Customer Retention in the Life and Pension Market: To Have and To Hold

Transcription

1 A Datamonitor brief timely Customer Retention in the Life and Pension Market: To Have and To Hold Publication Date: Feb-04 Product Code: Reacting to the latest news breaking in your industry focused Hundreds of hours of analyst time distilled into a few pages Life and pensions companies are increasingly looking at customer retention rather than acquisition; however, most are still in the initial stages of implementing a comprehensive strategy. primary research This brief gives insights into the crucial components and steps that make up a successful retention strategy and provides industry examples. Unique survey data and interview results thought-provoking For details of all Datamonitor Financial Services briefs, go to: Fresh opinions and out-of-the-box thinking

2 timely Scope and coverage of the brief Reacting to the latest news breaking in your industry Examines the background to the customer retention problem and utilizes information from interviews with industry experts to identify the key drivers Examines how to segment the customer base using lifetime valuation and gives strategic options for increasing the profitability of each segment Identifies key motivations for defection and explores potential strategies to counter these factors Compares insurers' current customer retention management tools against best practice and provides a roadmap for change Key findings and brief highlights Before implementing a retention stategy, it is important to identify which customers are worth retaining. This can be achieved through Customer Lifetime Valuation. The aim of a retention strategy should be to maximize the number of customers who have high lifetime value and low service cost - the 'value creators'. Customers can be segmented according to their defection motivation into: budget, bought, lost and stolen. The largest segment is 'budget' - those who defect because of a change in circumstance. Identifying these groups and the strategies that have the greatest impact on them allows more efficient and effective retention strategies. Life and pension companies have only recently begun to implement Customer Relationship Management (CRM) systems to help with customer retention; therefore they are focused mostly on operational CRM rather than adopting an integrated CRM strategy. Reasons to buy this brief Provides insights from industry experts and 'best practice' examples to help develop and evaluate successful retention strategies Examines where insurers are today using information from experts and industry examples, and explores how CRM could progress Provides analysis of retention strategies that have failed in the past and what companies can do to avoid making the same mistakes For more information... From Europe: tel: fax: fsinfo@datamonitor.com From the US: tel: fax: usfsmarketing@datamonitor.com From Asia-Pacific: tel: fax: apinfo@datamonitor.com

3 focused Table of contents Hundreds of hours of analyst time distilled intoa few pages ABOUT DATAMONITOR EXECUTIVE SUMMARY Identifying the problem The drivers of retention Europe waking up to retention issues Which customers do you want to retain? Why do customers defect? What can insurers do to minimize defection? Customer Relationship Management (CRM) - The current CRM position - Stage I - Operational CRM - Stage II - Data-mining - Stage III - Integration - The 'correct' CRM implementation The path to retention success IDENTIFYING THE PROBLEM The drivers of retention - Customer circumstances - Price - Product performance - Brand - Quality of customer service - Cost of acquiring new customers - Features of the company - New product development Europe waking up to retention issues WHICH CUSTOMERS DO YOU WANT TO RETAIN? - Stage II - Data-mining Win-back process Complaints processing Customer database Data-mining Incentivize staff correctly - Stage III - Integration Predictive analytics - 'Segment-of-one' - Maximize cross-selling through 'segment of one' Campaign management software Integration of sales software - Using this system to enhance cross-selling Text-mining The 'correct' CRM implementation THE PATH TO RETENTION SUCCESS Step 1: Define benchmarks Step 2: Use benchmarks to define strategy Step 3: Change company philosophy Step 4: Implement technology Step 5: Measure success against benchmark APPENDIX Research methodology - Primary research - Secondary research Current and future readings SPP writing team How to contact experts in your industry WHY DO CUSTOMERS DEFECT? Customer motivations WHAT CAN INSURERS DO TO MINIMIZE DEFECTION? Potential strategies - Budget - Lost - Stolen - Bought The current CRM position - Stage I - Operational CRM Call/customer care centre Lifetime valuation 'Reason for termination' survey 'Satisfaction' survey LIST OF TABLES Table 1: The extent to which customer loyalty is an issue for banks differs across various European countries Table 2: Across Europe, the majority of banks feel there has been an increase in shopping around and switching providers LIST OF FIGURES Figure 1: The drivers of retention Figure 2: The lifetime valuation of the customer will effect the strategy approach Figure 3: Understanding the motivations for defection is vital in implementing a retention strategy Figure 4: Success of retention methods will vary depending on the customer type For more information... From Europe: tel: fax: fsinfo@datamonitor.com From the US: tel: fax: usfsmarketing@datamonitor.com From Asia-Pacific: tel: fax: apinfo@datamonitor.com

