2008 was an exciting year for insurance companies in Massachusetts: Governor Deval Patrick introduced a new “managed competition” plan designed to entice new insurers to enter the market. Before, an insurance commissioner set all auto insurance rates for state residents, but under the new system, insurers could submit rate applications to the commissioner for review. For consumers, the change meant potentially lower rates and more choices, but for insurance companies it meant increased competition and the specter of higher attrition as once-loyal customers shopped around.
“In 2008, we saw that there was going to be a change in atmosphere,” says Rob Roche, cross-sell manager, marketing, for MetLife Auto and Home. “Deregulation was going into effect, so we saw Massachusetts as being an area where we had to pay more attention to the retention of our current customer base.”
So in January of 2008, MetLife launched a multipart retention campaign, based around reminding customers of the value of their insurance products.
“Massachusetts is a large part of our book of business, so we just needed to go in to our ex
isting customers to speak to them and let them know how great our products were,” Roche explains.
Throughout the year, MetLife sent postcards, a custom publication and letters to existing customers in Massachusetts, playing up their best-in-class auto policy and its various features and benefits.
A key part of this outreach effort was segmentation. The pieces sent out to the Massachusetts market were segmented by the length of the customer relationship, the channel through which they bought their policies, the products they had and their profitability. Control groups, which received nothing, were used to measure the success of the program.
After the year-long campaign, MetLife saw a lift in retention of about .87% among those Massachusetts customers who had received the letters (not the control groups).
“In our business, that’s really good,” Roche says. “Traditional companies have retention between 80 and 90%, so if you can get a lift of one point, that’s great. Our usual goal is a quarter point lift, which covers the cost of a marketing campaign.”
The strategy used so successfully in Massachusetts was the product of MetLife’s recent national CRM-boosting efforts. The insurer has only had an active CRM strategy, based on an Equifax-managed database, for the last four or five years, so the intense customer segmentation used in Massachusetts is fairly new to the company as a whole.
“We took all of the learning from the last few years nationally and just applied that to Massachusetts,” explains Bob Lundgren, VP of marketing, MetLife Auto and Home.
And Roche adds that the company realized they could save money and be more effective by mailing in a certain way. “The only reason we could do that was because we had all the statistics from running a CRM program nationwide,” he explains. “We had all the data and the pools to quickly do analysis and see what would work, and we would not have been able to do that without an active national program.”
It was only in 2006 that MetLife started parsing out its national customer base into different groups, starting with tenure: customers of less than one year, those with 2-6 years with MetLife, and loyal customers of more than 6 years. Other segmentation areas include profitability — how many and what type of policy — and, most recently added, life stage, separating mature customers from younger families.
“You can’t send a 24-year-old the same kind of CRM material that you’re sending to a 64-year-old,” Lundgren explains. “So the message has been tailored, and the next test is how well we can lift response rates based on life stage segmentation.”
MetLife tends to cater to what Roche calls a “more preferred market” — slightly older than competitors (at a mean age of 46) and with higher value homes. But with 1.8 million customer households nationwide, multiple customer profiles are inevitable.
“The tricky thing,” adds Lundgren, “is that we segment by tenure and profitability and also by the way that customer wants to buy because independent agents have a much closer relationship with customers than we do.”
That means that, when MetLife is mailing to independent agent customers, it has to create collateral on behalf of the local agent. Institutional customers get different collateral that is directly from MetLife.
More recently, data analytics and segmentation have also come into play at the MetLife call centers. Here, the insurer has taken a proactive, retention-focused approach to callers, who have a retention ratio four points lower than that of non-callers.
“Callers have a lower retention rate not because the service is bad, but because something has happened in their life that makes them call, that creates some sort of shopping point for them,” Lundgren says.
MetLife has started analyzing calls to identify when traditionally loyal customers come in, and note when they indicate they may change insurers. If the policy looks like it’s in trouble, the company will go in with a proactive retention program of mailings and phone calls. Preferred customers are even offered policy reviews with service representatives, which Lundgren says strengthens the relationship and also allows the rep to dig deeper into possible problems.
Best customers also receive a custom magazine, MetLife, Your Life. The magazine had existed for a while, but, like much of MetLife’s marketing collateral, it has become more tailored for different customer segments. Younger customers, for example, may receive an issue with features on rental insurance and the importance of covering their electronics, while older customers will be shown articles on protecting their assets or travel insurance.
While the Massachusetts market may have calmed down a bit, MetLife is pressing ahead there and nationwide. The company’s next big focus, marketing-wise, is to develop better responses to individuals in the call center and improve identification of red flags from loyal customers.
“Retention is the biggest challenge,” Roche says. “Especially in this economic environment, people are looking to get the best value possible, and we just have to make sure that we are there when they are out looking. The more you can stay actively involved with the customer in this economic environment, the much better off you are.”