Tag Archives: segmentation

Are Your Customers Like Berliners?

Soon after the Soviet Union erected the Berlin Wall, President Kennedy uttered the now-famous words, “Ich bin ein Berliner” (I am a Berliner). Initially, this was a statement aimed at the Russians that was intended to show Western resolve. Over the years, however, it has become adopted by Berliners as a statement of individuality and freedom of expression.

During a recent holiday in Berlin, I was reminded of this famous speech by the many historical sites I visited and the people I met. Berlin feels like a city of contradictions. Hard to categorize, it feels like an individual who refuses to be neatly pigeon-holed.

Is that true for your customers, too?

We have an armory of customer insight tools at our disposal these days (from various segmentation approaches, to predictive analytics delivering real-time personalized marketing content). It’s, perhaps, too tempting to focus on what is possible, rather than what your customers actually value. How often do you find yourself thinking about your customers in terms of stable segments or predictable behaviors your models can “understand”?

In Berlin, immersing yourself in the smorgasbord of sites, entertainment, food, drink and sheer variety of people is a great tonic for that simplification. It can also help dispel a number of misconceptions that Brits like me still have about our Anglo-Saxon cousins. Here are a few apparent contradictions that struck me:

  • You can be fined for crossing the road before the “green man” is illuminated, and most people obey this rule. That plays right into my assumption that Germans are rigid rule followers, almost control freaks. But then, as you walk around Berlin, you find a widespread acceptance of graffiti everywhere. At first, it can seem scruffy and run-down, but it seems that people value this freedom of expression, this individuality.
  • Berlin has many historical sites, beautiful museums and art galleries. Indeed, much of the information from the tourist office would lead you to expect that this classic, historical city is full of affluent middle-aged Germans and other tourists appreciating the many forms of culture the city has to offer. But, in my experience, 80% of those traveling in Berlin appear to be under 30. This is a youthful and vibrant city, with more nightlife and social venues than you could fit in your itinerary.
  • The British are famous (perhaps infamous) for believing the Germans have no sense of humor. Much of the comedy I grew up watching, including Dad’s Army, plays into such stereotypes. However, anyone attending a cabaret show called “The Wyld” will find an entertaining and hysterical cocktail of comedy, dance, circus acts and risqué performances that suits all orientations.
  • Like us Brits, the Germans are not renowned for their cuisine. People could easily assume all people in Berlin eat is currywurst (which is tastier than I expected) and beer. But this most cosmopolitan of cities has quality cuisine from all over the world. I, personally, enjoyed the food at a Jamaican-European fusion restaurant that was better than any I’ve visited in the U.K.

So, what’s my point for customer insight leaders (apart from recommending a vacation in Berlin if you haven’t been)? I want to remind you to remember that your customers are individuals whose lives will be filled with apparent contradictions. Don’t be surprised and discount research or analysis that appears to contradict what you think you already know about your customers. Rather, I’d encourage being open to insights about contradictory and changing customer wants and needs.

How do you respond to this challenge? Have you managed to stay focused on the jobs your customers want to get done—without assuming you fully understand them? Have you embedded a test-and-learn norm in your marketing that keeps your approach fresh and flexible?

Please do share your tips and tricks for avoiding stereotypes as well as any insight musings you have had from your holiday. I’d love to hear them.

Capturing Hearts and Minds

This article is an excerpt from a white paper, “Capturing Hearts, Minds and Market Share: How Connected Insurers Are Improving Customer Retention.” In addition to the material covered here, the white paper includes specific recommendations on how to improve retention.

To download it, click here.

Insurers currently operate in a challenging environment. On the financial side, premiums are stagnant and interest rates low, and many cost-cutting measures have already been enacted. On the other hand, customer empowerment is growing. Customers are finding the information and offers they need to switch providers more freely than in the past – customers whom insurers can ill afford to lose.

For many carriers, the key to preserving customer relationships still lies in personal interaction, executed through traditional distribution and service models with tied agents and brokers. For some customer sets – those who strongly favor personal interaction – this business model works well. Yet a growing segment of customers, especially those 30 years old and younger, differ in some key aspects. While they still look for help and advice, they seek personal contact in the context of a holistic, omni-channel experience; they communicate and find information whenever, wherever and however they want. And even traditional customers appreciate if their agents have broader and faster access to the information and specialists they need on a case-by-case basis.

