Why Pricing, data & customer segmentation are relevant for insurance (partly Dutch). Lessons shared from retailers and how insurers would benefit if they applied (some of) them

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Verzekeringen / Insurance
Pricing, data & customer segmentation

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32 jaar geleden:

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Maar eigenlijk heeft iedereen een beetje verstand van verzekeringen ...

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Uitspraken van klanten waarvoor ik werk
De meest gewaardeerde omnichannel ... retailer van
Nederland, en daarbuiten…
Het aanbieden van een naadloze, gepersonaliseerde
gebruikerservaring bij elke interactie om een
vertrouwensrelatie op te bouwen
"Omnichannel is gewoon de klant goed bedienen“

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Why retailers are an interesting breed
At the forefront:
• Interacting daily with clients
• Feel impact from internet,
mobile and social
• Other trends such as P2P,
global
• Pressure on prices & offerings
• Increased pace
Trying to find solutions
• Especially in non-food
• Omnichannel solutions
• Customer focus
• Use of data
• Personalization
• Mobile

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Source: March 10, 2014, “The Future Of
Business Is Digital” Forrester report and
Forrester/Russell Reynolds 2014 Digital
Business Online Survey

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Todays topics
PriceTrends (Big) Data

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EMPOWERED CUSTOMERS ARE
CHANGING THE RULES

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Marlies Dekkers, Block Electrostore, Schoenenreus, Free Record Shop, OAD Reizen,
Icentre, Piet Kerkhof, EXPO, De Harense Smid, House of Shoes, Polare, Siebel
Store closures

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IPHONE 1: 2007 IPAD 1: 2010
Mobile

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Every day 1.3 million
visitors, 300.000 new ads
8+ million ads on
marktplaats.nl
C2C

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P2P

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Real estate

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€$
£
Run Better
€$
£
Sell More Stuff
€$
£
Buy Better,
Turn It Faster

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Community Commerce
Content
Context
CustomerCustomer
It’s not what you want to sell,
but what/when/where/how consumers want to buy

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https://www.youtube.com/watch?v=D5G7xDrVT5Y

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Todays topics
PriceTrends (Big) Data

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Type Volume Value
Volunteered
Observed
Inferred
Source: Personal Data: The Emergence of a New Asset Class” World Economic Forum 2011

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Purchase History
/ Product Affinity
Attitudes & Preferences
Credit & Loyalty
Accounts
Geographics
& Demographics
Channel
Interactions
The challenge is to integrate the “right” customer information
to create a holistic customer view

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Age + Income + Geography
Preferred Product Categories
Modeled time to next purchase
CTP Customer
Use of In-House Credit Card
Facebook Page Engagement
Return / Exchange Behavior
Breadth of Categories Shopped
Length of Time as Customer Recency + Frequency + Value
Response to Media
Gift Registry User
Annual Spend Level
Annual Transactions
Econometric: Real-estate & Unemployment
Most segmentation approaches
only focus here:

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Preferred Product
Categories
Preferred Channel
Participation in
Loyalty Program
Use of Credit Card
Use of Service Programs
Return/Exchange Behavior
Breadth of
Categories Shopped
Length of Time
as Customer
Recency + Frequency
+ Value
Response to Media
Time until Repurchase
in Key Categories
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Example: “Brand Fanatics”
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Marketing Call to Action – RMI 37:1
EMOTIONAL BENEFIT: Sports enthusiast
BRAND PROMISE: Latest & Greatest, Multiple Sports Category Breadth and Depth
CUSTOMER AWARENESS: Loyalty promo, new product releases, direct mail and email
TOUCH POINTS: Multi-Channel, In-store and on web
UNIQUE IDEA: ‘Co-Branded Credit Card Promotion’
PRE-STORE: Mobile, Blogs, Social Networks
IN-STORE: Mobile applications and shopping aids, services merchandise together
POST-STORE: Online, loyalty program mailings and emails
Strongest Loyalty: Over 85% are part of loyalty program
89% have shopped over 5 categories
91% have been customers for 7+ years
Almost no new customers in <3 years
70% are due to purchase within 60 days
60% are using a private label credit card, 30% exclusively for all purchases
Highest Return on Marketing scores
9% of customers 30% revenue

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Increase response rates10-50%
increase
Improve customer
retention, loyalty & value
5-15%
increase
Lower customer
acquisition costs
Reduce marketing cycle time
& increase efficiency
40-80%
reduction
20-40%
reduction
Increase productivity/
campaign volume
50-300%
increase
Implementing personalization analytics delivers improved results
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•® 113% lift in email open rates
285% lift in banner response rates
Increased number of campaigns 30x
Reward Zone membership doubled in
3 months
Campaign prep time reduced from 3
weeks to 1 week
Cost-per-conversion decreased
nearly 80%
Marketing staff costs reduced 35%
20-75%
reduction
Reduce campaign &
marketing costs

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Todays topics
PriceTrends (Big) Data

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Five most important things to shoppers
The five most important things to shoppers making purchases both in-store and
online, in order, are:
• Price consistency across shopping channels,
• The ability to ship out-of-stock items directly to home,
• The option to track the status of an order,
• Consistent product assortment across channels, and
• The ability to return online purchases to the store.
http://www.cnbc.com/id/101320824

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"An insurer provides high value to us as customers when they
• Anticipate changes
• One step ahead
• Plan well ahead
• Better foresight
• New solutions
• Modify their products and services
• Pick up clues to changes
• Unflustered or unstressed by changes
• Look forward to some of the changes
Source: IBM Institute for Business Value 2012 Insurance survey

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Competitive positioning through comparison model: Price Zones model
Hyper Channel
Competitor 1
CPI=100
Store North Competitor 2
CPI=99
Superstore North Competitor 2
CPI=97
Store South Competitor 3
CPI=98
Superstore South
Competitor 4
CPI=98
The structure of
comparison will be
adapted dynamically to
the competitive
landscape changes
The structure of
comparison will be
adapted dynamically to
the competitive
landscape changes
Category
Roles
Competitive
Price Index
Prize
Zones

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Retailers Are Learning That They Can’t Compete Solely On Price
35%
44%
41%
38%
40%
28%
48%
52%
8%
23%
25%
28%
31%
42%
44%
48%
53%
Raise the barriers to entry for competitors
Develop better products and services through more…
Switch our company from primarily traditional…
Become more focused on our company's brand…
New marketing channels enable us to truly…
Turn customers into brand advocates through social…
Use digital channels to drive traffic to stores
A greater focus on customer experience, less on product
Top 3 Marketing Opportunities
2013 2012
N/A
Source: RSR Research, August 2013

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“The last best experience that a customer has
today will become the baseline expectation for
everyone going forward”
Paul Papas

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PUT YOUR CUSTOMERS AT THE HEART OF EVERYTHING YOU DO
Keep a close eye on prices, but focus on data and data analytics

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Thank you!
Jerry J. Stam MBA MsC LLM
Senior Managing Consultant
Jerry.Stam@nl.ibm.com
+31651285639
@ibm_retail_nl
nl.linkedin.com/in/jerrystam

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"Amazon's Retail Revolution - Business Boomers - BBC “
http://youtu.be/6UhrIEUjtwI