By John Lee, Merkle
Part I of this two-part series on creating "Customer Lifetime Value" currency described how insurance providers can establish a company-wide "customer value currency" or valuation standard that takes into account the entire customer. Part two describes how an organization's customer value currency can be used throughout the enterprise to improve marketing results.For many insurance carriers, results measurement and analysis occurs most often in acquisition efforts, at a single point-in-time at the campaign level, and only within one channel. To maximize the value of the customer portfolio, insurers must develop a customer value currency, a shared standard that all groups - including marketing, sales and product management - can agree to and use to help ensure dollars are spent in the most impactful way possible.
Customer lifetime value is a critical part of this equation. It is one of several factors that determine what each customer means to your organization. Once a shared metric is established, it is possible to use customer value currency as a core part of an integrated marketing approach.
Integration is the Key The missing element required to meaningfully create and manage a customer value currency boils down to a single word - integration. Maximizing customer value requires that a number of critical capabilities are integrated across the enterprise.
These capabilities include:
1. A common customer value currency metric that is shared across all marketing, products, sales and service functions 2. A common segmentation scheme that allows customer valuation and treatment decisions to be managed across marketing, distribution, sales and service 3. An integrated marketing data infrastructure and measurement framework that provides the required analytic power and reporting tools 4. A cross-functional team from across the enterprise that prioritizes and manages initiatives based on a shared customer value currency
Customer Segmentation Integration While the ultimate goal of any customer-centric organization is to have a "one-to-one" relationship with its customers, even the most successful ones struggle with managing their customer portfolio. Effective marketing requires a meaningful enterprise customer segmentation approach that leverages attitudinal, behavioral and demographic dimensions at the household level. The segmentation approach must help identify similar customers who think about, purchase and consume the product set and brand. These factors directly correlate to the customer's value to the organization over their lifetime with the carrier.
By utilizing internal customer data, custom research, syndicated panels and compiled data sources, insurance marketers can bring together a segmented view of the customer that contains preference and value data. This segmentation can be integrated into all critical marketing, sales and service systems to determine how much to spend, the most powerful message and the best channel for each customer.
Integrated Marketing Infrastructure A major challenge is a lack of supporting technology infrastructure and data to fully leverage the organization's customer value currency.
To rapidly generate momentum and measurable returns, companies must ideally develop and manage their customer data within a marketing-specific infrastructure. Marketing programs can first focus on proactive, outbound contact centers and transactional initiatives that do not require heavy integration with existing systems.
As successes mount, shift more marketing programs to the core customer management database, or feed information from the Internet and other channels to create a fuller picture of your program and your customers. Where IT resources and technology experience are short, seek outside help for solution development and hosting.
Creating a Measurability Framework Insurance carriers spend billions each year to acquire customers and increase customer loyalty. Yet most initiatives fail to deliver the expected results for the simple reason that no direct, measurable connection can be made between each initiative and the resulting consumer behavior.
Drawing a direct connection between various marketing programs and their results is a vital step. This connection brings a new level of accountability to marketing, making it possible to analyze and adjust retention and affinity marketing programs so that the focus is on spending on customers that yield minimally acceptable policy value over time. Without a measurability structure, insurance carriers have no clear and fact-based way to determine if they are targeting the best customers possible.
Removing Organizational Barriers While technology is often cited as a barrier to integration, the reality is that organizational dynamics are the number-one inhibitor. The ownership and accountability of managing the customer value currency cuts across multiple functions including marketing, sales, service and product management.
Each function must be involved in the strategic planning process, in which objectives are aligned and cross-functional customer programs are prioritized. This process should include an executive steering committee and a working committee whose guiding principle is, "invest marketing dollars where it generates the maximum incremental value."
With this charter and executive level sponsorship, a company can begin to successfully integrate customer management and marketing best practices and return significant value to shareholders.
About the Author: John Lee is vice president and general manager for insurance at customer relationship marketing agency Merkle.Insurance carriers spend billions each year to acquire customers and increase customer loyalty. Yet most initiatives fail to deliver the expected results for the simple reason that no direct, measurable connection can be made between each initiative and the resulting consumer behavior.