How can insurers keep – and even expand – these diverse customer sets, old and young alike? What factors drive retention and loyalty? To explore these questions, we surveyed more than 12,000 insurance customers in 24 nations about relationships with their insurers, what they perceive as valuable and in what ways they would like to interact and obtain new services going forward.

We found that while insurers understand well how to cover risks, they often fail to engage their customers on an individual basis. Even though insurance is complex, customers want to be involved, emotionally and rationally. When insurers act on this knowledge, customer share can rise.


The churn challenge

As a rule of thumb, the cost of acquiring new customers is four times that of retaining existing ones. To grow market share, insurers need new customers. But for the balance sheet, retention has a much larger impact.

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For a long time, the insurance industry did not consider this lack of trust a problem. In the highly asymmetrical pre-Internet world, there was a necessary gatekeeper to information and knowledge about risks and coverages: the insurance intermediary. For insurers, the intermediary’s trusted personal customer relationship was a guarantee of fairly reliable renewals and low customer churn – thus, keeping the most profitable customers.

The technological innovations of the digital age have altered this picture. Information asymmetry is diminishing. Although many customers still seek advice on insurance matters, the empowered digital customer does not need to rely solely on the gatekeepers of old for information. With communication being swift and ubiquitous, misinformation is quickly uncovered, leading to a steady erosion of trust, even with the personal adviser and insurer.

We have come to expect that only 43% of our survey respondents trust the insurance industry in general – a number that has stayed fairly stable since our first survey in 2007 – but only 37% trust their own insurers to a high or very high degree. Most customers are neutral, with 16% actually distrusting their providers.

As we have often seen in past studies, trust varies widely by market and culture. For example, only 12% of South Korean customers responded that they trust their insurers, compared with 26% in France, 43% in the U.S. and 51% in Mexico.

Low trust translates to high churn. Even though 93% of our respondents state that they plan to stay with their current insurers for their recently acquired coverage through 2015, almost a third came to that coverage by switching insurers. Why? Most commonly (for 41% of respondents), their old insurers couldn’t meet their changing needs (see Figure 1).

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The pattern of increasing customer empowerment and decreasing information asymmetry is continuing. New and non-traditional entrants to the insurance market are taking advantage of the opportunities of digital technologies. For example, Google recently launched an insurance comparison site for California and other regions of the U.S. This presents a real threat to both online insurers and traditional providers – not because of the comparison option itself, but because Google has collected a huge amount of information about each individual through his or her surfing habits, thus allowing better personalization and higher-value offers.

The three dimensions of retention

What do insurers need to do to increase trust and customer retention with the intent of improving both the top and bottom lines? The findings of our survey point to three courses of action:

    • Know your customers better. Customer behavior is affected by experiences and underlying psychographic factors. Insurers need to know and understand customers better, not only as target groups but as individuals. Insurers also need to get their customers involved, rationally and emotionally.
    • Offer customer value. As overused as the term is, a strong and individualized value proposition is exactly what insurers need to provide to their customers. Value is more than price; it includes many factors, including quality, brand and transparency.
    • Fully engage your customers across access points. As Millennials become a significant part of the insurance market, speed and breadth of access has begun to matter much more than in the past. Insurers need to engage their customers as widely as possible, from in-person interactions at one extreme all the way to digital interaction models such as those made possible by the Internet of Things.

Customer perception and behavior

Ever since the Internet has become a viable way to shop for goods and services, much discussion has centered on the matter of price. In theory, insurance products are easy to compare, so shouldn’t the cheapest one win out?

This view assumes that, aside from the price, all else is equal. If that were true, price would indeed be the sole tie-breaker. In reality, though, all else is never equal. Insurance is a product based on trust, for which perception matters. Perception, and thus customer behavior, is shaped by the individual customer’s attitudes and experiences. Understanding a customer on an individual basis helps a carrier tailor these experiences by communicating the “right way.”

To classify our respondents according to their attitudes, we used the same psychographic segmentation as in previous studies (see Figure 2).

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One size seldom fits all

Overall, our respondents stated that the three most important retention factors are price (63%), quality of service (61%) and past experience (33%) – leading back to the price as the main tie-breaker. Yet a closer look across segments paints a more diverse picture: For a demanding support-seeker, quality is by far the most important (74%), while a loyal quality-seeker bases his renewal intentions on past experience more strongly than any other group (43%).

