By James Burton, senior director of insurance product management, LexisNexis Risk Solutions UK & I
Marketing of insurance services to individuals with appropriate products and messages at the right time takes a huge amount of skill. Effective marketing is heavily dependent on good customer data management and achieving asingle customer view. This can be a big challenge for insurance providers when you consider policy switching, the volume of policies over a lifetime and the life events that drive these changes. However, patented linking and matching technology and a unique identifier to create one true customer record is now paving the way to more targeted and impactful marketing activity for the insurance sector.
The insurance marketer’s efforts to accurately segment customer databases have often been thwarted by the volume of policy switching in personal lines insurance. LexisNexis Risk Solutions analysis of the UK market has identified that on average over the past 5 years, close to a third (32%) of people switched their motor insurance[i].
Add to this, high levels of merger and acquisition activity[ii], the challenge of legacy systems in the insurance market and the fact that data is often stored in disparate customer databases across an insurance brand. This can all contribute to consumer data becoming outdated, incorrect and inconsistent. It is easy to see how the same customer could appear several times across a single or separate database within one insurance group. Linking and deduplicating the various records won’t be helped by the fact that one individual might appear with different names or addresses due to input errors, a home move or change in marital status.
Poor customer data management not only risks lost cross-sell and upsell opportunities, wastes precious marketing budgets, but it can also present challenges around fraud and pricing accuracy, and can lead to negative customer experiences. This is all against a backdrop of changing consumer expectations and risks created by the pandemic and as the insurance market faces major pricing reforms[iii] that will almost certainly influence their customer acquisition and retention strategies.
An additional challenge insurance providers face is the lack of interaction with the customer during the policy term. Research by Consumer Intelligence[iv] found home and car insurance providers only interact with consumers once or twice a year. If you don’t engage with customers, it’s difficult to build a relationship with them, understand their needs and influence their choice to stay or go at point of renewal. The decision then often comes down to price.
The good news is that the door is already open to greater engagement according to a study by Collinson Group[v]. This found that as long as insurance providers make their marketing activity timely and relevant, their customers will generally be receptive to more communication.
Responding to these dynamics demands a clear understanding of existing customers based on accurate, consolidated data pulled from every part of the business – in other words – the single customer view. This can help ensure that the products and services being marketed are appropriate for the risk presented and, just as critically, that the marketing communications and tactics occur at the right times in the policy lifecycle.
The single customer view is no longer a pipe dream for insurance marketing professionals. The technology now exists to pull data together from multiple customer touch points using patented linking and clustering methods. Common threads are found between records using a wide range of external data sets including public records and market-wide insurance policy history data. Records with commonalities are linked together and assigned the same unique identifier.
The result is one ‘golden’ record is created for each customer that is a consolidated view of every contact or policy the insurance provider has had with that individual – this then becomes the basis for all future communications.
This single customer view puts marketers in a stronger position to segment customer databases, plan campaigns and communicate relevant products and services. Over time, the picture of the individual can be enhanced as more data is accumulated. For example, data enrichment processes could identify when a customer is about to change cars, when their MOT is overdue, or when a storm threatens their region and property, opening up communication opportunities. Marketers will also be able to see when customers have multiple policies within the same group so they could be offered a packaged multi-product.
The real advantage of this approach is that it’s not just the marketing function that benefits, the whole insurance business benefits but most importantly so does the consumer, through personalised products, tailored communications and a more streamlined customer experience. Linking and matching customer data using LexID® a unique identifier can help all parts of the insurance market gain more value from the vast volumes of customer data held across their business, helping to ensure the right products are marketed to the right customers at the right time.