The insurance industry is jumping on the big data train and not looking back. One recent survey found that P&C insurers plan to increase the number of big data experts with advanced degrees on staff from 21% to 51% by 2016. Some large insurers have been using analytics for several years now, helping them to set customer rates, to identify risks and fraud better, and even to simplify the claims process. More and more insurers today are beginning to use the power of big data throughout the customer life cycle. Faced with a plethora of unstructured data, insurers are now working hard to utilize the data they have so that it reveals useful insights on their customers.
Despite their rising investments in analytics across the entire customer engagement process, many insurers still aren’t investing in the one marketing area that could result in a big boost to the bottom line -- customer acquisition. Some of these companies are spending millions of dollars on advertising, most of it focusing on television or big brand-awareness-raising sponsorships that realistically result in very few conversions. In fact, a recent Rocket Fuel report found that digital display ad spend is nine times more effective at driving top-of-mind awareness than TV, radio, and print.
The rise of new types of analytics-driven advertising technology allows insurers to develop their digital marketing strategies in much more cost-effective ways. By combining first-party, third-party, and proprietary data, insurers are given the best possible view of a prospect, allowing them to target each consumer’s individual needs and to present them with more competitive quotes, with the objective of converting them.
These platforms also allow insurers to track their digital ad spending better throughout the entire buying and selling process, which gives them the measurement tools to make quick changes if they realize a particular strategy isn’t working. Simply put, big data makes it easier to pinpoint target audiences, track successful marketing campaigns, and quickly change campaigns to target the right prospect, with the clear objective of signing the most valuable customers.
In addition to managing their ad spend better, and giving them a greater return on this initial investment, using targeted data in the customer acquisition phase will inevitably help insurers down the line. For example, the more customer data auto insurers analyze through their advertising strategies, the better they can identify consumers who are less likely to be a risk to their financial bottom line in the future. While premiums for drivers with good driving histories won’t be as high, they also come with lower odds of these people needing to enter into the claims process due to an accident, a situation that can be costly to both the driver and the insurance company.
Hyper-targeted digital marketing campaigns that build upon an insurers' existing big data strategy can mean savings across the entire customer experience. Insurers can then redistribute that money to customers through lower premiums and better service. This helps increase retention rates. As the effectiveness of marketing campaigns grows, engaging high-intent customers is sure to bring the greatest return.
Steve Yi is CEO of MediaAlpha, a performance-based insurance advertising company. Prior to MediaAlpha, Steve co-founded Fareloop.com, a travel comparison engine that was acquired by Oversee.net. Previously, he was a Senior Vice President and General Manager at Oversee.net, ... View Full Bio