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Assuming an insurer is targeting all these customer segments, it will need a diverse set of customer communication options, as each segment requires approaches tailored to its specific preferences (see Figure 3). This figure shows the five most-used insurance search options in the three segments where we are seeing the biggest shift among Millennials, who represent future customers.

The power of emotional involvement

Our data show that appropriate communication with customers sets off a positive chain reaction. First, it increased the use of that type of interaction. Customers perceived the interaction as more positive, and ultimately this increased emotional involvement with their providers – the “heart share” of our study title. Finally, emotional involvement is strongly connected to customer loyalty, so increasing involvement from medium to high had a dramatic impact on the loyalty index (see Figure 4).

What is the right way to communicate and increase involvement? As seen in Figure 3, the answer is “It depends,” so there is no one right approach for all customers. But using current technology – specifically, social media analytics – can help insurers improve involvement.

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With this tool, providers can “listen” to various online sources, understand how they are seen by customers, uncover trends and quickly tie this knowledge to specific actions. Providers can combine the findings of social media analytics with psychographic segmentation and an individual customer’s place within the segmentation; the latter gained via more traditional customer analytics. With this customer view, insurers can even go beyond the personalized knowledge their tied agents tend to have: As customer wants and needs change and they articulate it on social channels, insurers will know and can react in close to real time.

Social media analytics

Social media analytics is a set of tools that allow insurers to analyze topics and ideas that are expressed by their actual or potential customers through social media. This can be on an individual basis, or per customer group. Through social media analytics, insurers can apply predictive capabilities to determine overall or individual attitude and behavior patterns, and identify new opportunities.

This article is an excerpt from a white paper, “Capturing Hearts, Minds and Market Share: How Connected Insurers Are Improving Customer Retention.” In addition to the material covered here, the white paper includes specific recommendations on how to improve retention.

To download it, click here.

How to Remove the Roadblock for UBI

Once upon a time, the auto insurance industry relied on motor vehicle reports, drivers’ records, business addresses, financial credit reports, claims histories, policyholder-stated VIN and mileage information, etc. to make an underwriting and rating decision. This scant information provided a fuzzy picture of risk, at best, so insurers built in a pricing cushion to protect against losses and figured it all out at the end of the year.

Fast forward to today, and insurers have volumes of real-world driving data at their fingertips to inform more precise underwriting and pricing. With the proliferation of telematics devices, whether after-market or factory-installed, and mobile tracking and recording apps, we now can know where, when and how an individual vehicle is driven. We can know area and hours of operation, driving behavior, route histories, vehicle performance characteristics and much, much more. We can even re-create collisions using the data.

With data-driven usage-based insurance (UBI), we now can formulate a clear picture of driving risk and remove the guesswork. In short, we have the potential to write for a group of one, based on observable, verifiable data.

Some numbers to consider:

  • Currently nearly 30% of all commercial vehicles have some form of telematics device installed. This figure is expected to reach 70% in 2017. (C.J. Driscoll & Associates)
  • Today’s telematics devices record nearly 300 billion miles of driving data annually.
  • 94% of all small businesses report using smartphones in their businesses. (2014 AT&T-SBE Council Small Business Technology Poll)
  • Approximately 30 auto manufacturers (original equipment manufacturers, or OEMs) are busily equipping vehicles with data devices today.
  • More than 70 telematics service provider (TSP) fleet management services companies in the U.S. are equipping trucks, cars and utility vehicles with telematics.
  • More than half of small fleet managers are likely to stay with their current insurance carriers if their insurer offers UBI (Lexis Nexis’ 2015 Commercial Usage-Based Insurance Study)
  • Global sales of insurance telematics products are projected to grow at a compound annual growth rate (CAGR) of 80% from 2013-2018, and the subscriber base is expected to reach 85.5 million in 2018. (Research & Markets).

We are quickly reaching a tipping point for UBI programs that rely on data collection and analysis as the basis for a “pay how you drive” approach to auto insurance.

However, insurers looking to take advantage of this driving data face some tough questions: Where does all this data come from? How is it collected? How can different data sets be normalized? How can insurers store, analyze and manage such a huge volume of data?

The solution for insurers large and small very likely will be a telematics data clearinghouse.

Multiple Data Sources: OEMs, TSPs, Mobile Apps and More

The first problem insurers face is negotiating with 70 different TSPs and 30 OEMs for their data, which adds complexity, time and expense to the process of acquiring the driving data needed for an effective UBI program. A clearinghouse solves the problem of accessing data on millions of vehicles by aggregating data from available sources. Rather than negotiate with dozens of data suppliers, an insurance carrier merely subscribes to the clearinghouse for access to all of that data, at a single price. 

