Credit Where Credit’s Due

What if you could offer instant credit to a customer as she is placing an order? You’d already know if she meets your credit standards and how much she should be approved for – and she likely would increase the size of her order in the process.

That’s part of the service Bozeman, Mont.-based Zoot provides to retailers like Cabela’s. The two companies’ relationship began 10 years ago during the development of a solution to pre-screen customers for credit via the telephone channel.

Cabela’s then began using the Zoot service to provide credit offers through the e-commerce and store channels. As a result of using this service, Cabela’s financial subsidiary, World’s Foremost Bank, doubled its credit card applications without any corresponding increase in staffing.

“Zoot’s decisioning and loan-origination solutions have helped us achieve significant efficiencies internally, while managing risk effectively,” says Joe Friebe, CEO of World’s Foremost Bank.

Zoot is able to evaluate a customer’s creditworthiness without the customer’s permission as a transaction is being initiated; all it requires is the customer’s name and address. “A credit offer can be made within the context of the call so that it appears seamless,” says Eric Lindeen, marketing director for Zoot. “Most retailers can have us do a credit evaluation between the pages of their script. If a customer passes, they can make an immediate offer.”

Zoot passes along the name and address of the customer to the credit bureaus, which provide an instant credit score. Using the credit standards set by the retailer, Zoot can determine whether to approve a credit account, and at what limit. Some retailers start with a low credit limit and increase it as they get to know the customer better, Lindeen says, while others will start out with the full amount they believe the customer is capable of paying off.

Retailers can get significant lifts in sales as the result of the offers, he says. In some cases, customers will purchase more knowing they have an additional line of credit. Regardless, being able to offer instant credit provides retailers with a competitive advantage.

Click for credit
Some retailers use the service only at their call centers; others utilize it on e-commerce sites, as well. In the latter case, the retailer can perform an instant credit check as soon as the initial order page is sent. When it’s time to complete the payment page, the retailer can ask the customer if she wants to use the retailer’s proprietary credit card or another line of credit. The customer wouldn’t have to fill out an application; she could merely click to accept the offer.

“Few retailers can give real-time credit,” Lindeen says. “By using the pre-screening program, customers could put their purchases right on the credit card without taking additional steps. And retailers could only make the offer to those who are pre-approved, so there is no risk of promoting a credit card to a customer and then not approving the application.”

Most retailers using Zoot see acceptance rates of 5 to 20 percent, Lindeen says. Retailers that offer credit applications without pre-approval typically see only about 1 percent of customers apply.

Zoot also provides a hosted credit approval system that can be integrated into call center scripts and e-commerce shopping carts.