Take Insurance Loyalty to Next Level Epsilon_Forrester

©2014 Epsilon. Private & Confidential

Take insurance loyalty

to the next level with telematics

G u e s t s p e a k e r : E m i l y C o l l i n s , S e n i o r A n a l y s t , F o r r e s t e r

H o s t e d b y : D a v e E d i n g t o n , S V P, I n d u s t r y S t r a t e g i s t , E p s i l o n

©2014 E

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loyal ty - hot top ic in insurance

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Guest speaker:

Emily Collins, Senior Analyst

Hosted by:

Dave Edington, SVP,

Insurance Strategist

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© 2015 Forrester Research, Inc. Reproduction Prohibited

Agenda

› Why does loyalty matter?

› How do companies currently tackle customer loyalty?

› What should insurance companies do about it?

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Agenda




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Loyalty is dead…

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Empowered customers are

in control.

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They are “always on.”

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They have more choices.

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They can switch on demand.

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In the age of the customer,

relationships determine success.

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Loyalty is dead.

Loyalty is mission critical.

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Agenda




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Many companies think they’ve handled

loyalty by implementing

a program.

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Programs influence customer behavior

Save me money83%Loyalty

programs drive

purchase

Influence where I

make purchases67%Influence what I

buy56%Base: 3,1976 US online adults (18+) who belong to any loyalty programs

Source: Forrester’s North American Consumer Technographics® Customer Life Cycle Survey, 2 2014

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They improve the customer experience

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But programs only cover part of the life cycle.

The customer

enrolls in a

program during

or after the initial

purchase has

been made.

Offers and

discounts

incentivize

repurchase.

Top tier

customers in a

program may

receive direct

access to

customer support.

Some programs

encourage or

incentivize

engagement

(e.g., reviews and

rating, social

shares, etc.).

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The market place is crowded

On average,

consumers

belong to

nine

programs

71% of US

online adults

belong to a

loyalty

program

Source: Forrester’s North American Consumer Technographics Customer Lifecycle Survey 2, 2014

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Marketers aren’t happy with their current

approach Completely Satisfied

Very Satisfied

Satisfied

Somewhat satisfied

Not at all satisfied

Base: 127 Loyalty Marketers

Source: Forrester/DMA Global Loyalty Benchmark Survey, Q2 2015

56%dissatisfied

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They face real challenges

47% Understanding

customers

across touch-

points

29% Aligning our

loyalty strategy

with the

overarching

business strategy

Personalizing

offers, content,

and experiences

based on

behavior

25%

Base: 127 Loyalty Marketers

Source: Forrester/DMA Global Loyalty Benchmark Survey, Q2 2015

25% Managing data

from a variety of

sources

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Marketers collect lots of data, but struggle to apply it

Base: 120 loyalty program marketers

Source: Forrester/ DMA Global Loyalty Benchmark Survey, Q2 2015

78%

66%

60%

56%

50%

41%

39%

36%

Campaign response data (e.g. open, click,redemption, etc.)

Voice of customer data (e.g. customer surveys,feedback, etc.)

Customer preference data (e.g. contactedpreferences, opt-ins, opt-outs)

Customer behavior data (e.g. loyalty data,identifiable customer data)

Collect data Apply insight

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Success starts with data and intelligence.

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Customer understanding guides execution

What types of benefits

and offers will they

value?

What will motivate

them and make them

feel valued?

What are their

expectations?

What makes our

customers loyal?

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Loyalty insights have a far-reaching impactLoyalty program

Customer service

Product development

Branding

Customer experience

Mobile strategy

eCommerce

Advertising

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Loyalty is the informant

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Agenda




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Walk the walk, don’t just talk the talk

82%

78%

81%

81%

74%

77%

77%

79%

79%

79%

Increase market share

Improve competitive advantage

Improve customer loyalty

Improve customer acquisition

Increase organization's use of data and analytics forcustomer insight

“Which of the following are likely to be your organization's top marketing priorities over the next 12 months?”

Insurance All other Industries

Base: 103 Global marketing decision-makers from the insurance industry

3234 Global marketing decision-makers from all other industries

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Map customer journeys to uncover benefits

Impact “moments

of truth”Alleviate “pain

points”

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Reward for interactions, not transactions


19%

15%

28%

29%

49%

51%

All other industries

Insurance

“What are your firm's plans to adopt M2M/Internet of Things solutions or applications?”

Implemented and/or expanding Planning to implement Not interested or no plans

Base: 103 Global marketing decision-makers from the insurance industry

3234 Global marketing decision-makers from all other industries

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Use sensor data across the life cycle to build

relationships

A global leader in turning data-driven marketing

into lasting relationships.

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IoT: The Internet of Things

Millennials

Loyalty program design

Behavioral change

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Millennials

Loyalty programs

Behavior enhancements


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In 2016, 5.5 million new things will get connected every day.

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Millennials

Loyalty programs


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Insurance and Loyalty ProgramsXlow frequency of transactions

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With Plenti, Nationwide puts members first

Nationwide is the exclusive insurance partner

of Plenti, the rewards program that lets Plenti

members earn Plenti points at Nationwide and

use them for savings at certain Plenti partners,

all with a single card.

