Insurance is typically a grudge purchase, and as a result insurance organisations experience high volumes of customer churn, says Gary Allemann, MD, Master Data Management.

Customers are looking for the best price and the best service, and are more than willing to switch providers if it will give them a better deal. The Internet has fuelled this trend further, empowering consumers by providing unprecedented access to greater volumes of information than ever before, making pricing more transparent and product differentiation far more difficult.

In a changing market, insurance companies need to adapt their marketing strategy to remain competitive. Today, this means embracing the potential value of big data to improve customer engagement, enhance product development in line with customer needs and thus help to attract and retain customers for decreased churn and improved profitability.

Historically, insurance companies have operated through the services of brokers who act as intermediaries between the organisation and clients. Thus, in the past there has been more value in developing relationships with brokers than with the end customers, and reliance on the broker to bring in the end customer.

This has led to product-focussed siloes developing within insurance organisations – each department and product division operates in isolation without internal engagement. However, the evolution and growth of the Internet has changed this dynamic and made this model redundant.

Customers are now better educated than ever thanks to the Internet, and are empowered to easily find and compare quotes from a variety of different insurers, enabling them to choose the best deal for them. This has made insurance products more difficult to differentiate and has also made pricing far more transparent.

The broker still plays an important role, as people still buy from people. However, remaining competitive requires a complete shift in focus from product, where differentiation is difficult, to the customer, where targeted services and solutions can make all the difference.

This is not simply a matter of throwing hundreds of thousands of rands at a marketing strategy that attempts to engage with, attract and retain customers. Success requires the use of intelligence and accurate, complete data. The insurer that has the best understanding of their customer, based on this data, will be able to differentiate by offering that customer exactly what he or she needs at the best possible price.

Leveraging available information and unlocking the potential value of big data through data quality and analytics initiatives can assist insurers to improve engagement and retention strategies and target products, solutions and services more accurately for increased returns.

Insurance organisations have access to a wealth of information, from policy documents and claims to product usage patterns, social media behaviour, browsing history and more. Ensuring that structured data is accurate and of the highest quality, and then leveraging analytics that incorporates the ability to harness unstructured and big data sources, provides a powerhouse of information for improved marketing efforts.

Furthermore, statistical analytics can also help insurers to predict customer churn, enabling them to intervene and attempt to retain the customer.

In addition, leveraging the power of available data has additional benefits. It can help insurers to improve risk management, as accurate and complete information provides the ability to more accurately assess risk and provide more competitive pricing. This in turn helps to retain and attract new customers who are looking for a better deal.

Data can also be used to improve the customer experience by tailoring marketing and interaction efforts around who the customer is, how they prefer to deal with insurers, what their requirements are and more. Using analytics tools, changing requirements can also be anticipated and product offerings tailored to meet these needs, further enhancing the customer experience.

Developing an accurate and comprehensive understanding of the customer is essential to competitiveness in a connected and engaged market. However, obtaining this understanding requires a great deal of sophistication. The customer of today is always on the move. They may change jobs (and contact details) every few years. Their shopping behaviours will change too.

As they move through different life stages, their needs and requirements shift. Each of these changes must be captured and incorporated into the customer model in order to ensure that insurers stay ahead of the competition. Quality data and the ability to unlock the value of big data sources are critical in achieving this, helping insurers to customise their marketing and solution efforts, engage customers on their terms and maintain competitive edge.