Multiple Formats: Not All Data Is the Same

With so many data sources, each using different telematics devices and software, pulling data from different types of vehicles, the aggregated data is a jumble of formats, with no two data sets the same. A clearinghouse plays a critical part in scrubbing, authenticating and normalizing this data for handoff to underwriting.

Making Big Data Digestible… One Byte at a Time

UBI represents a monstrously big IT effort for an individual insurer. With nearly 300 billion miles of driving data available, we’re talking about petabytes of data to acquire and analyze. Even the largest insurers must weigh the benefits of devoting precious IT resources to developing and running a complete UBI data collection, storage and analysis effort. In contrast, a clearinghouse is built to manage big data in a big way, delivering a clean, authenticated data set to the insurer, integrated seamlessly into the underwriting process for easy access and use.

Evolution of a Safe-Driving Scoring Standard

With access to data from millions of vehicles, a clearinghouse is also able to provide comparative analytics and calculate a fleet’s safe-driving score, the driving equivalent of a FICO financial credit score and a much more accurate predictor of risk. A complement to current driver score cards offered by many TSPs (which measure individual driving behaviors such as speeding, harsh braking and hard cornering), a fleet score factors in all drivers, as well as the vehicles they drive and the environment in which they drive. The fleet score analyzes variables including weather, time of day, road surface and traffic dynamics. An overall fleet safety score compares fleets of similar SIC codes and territories to derive an indexed score and ranking – a meaningful risk assessment and underwriting tool more powerful than anything else in use today.

Data Privacy and Protection: Permission-Based

Yet another crucial role played by a clearinghouse is data protection and privacy. Clearly, the vehicle owner owns the data generated by that vehicle in the course of a driving trip. But once it is in the UBI transaction chain, how is that data protected? Who sees it, and what is done with it? The clearinghouse serves as gatekeeper. With the consent of the vehicle owner/policyholder, the clearinghouse facilitates the secure sharing of encrypted data with the insurer, allowing the data owner to control who sees the data and why. Such protection encourages voluntary participation by vehicle owners, helping fuel the growth of UBI. 

Data Transparency and Portability: You CAN Take It with You

Data transparency and portability go hand-in-hand with data ownership. As a consent-based data sharing service, the clearinghouse offers complete transparency to the data owner. The vehicle owner knows what data is being requested and has the option of permitting or denying access. The clearinghouse allows the data owner to share his data and driving safety score with multiple insurers.

Data Clearinghouse or Data Exchange: What’s the Difference?

Aggregated driving data services are taking different forms. While all share the purpose of providing a “one-stop” storehouse of driving and vehicle data, they do not all operate in the same manner or provide the same services.

The primary distinction can be explained as an open marketplace vs. a closed system.

As an open market, a clearinghouse merely facilitates the transfer of data from vehicle owner or TSP to insurer. The insurer then underwrites a policy based on this data (and other factors the insurer deems important) and determines a policy premium. In this open system, there are no regulatory filings required; data is used in the insurer’s existing underwriting process, and the insurer retains complete control over pricing, applying credits as warranted. Furthermore, the marketplace determines the value of the data: How much is an insurer willing to pay for detailed trip histories, for example?

In contrast, an exchange uses driving and vehicle data to compute a rating and pricing recommendation for the insurer. Because the exchange is determining price, this rating system must be filed with state regulators. In this closed system, the exchange assumes the role of underwriter and pricing specialist, leaving the insurer with little room for proprietary pricing, segmentation or differentiation. The exchange controls the data and the insurance product.

Data-Driven, UBI: A Return to Profitable Auto Underwriting

UBI offers auto insurance carriers an unprecedented view of vehicle use and driving behavior. Insurers that embrace UBI and develop a data-driven underwriting and ratings process will benefit from more consistent underwriting, improved segmentation and better selection. Those that do not will likely suffer from adverse selection and an underperforming book of business.

The key to successful UBI adoption will be access to, normalization of and correct interpretation of all this data. Undoubtedly, auto insurance carriers will be hearing more about the clearinghouse concept and the pivotal role it plays in UBI.