Earn 1 Plenti point for every $3 you spend on your eligible auto and

home insurance. Start earning points by linking your Nationwide

account to Plenti.

Earn 1 pt for every $3 on auto and property insurance premiums

Boost your points balance with offers to complete an eligible

insurance quote

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L a r g e , I m p o r t a n t a n d F r e q u e n c y o f D a t a


F r e q u e n c y

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Data normalization & event analysis

Cellular and wireless

networks

Insurance telematic ecosystem

Consumerinterface

Loyalty solution architecture

External feeds & services

Firewall /Security, load balancing layer

Internet

Web services

Business processing

Data managementMarketing

database

Behaviorscore

Data storage & analytics

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Online, white card concept test,

national poll survey 500 Responses

250 Responses

Assuming there would be no changes to your current auto

insurance policy, how interested would you be in enrolling in

an auto insurance program where you enable a device in your car

to track your driving behavior?

If you demonstrate good driving habits, you would be able to

qualify for good driver savings averaging around 15% offyour car insurance premium. Would you be interested?

9.8%

18.0%

Very SomewhatSource: Epsilon Research Study

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Earn Reward Points

Assuming there would be no changes to your current auto

insurance policy, how interested would you be in enrolling in

an auto insurance program where you enable a device in your car

to track your driving behavior?

Each month you demonstrate good driving habits, you would

earn reward points. You can use your reward points for

retail gift cards, electronics, music, video downloads, gasoline,

movie tickets, restaurants and more. Would you be interested?

9.3%

15.8%

Very Somewhat250 ResponsesSource: Epsilon Research Study

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500 responses

Combined savings and rewards

If you demonstrate good driving habits, you would be able to

quality for good driver savings averaging around 15%

off your car insurance premium and/or earn

rewards points. You can use your reward points for retail

gifts cards, electronics, music, video downloads, gasoline, movie

tickets, restaurants and more. Would you be interested?

Source: Epsilon Research Study

23.1%

34.3%

Very Somewhat

Interest

up 13.3pts

vs. savings

alone

Interest

up 16.3pts

vs. savings

alone

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Devices (32)Apps (16)

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Gains in

brand association(healthy habits / healthy lifestyle)

3 years

140 mil members

in Balanced Rewards

significantpositive

Buzz and PR

continualimprovement

in NPS scores

All ties back to

telematicsand the goal of

‘Frictionless CX’

2 years

30 mil members

in Balanced Rewards

for Healthy Choices

Benefits/lift in

transactions and

engagement at store

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Favorable CBA

$$

$$

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Favorable

UBI economics 15-2-1• 15% average UBI Premium Discount

• -2%, to a 13% average premium discount

• 1% to fund the ‘rewards’ program

• 1% pocket to lower UBI costs

Discount & Rewards…net higher perceived value

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Brand

Consumer

Relationship

Brand

Consumer

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Premiumsvs

Perks

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We see what others don’t

71MMU.S. customers

Largest single-sourced

custom survey.

256MMU.S. customers

1,900Points of data

#1 U.S. demographic

marketing data

109MMConsumers

78Transactions

per HH

Powerful and predictive

retail transactional data

131MMCross-Device ID’s

Unmatched online browsing

and transactional data

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Geography

Income

Home value

Net worth

Active credit cards

Discretionary income

Favorite activities

Age

Marital status

Presence/

number of children

Age of children

Education level

Homeowner or renter

Dwelling type

Life stage /

recent life events

Category purchase

activities

Channel preferences

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Who they are: age of total adult population (individual)

2%

12%

20%

24%22%

14%

8%

49

87 105

10796

85

63

0

20

40

60

80

100

120

0%

5%

10%

15%

20%

25%

30%

18-24 25-34 35-44 45-54 55-64 65-74 75+

Tele

mati

cs

Telematics Index

Discount

Rewards

4%

39%

26%

30%

24%

5% 3%

117

280

137 131105

3222

0

50

100

150

200

250

300

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

18-24 25-34 35-44 45-54 55-64 65-74 75+

Tele

mati

cs

Telematics Index

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Their financial strength: income

20%

28%

33%

17%

2%

65 74

142

226

288

0

50

100

150

200

250

300

350

0%

5%

10%

15%

20%

25%

30%

35%

$0 - $29 $30 - $74 $75 - $149 $150 - $249 $250+

Tele

mati

cs

Telematics Index

Discount

28%

45%

21%

5% 1%

91

119

92

68

92

0

20

40

60

80

100

120

140

0%5%

10%15%20%25%30%35%40%45%50%

$0 - $29 $30 - $74 $75 - $149 $150 - $249 $250+

Tele

mati

cs

Telematics Index

Rewards

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8.08% 205

Favor discounts

Chic society

Loyal online subscribers that are

likely to use a web portal such

as AOL, Yahoo or MSN.

54Avg. age of head

16Average length or residence

$168,592Avg. household income

12% withkids

8.24% 480

Favor loyalty gifts

Oodles of offspring

33Avg. age of head

7Average length or residence

$48,881Avg. household income

65% withkids

Highly reachable via cookie-based

web display advertising; uses

a PC to access the internet.

