By Daniel Rubin and Thea M. Crelin
It’s the million-dollar question that can save many insurance firms a bundle, and yet it starts so small: If you had just one dollar to spend on marketing, where would that dollar go?
The question gains value each year. As insurers expand their offerings to include more types of coverage and investment options, so do their opportunities to bundle their services among clients to generate low-cost organic growth. The challenge is in precisely identifying the characteristics of the best customers to determine which services are the correct fit for each, and when.
Siftingfor these characteristics requires reliable data analytics, but insurers should also know what to look for. These five essential customer characteristics, detectable through data insights, enable insurers to anticipate and address the services their customers will need as they navigate their busy lives. The first two help to establish segmentation and prioritization; the final two firm up what to know about the customer to establish much-required relevance.
Consider them mutually dependent of each other.
1. Customer Behavior
It's a straightforward step, but it’s disproportionately crucial because all else balances on the accuracy of the data. How the customer interacts with an insurance company today represents the lion’s share of predicting what the customer will want or need tomorrow. Information ranges from policy terms and portfolios to engagement habits, such as whether the customer logs on to your website and completes online forms. This information will reveal patterns in activity and events that indicate potential growth, such as extending policies to new family members. Behavior can also be predicted by examining the policy owner’s digital footprint (more on that below). Resist the urge to latch onto predictable stereotypes. A family of five with a combined income of $250,000 might include contributions from a grandparent who moved in to help with childcare (or a grown child who moved in to care for an aging parent). Don't underestimate the wealth of knowledge that can be yielded from even small, unheralded activities. Many unexpected insights can be gleaned from the purchase of an insurance policy for a 2016 Toyota minivan, for example.
2. Household Composition and Life Stage
The turning points of our lives, such as buying a house and building a family, reveal much about who we are and what we need. When babies arrive, parents think about more than cribs and bottles. If it’s baby number one, health coverage policy expansion jumps to the top of the list. They might also consider buying life insurance or increasing the value of their existing policy. Once more, try to avoid assumptions. If the household just acquired a minivan, don't deduce it’s because a child is on the way; it may be to accommodate a family member in a wheelchair. If the minivan isused to shuttle kids around, expect there’s a chance the female head of household isn't necessarily doing the driving. A stay-at-home husband (or a grandparent who’s come to help out) may pilot the van, while she drives an SUV to her demanding executive job. In a few years, when the kids enter school, the stay-at-home husband might take a part-time job or add a home office over the garage, requiring added homeowner’s insurance. The kids, meanwhile, are getting their driving permits.
These pivotal factors about life stage and household composition can largely be gathered through the self-reported data provided through customer behavior. Still, it leaves a lot out. To fill in the gaps, insurers can purchase category-specific spending data from third parties. The combined sets of data may reveal the customer likes DIY projects and scuba diving, as well as the need for a used minivan.
3. Digital Data Footprints
A wide range of data activities can be combined to reveal more about a customer’s preferences and behaviors. Think of all the data we automatically submit digitally in our daily lives: website visits, click throughs, steps taken, calories consumed, routes driven, places visited, discounts redeemed and opinions lodged. By leveraging all this newly available data you can compose a customer profile that just a few years ago was invisible.
4. Interests and Attitudes
Drill deeper into life stages, household composition and the family’s digital footprint and you will unearth the activities and pastimes for which the customer makes special time. He may be a single professional whose mother helps out with the kids, but he may still like taking cross-country motorcycle trips. Or she may be part of a same-sex couple, and her partner prefers antiquing and collecting rare cookie jars. Interests and attitudeselevate the customer into a warm human being and therefore enable you to tailor communications and offers that resonate more meaningfully. If someone in the household goes on motorcycle trips, you not only have the opportunity to talk about supplemental insurance, but can also partner with a hotel chain to offer discounts on rooms. Knowledge of interests and attitudes helps tighten the conversation and make it more intimate—just remember the customer’s mindset continually changes through the journey.
5. Geographic Influences
Lastly, all of these characteristics are shaped by where customers spend their days. The needs of those who live in the suburbs differ from those in urban areas. Residents of North Dakota encounter far different challenges than those in Florida, where ice dams are more likely to conjure images of frozen desserts than roof damage. Zoom further into the map and zip codes reveal whether the customer lives in a blue-collar neighborhood, a gated community or on farmland. This matters a lot. A three-generational family in the suburbs will likely have more space, and therefore different insurance needs, than a family in the city (unless the family lives on Manhattan’s Park Avenue). Also, imagery matters: An apartment dweller won't likely respond to a mailer featuring a picture of a farm house, and a rural client likely won’t identify with images of concrete skyscrapers.
These five characteristics combined provide the million-dollar answer for relating to insurance customers at a level that is genuine and long lasting. It takes reliable data collection, but also the sophistication to know which data to collect, either from in-house sources or a third party. But it’s the best first dollar you can spend on marketing. When the customer believes you “get” him or her, that you understand their buying journeys and anticipate their needs, they will want you in the passenger seat—whether they’re driving an SUV, a van or a motorcycle.