A Wedding’s Lessons on Customer Insight

Enjoying the emotions of my second son’s wedding was the highlight of our family’s year. After the drama of the ceremony (including the comedy of a fire alarm that wouldn’t give up), we enjoyed great food at the reception, moving speeches and then the joys of drink and dancing into the wee small hours. Everyone agreed it was a great day with brilliant weather.

Reflecting on this time afterward reminded me of the importance of such events in all our lives, including the lives of our customers. Whether it is getting married, the birth of your children, moving home or even (as I’ve had the joy of experiencing) the arrival of your first grandchild, such milestones affect us all.

Does our marketing or customer insight work always reflect this? Do you target your marketing on the basis of important and appropriate trigger events in your customers’ lives?

Common practice can be to assume that the gold standard of targeted direct or digital marketing is to use logistic regression propensity models and perhaps optimization across multiple models to determine next best action. However, think for a moment about your own life. Do you feel that you walk around with a more or less permanent level of propensity to buy something? Apart from perhaps coffee, chocolate or alcohol, I suspect not.

In our lives, is it really more about “events, dear boy, events,” as former British Prime Minister Harold Macmillan quipped? Different experiences and special occasions help us to mark out the progress of our lives and trigger us to reflect on other needs and aspirations. These can be as mundane as the annual renewal cycle for home insurance or as momentous as the birth of our second child, for considering life insurance or the need for a new home. Those who an predict the timing of a trigger event will outperform those who target using any propensity model.

How long ago did you reflect on the right timing to talk with your customers? Does your customer segmentation capture the key life events that shape their thinking about new needs, where your products and services could help them?

It is perhaps also time to acknowledge that the whole concept of an apparently permanent “needs-based segmentation” is looking dated. Customers rarely have such semi-permanent needs, at least not ones that they are aware of or will consider at every point in time.

Perhaps it’s more helpful to think about the “jobs they want to get done” when the right triggers arise in their lives. Segmenting based on the jobs your products and services can help your customers to “get done easily” can be very powerful. Even more so if you can combine that behavioral analysis to predict the trigger events or actions that prompt such a job requirement.

Have you experienced this shift to thinking more about timing in your analysis and marketing targeting?

The 3 Ways to Customer Retention

While life insurance used to be one of many Americans’ most important financial assets, a host of changes—economic, social and cultural—have caused it to become a lower priority. Customers’ top two reasons: that life insurance is too expensive, and that they have other financial priorities.

Given the difficulty of acquiring new customers, it is imperative for carriers to focus on retaining existing ones. In fact, small increases in retention can translate to large revenue growth, and the payoff can be substantial.

Reaping the benefits of a thoughtful customer retention program requires a long-term vision. Carriers should consider the potential lifetime value of a customer (and the products he is likely to buy) that will allow a carrier to increase profitability—today and in the future.

LexisNexis recommends three steps on the road to an effective customer retention program:

  • Acquire customers with retention in mind
  • Develop a customer-focused communications agenda
  • Understand the customer experience
  1. Acquire customers with retention in mind

Effective customer retention begins with targeted acquisition. Carriers must understand their own capabilities, risk appetite and services and acquire customers that they can serve well. The better a customer aligns with a carrier’s profile and preferred market spaces, the greater the likelihood she will stay.

Segmentation and predictive models are key. Solutions available in the market include:

  • Risk classification models to help carriers optimize leads and identify the most profitable prospects.
  • Lookalike models to help carriers understand the characteristics of their best customers and attract similar prospects.
  • Lifetime value models to identify the potential long-term return of a prospect—enabling a carrier to identify prospects with the greatest future potential for growth and loyalty.
  • Prospect persistency to help predict whether a prospect will lapse within a given time.

In short, successful retention efforts begin well before a customer is acquired.

  1. Develop a customer-focused communications agenda

Having done the legwork to acquire a suitable customer, carriers should ensure they have a strategy for strengthening the relationship. Each customer touch point is an opportunity to do so, and these touch points should be outlined in a customer-focused agenda and communication plan.