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The internet of things

Millennials

Loyalty programs


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Millennials,

have the highest average number

of loyalty programs with 14.

Source: Mintel

as extension of social selves

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Millennials

Loyalty programs

Behavior changes

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Millennials are most likely to modify their shopping

behavior on the basis of loyalty program benefits

65

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Source: OMA

6 in 10would switch the brands they buy and…

millennial

respondentsWould change when

and where they shop

if it meant getting 2/3rds more benefits.

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Transaction

Frequency

or $ Spent

Highest

Engagement

Traditional Loyalty Program Design

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Progressive Loyalty Program Design

Behaviors

Best

X

Worst

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Data normalization & event analysis

Cellular and wireless

networks

Insurance telematic ecosystem

Consumerinterface

Loyalty solution architecture

External feeds & services

Firewall /Security, load balancing layer

Internet

Web services

Business processing

Data managementMarketing

database

Behaviorscore

Data storage & analytics

+ Large scale

1st, 2nd, 3rd party data

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Online purchase data

• 7.9x more likely to purchase photos and prints

• 6.7x more likely to purchase wedding related

products

BROWSING BEHAVIOR

• 2.1x more likely to visit baking sites

• 2.3x more likely to visit entertainment sites

Social

• 30% have recent Facebook

activity in the last 7 days

W H A T I B U Y

W H A T I C A R E A B O U T

W H A T I S H A R E

Life events

• 8% recently moved

• 13% recently had a baby

W H O I A M

H O W I C O N N E C T

Millennials…Online

Offline data

• 72% have some college or higher

• 15% live in multifamily dwelling/apartment

App usage

• 11.0x more likely to download baby care apps

• 6.0x more likely to download news apps

Reaching

10.1MConsumers

(2.5 average devices)

12,353,685 desktop

9,877,850 mobile

3,381,779 tablet

Device data

• 2.0x more likely to own a Mac desktop

• 1.8x more likely to prefer iOS devices to

Android devices

*Consumers seen in the last 30 days

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Random Catalog

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DEMOGRAPHIC:

• Male, 33

• Married

• 2 Children in household,

1 school age, 1 baby

Income: $84k

• Chicago, IL

DEMOGRAPHIC:

• Male, 33

• Married

• 2 Children in household,

1 school age, 1 baby

Income: $84k

• Chicago, IL

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Recent Browsing:

• Life Insurance

Historical Purchase:

• Auto and Home

Dominant Categories:

• Social Causes

• Cooking

Key Attributes:

• Wine & gourmet foods

• Online full price shopper

• Shops retail stores

Historical Browsing:

• Home Insurance

Historical Purchase:

• Renters

Dominant Categories:

• Sailing

• Running

Key Attributes:

• Outdoor enthusiast

• Online value shopper

• Likes sale pricing

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across platforms and devices

Display Mobile | Tablet

Social Video

VideoWebsite

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And across the day

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hyper-personalized

loyalty engagement

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Loyalty Highlights Epsilon was named a leader in The Forrester Wave(TM): Loyalty

Program Service Providers, Q4 2013".

Running the world’s largest, most complex loyalty programs:

43 clients

500+ brands/ programs

500 dedicated loyalty specialists

8 year average client tenure

380+ partner integrations

500MM members in explicit loyalty

Epsilon connects to real-time systems with responses less than 250ms

175MM campaign messages and 600MM transactions per month

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How to get started…

determine which

model(s) to deploy

Many strategies exist for building relationships and

stimulating customer loyalty, but they aren’t all correct for

every organization

Service

providing services

that enhance

product

Information/Advicecreating a better user experience

Personalization

creating a 1-to-1

experience

Discountsmaking loyalty more affordable

Accessproviding access to information, people & events

Progressmaking customers smarter, successful, wealthy

Status/Exclusivitymaking customers feel more importantEngagement

open dialogue across all channels

Points rewards based on transactions

Partnerships

broaden the

experience

Customer Engagement

Models

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Millennials

Loyalty programs

Behavior changes

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onfid

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++Outcomes- - e n g a g e m e n t & r e t e n t i o n

- - c r o s s - s e l l & u p s e l l

- - h i g h e r LT V s c o r e s f o r i n f o r c e b o o k

- - l o s s r a t i o ( 1 2 - 2 4 m o n t h s )

- - c o m b i n e d r a t i o ( 2 4 - 3 6 m o n t h s )

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Take Insurance Loyalty

To the Next Level with Telematics

E m i l y C o l l i n s , S e n i o r A n a l y s t , F o r r e s t e r

D a v e E d i n g t o n , S V P, I n d u s t r y S t r a t e g i s t ,

E p s i l o n

E m i l y C o l l i n s , S e n i o r A n a l y s t , F o r r e s t e r

D a v e E d i n g t o n , S V P, I n d u s t r y S t r a t e g i s t , E p s i l o n

Q&A

Documents

Take Insurance Loyalty to Next Level Epsilon_Forrester