The Top 5 Ways Insurance Companies can “Insure” the Best Results with Data & Analytics

It’s no secret…Insurance companies have a wealth of data and have historically used data to minimize risk and run their business.  According to Forrester Research, insurance firms are sitting on more structured, semi-structured, and unstructured data than any other industry.

Whether it’s for life, home, or auto, insurance companies recognize the value of data.  However, the more data, the more complicated it can be to analyze it and yield effective marketing results.  With so many different options to pursue from a marketing perspective, one can easily become overwhelmed in selecting the best approach.¹

Here are the top 5 ways insurance companies can effectively use predictive and analyzed data to optimize marketing success.

1. Aim For Growth

Identify and aggressively pursue high potential prospects to maximize your marketing dollars. An effective approach is to create an Acquisition Clone Model (aka “Look-Alike” model) which ranks prospects based on their probability of looking similar to current best customers. By leveraging current policyholder data along with demographic, lifestyle, and purchase behavior data to understand which characteristics predict profitability, the model focuses on targeting the highest value prospects yielding the most effective use of marketing dollars and achieving higher response rate. Whether it’s a list of prospects collected or a third party list that is purchased, the Acquisition Clone Model helps insurance firms attract the right prospects.

2. Uncover New Opportunities

Reach current and future policyholders during important life events and transition periods. By proactively using life stage and trigger data, insurance companies can successfully upsell and cross-sell new insurance products improving customer lifetime value. The key lies in identifying and targeting with relevant messages when someone is having a life change event such as moving, going to college and living off-campus, getting married, having children or a changing financial situation. Highly personalized mailings based on life stage triggers can produce up to 10 times higher response rates when compared to traditional campaigns. With the right data, right message, and right channel, insurance companies can target and acquire the right policyholders.

3. Boost Customer Retention

Gain rich insights into your policyholders and understand what they value most to improve the customer experience, drive retention and loyalty and enable personalization. Analyzing your customer base to identify fiercely loyal vs. passively loyal policyholders as well as at risk and underinsured policyholders requires the right data insights from a combination of various data points such as demographic, lifestyle, behavioral, and attitudinal dimensions. Understanding policyholders on a multi-dimensional level is a critical foundation for tailoring brand experiences that attract, engage and motivate customers. Industry experts agree that segmenting customers based on attitudes and behaviors in addition to demographics is far more effective in tailoring value propositions and customer decision journeys than purely demographic variables alone.

4. Reduce Churn

Understand which policyholders are at risk and are more likely to leave. Creating a predictive Churn Model to understand why customers leave and how to predict at risk policyholders is an excellent approach to address customer attrition. By using information about policyholders such as demographic data, policy-related data (e.g., insurance lines, number of policies in the household, tenure, premiums, insured cars, etc.), claims, complaints, and other relevant information (e.g., sentiment score for past surveys), insurance companies can identify those customers at risk and determine if they want to proactively retain them. Given the potential long duration for a typical policyholder—especially for home insurance—retaining valuable customers equates to a higher life time value.

5. Maximize Digital Presence

Occupy space online and have a presence. Today’s consumers use multiple channels when researching insurance-related products, with online being the channel of choice during the initial stage of consideration. As consumers are researching insurance options, it is critical for insurance providers to have a multi-channel presence to engage with potential new prospects through online marketing, including social sites, email deployments, paid advertising, and digital display advertising. Real-time access to online activity allows marketers to react to their customer’s buying signals, providing a better overall experience.

As customers’ expectations of insurance providers shift and consumers’ lifestyle and behaviors change, the insurance firms who implement more customer-focused strategies across a broader range of channels, including digital, to meet evolving expectations will be the winners. Weaving customer analytics into the fabric of your business is a journey, which will be different for each firm. Allant can help insurance companies navigate the changing landscape by using data and analytics to predict and minimize risk and deliver a more personalized customer experience. Our solutions address the full customer lifecycle—acquisition, growth, retention, and winback.

¹Forrester Research’s Global Business Technographics Data and Analytics Survey, 2016