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Case Study: Insurer Crafts Campaign by Listening to Customer Voice

Date: April, 2013 --

In this case study we’ll discuss how an insurance marketer utilized Voice of Customer (VOC) data to better understand their customer and prospect bases, and, through this exercise, better target them for upsell and/or renewal of their insurance program. We’ll demonstrate how the insurer effectively utilized the information garnered from VOC data to craft targeted sets of multi-channel campaigns utilized to communicate with the various segments of their database, and detail the outcome of these initiatives. This case study was compiled by Data Services, Inc. in cooperation with our friends at the Prescott Report.

The home mortgage security insurance company profiled in this case study seemed to have grown as much as they could. The company sells a particular type of insurance which provides warranty protection for the various major systems and appliances in the home, such as refrigerators, hot water heaters and so forth.

Most of these policies are purchased by sellers of homes as a sales incentive. Thus, the home buyer becomes the insured and the customer. However, the homebuyers tend to believe that warranty service is needed only during the first year of ownership. Home warranty insurance is not perceived as a long-term relationship. Consequently, the renewal record in this industry tends to be very low.

The company wanted to improve the renewal rate, setting as a target a 15% increase. In order to accomplish this, the company re-examined its marketing strategy with respect to renewals. They undertook “voice of the customer”, or VOC, research, a unique form of research that requires an intense listening effort and disciplined tests of marketing approaches. From this research they learned several important things about their customers, and were empowered to craft a multichannel strategy which focused on these insights.  

They first identified the three main segments of their customer base and then crafted strategies to approach these segments. Not surprisingly, the three populations were: customers who did not file a claim; customers that had filed a claim which was approved; customers who experienced a denied claim.

It was necessary to reach each of these categories in an effective, yet slightly different, manner. In short, using VOC techniques enabled them to develop a renewal strategy that was driven by the expressed needs and expectations of their three categories of customers.

But the customers did share one thing in common: They did not perceive that they had a relationship with the company. It was important to build that relationship among all three categories. The research drove them to develop a new strategy to confirm customer awareness and engagement.

Research showed that a traditional aggressive sales approach would not work, and this tactic was abandoned for a series of carefully-timed and targeted approaches for each of these segments. These promotions all focused on value creation and benefit return to the consumer for his/her $500 service contract payment.

From the insights gained they developed six new touches to establish a relationship. This was in essence a multimedia campaign.

Each touch was based on an insight into the customers’ thinking. For example, customers said they wanted to be valued and this data inspired the first campaign element, a telephoned voice message from the company's president 45 days prior to renewal. The message thanked the customer for their business, referenced the upcoming contract renewal and announced that further messaging would follow. This set the tone and laid the groundwork for subsequent communications.

Each subsequent message was built on a “VOC insight”, e.g., following the call was a high-quality letter to those who had filed an accepted warranty claim, which included a personalized summary of the benefits the insured had experienced. This was based on the insight that these customers did not fully appreciate the value of their insurance experience and thus had no reason to renew. 

For those who had not filed a claim or had one rejected there was an educational element to the letter. The next two touches over the next month highlighted the ease of renewal and the benefits of insurance. A gift card to a home improvement retailer was included as an incentive as well as a very large 6 x 11" folded communication highlighting the risks they were running by not renewing.

The penultimate touch was a telemarketing effort about two weeks before the expiration which included a monthly payment option as opposed to a single annual payment. The last touch, an email marketing campaign, came after expiration of the policy. 

Inspired by the lessons drawn from the VOC research, the total renewal effort includes: a recorded telephone call from the president, three different direct mail pieces, one personalized telesales call and one final post-expiration email communication.

What did the marketer learn? In short, listening works. From July to December 2011 the company experienced an average increase in renewals of 25.5% against the target of 15%. Results in 2012 continued to be healthy and permitted the company to increase premium prices by 15%.

Like any campaign, this one relied on accurate, well maintained data in order to ensure that the insurance marketer was able to effectively communicate with their customers. Get your piece of mind by working with Data Services, Inc. to ensure all the postal, phone and email elements within your database are properly formatted and cleaned for deliverability!