Customer Insight A Key Competitive Advantage
There are several steps insurers must take to implement customer analytics, according to Allstate's Abbattista. First, carriers must have all of their data organized, retrievable and clean so that it can be mined, he says.
The consequence of an unstructured database actually could result in a violation of a compliance requirement, according to Lee Ann Hoover, analyst and managing director of Navigant Consulting (Phoenix). "This is customer data, so any way you manage that data has to comply with the Patriot Act, the Anti-Money Laundering Act, HIPAA and SOX," she says.
Achieving this first step takes time, money and technology. In 2006, customer analytics vendors generated more than $8 million in sales in the U.S., according to a study by Cambridge, Mass.-based Forrester Research .
It's Hard to Measure Up
Although compliance is a concern, the major challenge for all carriers using customer analytics is reaching the business goals they set and measuring the ROI. "Carriers need to define their business objectives clearly and specifically, and create a road map, because if they want to analyze data, they have to analyze the right data," says William Band, principal analyst for Forrester.
Yet the value of these types of projects often is difficult for insurers to calculate because analytics technology is so widely integrated throughout the enterprise that it is hard to pinpoint where analytics succeeds and skill levels begin, concurs Alan Braybrooks, senior manager at McLean, Va.-based consultancy BearingPoint. Still, customer analytics are vital for competitive advantage, he notes. "The market pressure is so great today that without customer analytics, the growth isn't there," he says.
Allstate has used customer analytics across the enterprise for the past 10 years, but since 2003 the carrier has altered its strategy for the use of customer analytics, relates Allstate's Abbattista, who has been instrumental in executing the company's strategy. "Three years ago we were product focused, but now we are driving product innovation by taking the massive amount of data we have about customers and using that to measure and understand what people want in order to serve our customers better," he says.
Tweet This