Study after study has shown that when customers have ongoing contact from a company they’ve purchased from, the majority of their repeat business – life insurance, annuities, disability-income insurance, long-term care insurance and mutual funds – will come from that same company.
The sentiment “Out of sight, out of mind” may sound cruel, but it’s true, and that’s why your customers may be buying from another company. If your firm’s communication is limited, only a handful of customers will come back to buy again.
Unless a customer is continually reminded of what you can do for them, you may not only be losing additional sales, you may be losing customers to the competition. Staying in touch is the most important action that companies can take to capture the continued loyalty and purchases of their customers. Nevertheless, many companies don’t have a company-wide marketing strategy in place.
In most companies that provide insurance and financial services, the primary responsibility for cross-and-repeat sales lies in the hands of field-sales representatives, with minimal support from the home-office telemarketing or corporate marketing department. While the sales force is best placed to handle certain aspects of the customer relationship, it may not make economic sense for producers to provide the same level of service to all customers. The 80-20 rule continues to ring true – 20 percent of customers are responsible for 80 percent of business. Finding and servicing the 20 percent of customers with high value is often relatively easy. But, how do you move a larger percentage of your business into a higher-valued state?
To begin, you need to establish customer value using indicators such as total premium in force, assets under management, number of contracts in force, length of time as a customer, recency of purchases and propensity to purchase. Buoyed with the knowledge of customer valuations, you can drive the higher-valued customers to producers for individualized handling. Successful producers recognize the value and are eager to pursue business where the revenue potential supports their cost of doing business.
As insurance companies migrate to a more customer-centric environment, it also is critical to recognize that customer’s preferences vary in the marketplace. Some customers expect a large element of face-to-face communication, while others are more comfortable with printed mail pieces, phone and Internet transactions or purchases. The standard approach of assigning customers to a sales representative located in a nearby office may not work for all customers or all products.
The availability of reasonably priced data warehouses and data marts to store greater amounts of information about customers’ characteristics, behavior patterns, life changes, attitudes or communications preferences is revolutionizing the field of marketing. Data is available and easily attainable to generate a DM program that can capture new revenue opportunities with existing policy holders, improve retention and add customers.
Using a set of predetermined rules, a company can decide what message each customer should receive, at what time and in what format to maximize marketing effectiveness at the lowest possible unit cost. The database becomes the marketing engine that drives customized communications via offers, brochures, newsletters, phone scripts, Web pages and e-mail messages.
A factor critical to marketing success is the periodic updating of the database with new information from all end users. This includes the field and customer service representatives. The higher the level of integration with front-end tools, the greater your ability to collect information about the customer at the point-of-touch.
The ability for all sales and service channels to access customer information in real time greatly enhances your ability to provide personal service to the customer. Today’s technology allows companies to collect, analyze and access customer information regardless of the channel the customer is using. Phone surveys completed immediately after the satisfactory completion of a service transaction can become a source of leads for the field.
A marketing database is not complete without the use of predictive models and data-mining tools to transform customer data into actionable information, such as scoring models. Over the past three years, LIMRA International has developed families of scoring models that calculate each customer’s propensity to buy, propensity to persist and relationship preference. Research becomes part of the marketing process. Models such as these can help direct your company’s marketing actions. These models can be validated and enhanced as early results of the company’s in-force marketing strategy start to generate results.
New players in the financial services industry are already approaching your markets and customers with these techniques. Many have fine-tuned them to a level that is enviable. Some will be perceived as superior service providers in their marketplace because of their ability to stay in touch using customized communications. Your existing customers are likely being contacted by new competitors. Insurance and financial services marketing has evolved to be a partnership between marketing, research, information systems and customer service – all of which should work in tandem to deliver what the customer wants, needs and expects.
Many companies already understand the need for more individualized communications driven by a technology-based solution such as a database. However, companies are often constrained by internal factors: legacy systems, lack of customer-level files and IS resource allocations. The new solution may lie in a database that can drive individualized, cost-effective communications programs that would be established offsite and managed by an outsource marketing partner, providing a turnkey database marketing program.
The right partner can help design and implement an in-force marketing program, one that is designed to capture revenue opportunities among existing customers and beneficiaries. Customized programs can be designed to meet the specific needs of each participating company, whether geared toward conserving assets or building additional sales. In-force marketing programs have multiple applications: conservation, repeat sales, cross sales, lead generation and orphan policy-holder management. Regardless of the objective of your application, the expected return on investment and the potential financial benefits should drive the scope of your program. And don’t forget the importance of a comprehensive database, the engine that will help increase sales and improve profitability.
Whether you have an existing database and need new ways to mine the information or you need a third party to develop a database, you need to analyze and convert your data into actionable information and make it an integral component of your marketing program. There are hidden responses and purchase patterns within your database that will help you determine the cost effectiveness of your sales and marketing initiatives. With the added knowledge the database provides, you’ll be able to target customers and prospects for various marketing, solicitation and lead handling that will maximize customer lifetime value and help you to build new business.