Increasing competition, skyrocketing costs, changing demographics, the proliferation of Internet options and more demanding consumers have resulted in a dramatically different competitive environment for the insurance marketer. Now, the pressure is on for insurers to grow their businesses in new and different ways.
While it can be difficult to compete with the lower prices that direct insurers and the Internet offer, agent-based insurers can sustain and increase profitability by targeting their marketing efforts to current policyholders – finding ways to maximize each customer relationship through cross-selling.
Empowering your agents with knowledge. Retention and upselling should be an integral part of any insurance marketer’s strategy because the lifetime value of one policyholder can translate into premium volume for insurance providers. It’s no secret, however, that most insurance companies allow individual agents to control marketing efforts to the current customer base.
For agents to make the most informed decisions about whom to target with new offerings, corporate insurance marketers would do well by their agents to take a hard look at the collective customer base of the company.
By profiling, analyzing and segmenting the customer base, insurance marketers gain insight into specific customer segments – why each segment initially purchased coverage, the insurance needs of each segment, and how these needs result in cross-selling opportunities. This perspective empowers agents with more actionable knowledge that will enable more targeted in-force sales efforts.
Existing policyholder database as
key resource. To implement this type of cross-selling and upselling strategy, insurance marketers must first maximize the existing policyholder database. This critical information source holds not only the basic name and address information necessary for targeting current customers, but also maintains valuable information such as:
• Amount of premium payment.
• Age of policy.
• Age of policyholder when issued.
• Method of payment, (bank draft, direct bill, payroll deduction).
• Type of policy.
• Number of riders on policy.
The policyholder database may also contain information on ex-policyholders, which can prove to be of great value to insurance marketers. Based on this information, models can be created to help determine when customers are most likely to lapse. By running this model against current policyholder records, marketers can identify potential attrition segments and develop programs targeted to their needs before any revenue is lost.
Thoroughly understanding policyholders. To maximize profitability, additional data must be secured to identify other areas of opportunity within the customer base. By working with an established information provider, insurance marketers can verify the information on the existing policyholder database and append more detailed information to existing files. Static data that does not change, such as gender and birth date, can be stored once it’s collected and verified, which allows the marketer to focus on capturing other data elements including:
• Estimated household income/wealth indicators/net worth.
• Education level.
• Investment patterns.
• Household size and makeup (age ranges and number of children in home, etc.).
• Home ownership/length of time in home.
• Rural/urban status.
• Aggregate value of vehicles in household.
• Automotive and home insurance expiration dates.
• Identification of new homeowners or recent births.
• Identification of recently married individuals.
With this comprehensive data profile, an insurance marketer can combine the new enhanced data with existing customer information and segment the policy base into more accurate clusters – gaining a more detailed understanding of policyholders. As a result, the marketer can begin to develop cross-selling strategies for each unique cluster and then encourage agents to implement and maximize these strategies.
Customize offers for maximum profitability. In addition to segmenting the customer base and marketing to each individual segment, an insurance marketer might use appended life-event data to customize offers to individual policyholders based on life stage or life event. For example, by appending information that will help identify recent births or the purchase of a new home, corporate marketers arm their agents with valuable data with which to customize messages and offers for cross-selling.
To prosper in this competitive environment, insurance marketers must focus on retaining profitable customers and cross-selling additional services to maximize policyholders’ lifetime value. By having a good understanding of the collective policyholder database, insurance marketers will provide their agent forces with valuable knowledge that results in increased profits.
Sue Wilson is vice president of sales at Experian, Orange, CA, an information solutions provider.