CASE STUDY - In-depth Customer Insight: A Winning Go-to-Market Advantage for a Leading Insurance Company
By Mark Smith, Executive Vice President, Portrait Software
The Issue: Falling Profits, Flagging Loyalty
A large insurance industry icon, which we’ll call “LIII,” needed to develop a strategy and process that would enable it to retain customers and minimize risk over an extended period of time. A project team was assembled to evaluate the company’s general insurance value chain. It quickly determined that LIII’s marketing and sales had fallen short in creating a truly compelling customer experience.
The company recognized that it had a fragmented view of the customer. However, a better and deeper understanding of its customers would not only foster a deeper and more intelligent engagement but would also positively affect the company and improve its bottom line. The company possessed volumes of information about its customers but had no process in place, nor did it have a comprehensive way to cull the information necessary to enable segmentation of its customer base. Without the capability to look at the individual customer, LIII would continue to spend money, perhaps unnecessarily, by targeting the wrong people at the wrong time. This lack of insight had several negative implications, including customer dissatisfaction, increased risk, and faster attrition.
The team embarked on a mission to develop an internal customer insight capability and supporting technology infrastructure.
Insight for Incremental Revenue
In order to gain the desired depth of insight, the team made key technology infrastructure improvements, including the addition of Uplift modeling as an extension of the existing Quadstone Customer Analytics solution (an analytics product from Portrait Software for segmenting and profiling customer data).
Their two main objectives for refining the targeting approach were to remove the negative effects associated with the retention programs and to identify customers who renew only because they are contacted.
Portrait Uplift modeling was applied to business processes and systems to enable insight into the individual customer and to provide information that helped the company target its direct marketing to only those customers who would respond positively (not just those who were likely to respond, which could include “negative” responses). The ability to quickly infuse innovative analytics into the business processes resulted in tremendous cost savings and increased the view into the customer base.
Stellar Retention Results
LIII estimates that by applying this approach early to a single retention campaign, the full cost of implementing Uplift modeling will produce a 152% return on investment within the first year. The technique is applicable to a range of retention and acquisition campaigns.
Increased marketing ROI was achieved by implementing Uplift modeling and resulted in the following:
- Reduced contact volumes
- Increased retention rate or maintenance at a lower cost
- Reduced missed opportunity costs
- Increased customer satisfaction by eliminating counterproductive calls
Throughout the course of developing the consumer insight solution, the company experienced several analytical breakthroughs:
- Reduced number of customers wanting to cancel
- Improved direct mail cost per sale (CPS) and ROI
- Improved door-drops CPS and ROI
- Identified best time and way to approach ex-customers or not-taken-up-quote
- Identified cross-media dynamics of response (online and offline)
- Geographical analysis to identify best selling practice and share
Flexibility and Long-Term Sustainability Pays High Dividends
The customer insight solution, based on technology from Portrait, was designed to help the organization quickly adapt to changing market conditions and business requirements. The company built both intelligence and flexibility into the solution to enable quick analyses of customer behaviors and on-the-fly modification of offers. The company initially considered a five-year timeframe when embarking on the solution. However, LIII has established a solution that is easily repeatable and extendable across all customer campaigns, based upon its inherent ability to reevaluate customer interactions within its business processes quickly and with the benefit of analytics. This has had significant impact on the organization’s marketing profitability and the ability to deliver highly focused and targeted customer campaigns linked to customer needs.