LAZARUS :: INSURANCE WIN-BACK PRICING

If the lost customer was a difficult one and refused the past insurer renewal offer we should make a counter offer (but profitable) that the client can not refuse.

The idea is simple: 

• An insurer call center can ask former profitable customers where he is now (in some countries this is public information).
  
• With market price (see Insurance pricing room) is possible to know the price practiced by the competitive set and with the "willingness module" it is possible to make an offer the customer will accept.
  

There is no need to offer a bigger discount - we help insurance companies to offer just a sufficient one! 

Companies spend huge sums on direct marketing to win-back customers. Yet the return on marketing investment (ROMI) is often poor because the response rates tend to be very low — usually less than 2% and often less than 0.5% — and rates have been declining.

To cope with this, many organizations (still) use traditional A/B testing approaches, that test one sort of offers versus another. 

We take A/B testing to the limit and test several variables/factors at the same time.

Experimental design is an efficient method of in-market testing that can improve the performance of direct marketing.

The power of this statistical approach is that it increases response rates by massively increasing the conditions of win back campaigns and identifying which variables are correlated with the  customer's  behavior.

Maybe the price was not the true reason for the client's lapse.

In the insurance sector, and in the short run, is very difficult to find why customers left. There are not many touch points in the insurance sector. Claims can be a relevant segment variable, but besides that specific variable we can only use the risk factors and the price of the competitive set.

Data XL has a deep knowledge of customer segmentation towards willingness to come back - we can take the most of the variables that exist to anticipate the client behavior.

But a price discount sometimes is not the most profitable answer. So we ask at least two more probing questions to find out exactly what the insurer could do to improve the offer.  Insurers may not get them back at a very profitable price, but will have information to design new products or procedures that are more customer focused.