The customer agenda defines customer touch points, such as:

  • Onboarding process. The onboarding process can set the tone for the carrier-customer relationship. For example, customers might receive a welcome note with contact information in case of questions; where to learn more about protecting their life, health and other assets; how to set up a holistic financial protection plan; and more. Carriers can tailor these communications for individuals and reinforce the company’s brand, nurturing a conversation from the very start. These communications are usually separate from a carrier’s requirement to deliver legal policy documents, but this is not to say that the delivery of legally required documents has to be stiff or un-tailored. Every step of the process is an opportunity to nurture.
  • Annual reviews. Many customers are either unaware of or confused about coverage options, so annual reviews are an ideal opportunity for the carrier to stay in touch with each customer and offer risk management advice. Annual reviews also help position the carrier as an adviser, not just a service provider. In addition, carrier support for annual reviews can help a sales team stay on top of its customers’ life changes—while also positioning each salesperson as a reliable and trusted adviser.
  • Cross-selling opportunities. Based on their understanding of each customer, carriers can identify opportunities to cross-sell additional products, such as an annuity or supplemental health product. Carriers should also consider cross- or multi-product purchases within a household—for example, for an insured’s spouse, child or parent.
  • Payment reminders and opportunities for automatic payments. Payment and premium reminder notices can trigger customers to lapse or switch providers, so managing these communications is critical to retaining customers. In addition, automatic payments can make paying life insurance premiums effortless for customers, minimizing the chance that they will lapse.

Carriers should also ensure that they maintain continuity across all channels, synchronizing their market messages across all digital and traditional communications channels including websites, print and radio ads, social media, email and direct mail.

Traditionally, carriers have minimized communications with their customers, believing that reminders about life insurance are a reminder of that customer’s mortality as well as a budgetary expense. As such, retention strategies were more focused on conserving customers who had already decided to cancel their policies, typically by offering less coverage and lower premiums.

  1. Understand the customer experience

The customer agenda outlines when and how a carrier will communicate with its customers but does not address an individual customer’s unique needs. To better understand their customers and identify these needs, carriers should supplement their internal data with external data sources and predictive models. This is one area where the life industry has much experience and has often excelled, but carriers have not been consistent in their pursuit of data for deeper customer insights. Exacerbating the issue, new sales have been harder to win, prompting carriers to focus heavily on acquisition—to the detriment of understanding current customers’ needs.

The Internet and social media channels have changed the way that customers make purchases—and insurance is no exception. Rather than turn to a carrier or agent for advice, many customers now begin with online research. This research may include the carrier’s website, as well as comparison sites and online reviews. Increasingly, it also includes social media, which allows positive and negative experiences to be reported and shared. In general, these channels limit a carrier’s control over its brand and the customer experience.

To better understand each customer’s individual needs, and how he experiences a relationship with the carrier and agent, carriers can work with a data partner to:

  • Tap into third-party data sources to gain insight on a customer’s life changes. External data can help carriers identify customers whose insurance needs might change: For example, people often reevaluate their finances when they move or purchase a new home. Armed with up-to-date mover and homeowner information, carriers and agents can contact customers and advise them on ways to mitigate risk.
  • Verify whether an insured has appropriate coverage. Customers may experience life changes and not think to update their life insurance provider. Working with a data partner, carriers can obtain up-to-date, accurate and validated wealth and asset information—to be certain each insured has appropriate coverage and affordable premiums for their means, and to offer alternatives if otherwise.
  • Use models to determine the risk of a customer leaving. Market solutions are available that can help carriers predict the risk of a client leaving, so that carriers can take action before she leaves.

With data, analytics and predictive models, carriers can identify customers with changing insurance needs and life events and respond appropriately. An effective response will address a customer’s specific needs—and, in an ideal situation, will deliver a tailored message at the right time. In addition, market solutions can enable carriers to establish event alerts that deliver automatic messages at the right time. For example, a carrier could establish an automated event notification when customers apply for a new mortgage. An automated process could send each customer a note outlining tips for buying a home, while reinforcing the value of the life insurance the customer already holds, in helping to protect the home for the family. The communication would also remind customers to update their life insurance policy within a suggested time of a new home purchase to ensure they have adequate coverage.

Automation ensures that messages are delivered efficiently, effectively and through the appropriate channel. It can also support a more cooperative carrier-agent relationship, as carriers can direct customer retention efforts while still empowering agents to connect with customers. In addition, automation better assures carriers that they are providing a consistent experience. Following each automated message, the carrier or agent should follow up with the customer to reinforce the 1:1 messaging and strengthen the relationship.

In a continued low-interest rate environment, customer retention must be a priority for a carrier to thrive. Customer acquisition encompasses a host of carrier activities, from advertising and marketing, to on-boarding, underwriting and policy issue. In life insurance, it can take seven to eight years to recoup the acquisition costs for one customer. Bain has estimated that it is six to seven times more costly to acquire a new customer than to retain an existing one.