The Marketing Challenge

The marketing of insurance products goes far beyond the Product, Placement, Price and Promotion that are common to other industries. A key difference can be found in what an insurer considers a customer and therefore what the insurer considers a marketing target. For some insurers, their customer is the business that employs the people whose life or health the insurer protects. For others, it is the individuals and households that the insurer pursues. Yet for other carriers, the agents who sell and distribute insurance products are the more important target.

Distribution Differences

Like other industries, insurers must manage product distribution through a variety of channels. For insurers, those channels include direct writers, captive agencies, and independent intermediaries. The methods used for product distribution also bring its own marketing challenges. For example, independent agents are typically viewed as having ownership of the customer relationship and any direct marketing to the agent’s clients by the insurer is generally frowned upon. This contrasts sharply with the customer ownership perspective of direct writers and captive agency forces. In those cases, the insurance company owns the relationship and is free to market their products to the customer as they see fit.

Because of these differences, the methods used to attract and retain customers in each of these marketing models are somewhat different, however one commonality exists: Predictive analytics can be employed to improve marketing results.

Acquisition Expense

Most insurers would agree that the cost of acquiring a new customer requires somewhere between 18 months and 5 years to recover. It is also understood that business that contracts that have been on the books for a year or more tend to be more profitable than contracts that are in their first year. Therefore, the reduction in customer acquisition costs without a reduction in new customer volume should be a priority. Likewise, retaining existing, profitable customers should also be a priority.  Predictive analytics plays a significant role in improving these aspects of the business.

The Valen Solution for Marketing

Through the use of predictive analytics, Valen creates models that predict which potential customers are most likely to respond to product offers. Rather than sending offers to every target on a mailing list, insurers can focus their efforts on the targets that are most likely to respond and avoid spending money on prospects that are never going to respond.

Valen’s predictive analytics can also help identify which of your existing customers are most likely to allow their policies to lapse thereby giving you an opportunity to reach out and proactively attempt to retain valuable business.

Powerful But Cost-Effective

Most target marketing solutions involve the purchase of expensive software to build response models. Valen eliminates this cost. We build the models using your data combined with our own ValenNetworks™ historical risk data and our XData^® warehouse of econometric, demographic and firmographic information. We then provide access to model results either in batch or in real-time as your needs dictate. We provide cost-effective access to the benefits of predictive analytics. The end result is improved customer retention, higher campaign response rates and lower marketing expenses.