dec 1998 10:39:13 GMT
Reply-To:     Clive Granger <cliveg@IHUG.CO.NZ>
Sender:       "SAS(r) Discussion" <SAS-L@UGA.CC.UGA.EDU>
From:         Clive Granger <cliveg@IHUG.CO.NZ>
Organization: The Internet Group Ltd
Subject:      Credit Card Segmentation (a very exiting topic if I say so myself)

Dear SASers,
 
This is not strictly a SAS language query.  However I know there are people
reading this Newsgroup who use SAS to analyse business data and (more
specifically) segment credit card  databases.
 
My specific query concerns segmenting credit card usage behaviour into
Transactors, Revolvers or Dormant.   The common perception is that around
30% of cards are Transactors (for those interested but unfamiliar with the
terms,  a credit card transactor always pays the outstanding balance on the
card each month, so therefore never pays any interest; a Revolver, on the
other hand, pays the minimum payment due and then gets charged interest on
the 'revolving' balance; Dormant is self evident).
 
Of course there are pure Transactors as there are pure Revolvers (poor
sods). Most cards seem to fit into grey areas though, or exibit
transactor/revolver/dormant behaviour throughout the year.
 
The hard definition of usage spans only one month (ie. cycle) but this is
pretty useless for marketing. You can't select an account for a
re-activation campaign because it was Dormant last month.  I keep telling
the marketing guys, "why worry about labels.  Segment on the income an
account pays.  You quickly find under half your base gives you over 90% of
your income."  But the desire to know Revolvers from Transactors persists.
 
 
I have a definition based on a rolling quarter (3 months).
If the account revolved in any one or more cycles during the 3 months then
the account  is Revolving.
If the account did not revolve, then it either Transacted or was Dormant.
If the last Retail Purchase or last Cash advance was within 90 days then
the account is transacting, otherwise the the account is dormant.
If there is not 3 months of history then the account is New (ie. cannot
determine the usage).
 
I know this is not ideal.  An account that makes one purchase in 90 days
could be defined as a Transactor, but card holders  are so damned
inconsistant in their behaviour! :-)
 
However, this definition does give me 44% revolvers who contribute 94% of
total interest income over the year.  25% transactors contributing around
4% of interest income and the rest divided up between New and Dormant
accounts.
 
Do you have any thoughts on this subject? If so I would like to hear them.
 
Thanks,
Clive
ps. Not Dr. Clive Granger, that's someone else who somehow got hold of my
name.
CPG.