Perhaps the most powerful contribution that decision sciences can play is the ability to continually track customer behaviours in light of changes in the market, customers’ personal circumstances or in response to changes in the wider economy.
It’s perhaps not surprising that many organisations struggle to make sense of the vast quantities of customer data that they now capture. As well as presenting a storage and compliance challenge, these valuable insights can, if interpreted correctly, unlock real competitive advantage for the provider.
The key is to transform data streams into real customer insight and then apply business processes to unlock added-value opportunities and new business.
In retail banking and general insurance many have heard the virtues of decisions science extolled. Largely as the application of advanced analytics has automated and optimised customer relationships, driving greater returns from customer management, the supply chain and even product development.
Why then is the protection market one step behind its peers and what can it do to catch up?
There are four key considerations:
Capture the right data
It is important that any business decisions are based on solid, reliable and useful data. Fortunately the protection market has an abundance of information but it must focus on the useful elements and put processes in place to gather more vital data that might be lacking.
An absence of information means that decisions are less reliable. It also adds cost and wasted time which result from the multiple customer interactions that could have been avoided.
See the wood for the trees
Once you have the information you have to understand the patterns and trends that are locked within the data. Finding these insights is of course more complex than it appears. Put simply, it requires an investment in time to compose the right questions that cause the data to reveal its secrets. Frequently this means the composition of sophisticated statistical techniques and bespoke algorithms.
Close the loop and inform the business
The benefits of decision science are only felt when this insight is used to shape the way products and services are marketed, priced and delivered. Smart use of information can improve many aspects of the way a provider delivers service:
· Customer segmentation
- Customers with a greater propensity to take up protection can be identified and triggers can be isolated so that sales and marketing activity becomes much more effective
- Key customer segments, with measurable lifetime value can be isolated. In this way groups who represent the more attractive risk, based on a wide range of factors such as age and gender, postcode, occupation, existing covers and family status, can be identified
- Once you know which customer groups consume which products and respond to which triggers it becomes a lot easier to develop the channels that can reach and influence them – for example intermediaries versus direct routes
- This can even provide insight at a personal level. Segment A responds to direct mail and not text but segment B prefers telephone interactions? No problem, just refine the campaign accordingly
- Data greatly improves a provider’s ability to identify adjacent white labelling opportunities. A wide range of companies customer insights’ can unlock even richer interactions, risk profiling and propensity segmentation.
Watch and learn
The ability to capture, refine and harness data is one of the most strategic levers a provider has. Used correctly it can help understand, pre-empt and respond to customer needs and provide real competitive advantage.
Stuart Hayman is senior business consultant at Vertex.