4 primary research Unique survey data and interview results Figure 5: Figure 6: Figure 7: Figure 8: Figure 9: Figure 10: Figure 11: Figure 12: Figure 13: Figure 14: Figure 15: Figure 16: Figure 17: Figure 18: Most life and pension providers are still at the operational stage of CRM implementation The drivers of retention Consumer attitudes and increased competition have the greatest effect on consumers switching providers The lifetime valuation of the customer will affect the strategy approach Understanding the motivations for defection is vital in implementing a retention strategy Success of retention methods will vary depending on the customer type Increasing share of wallet can increase the value of the customer base Customers are happy to hold multiple products from the same provider The most common reason given for a provider being an IFAs favorite is their efficient service Most life and pension providers are still at the operational stage of CRM implementation Using 'segment-of-one' to predict customer behavior The CRM processes within a company Customer retention loop 4 key steps underlie the development of an overall strategy For more information... From Europe: tel: fax: fsinfo@datamonitor.com From the US: tel: fax: usfsmarketing@datamonitor.com From Asia-Pacific: tel: fax: apinfo@datamonitor.com

5 thought-provoking Customer Retention in the Life and Pension Market: To Have and To Hold Datamonitor: Your total information solution Fresh opinions and out-of-the-box thinking Datamonitor is a premium business information company helping 5,000 of the world's leading companies across the Automotive, Consumer Markets, Energy, Financial Services, Healthcare and Technology sectors. Our products and services are specifically designed to support our clients key business processes - from corporate strategy to competitive intelligence. We provide an independent and trustworthy source of data, analysis and forecasts to improve these processes and ultimately, to help grow your business. Corporate Strategy & Business Planning Product Development & Commercialization Targeting & Influencing the Market Market & Competitive Intelligence Quality Data Expert Analysis Future Forecasts Make more effective strategic and business decisions Accelerate delivery of commercial success Assess and influence your commercial and market environment Maintain or obtain critical competitive advantage HELPING TO GROW YOUR BUSINESS No-one speaks louder than our clients Abbey National ABN AMRO AIB Bank American Express Aviva AXA Bank of Ireland Barclays Bank Berlinerische Lebensversicherung BNP Paribas BUPA Capital One Citibank Commerzbank AG Co-Operative Bank Crédit Agricole Crédit Lyonnais Credit Suisse Deutsche Bank Diners Club International Dresdner Bank Europay Fidelity Investment Services Fortis GE Capital HBOS HFC Hiscox Insurance HSBC HypoVereinsbank ING Interpay Invesco Legal & General Lloyds of London Lloyds TSB M&G Group MBNA National Australia Group (UK) Ltd Nationwide Building Society Nordea Prudential Royal & SunAlliance Royal Bank of Scotland Scottish Widows Skandia International Standard Life Swiss Re UK UBS AG Visa Zurich For 91% of our clients, Datamonitor research helps their company to respond to competitive threats Source: Datamonitor Customer Research

6 timely Reacting to the latest news breaking in your industry Interested in this topic? Regulation, distribution and stock market performance continue to be the fast-changing drivers of the life, pensions, investments and protection markets. Datamonitor is perfectly poised to address these issues within our range of insightful market, strategy and distribution reports. Other reports available in this series: The Pensions Common Market Seizing the Opportunities of the European Pensions Directive This report examines the impacts the EU pension funds directive will have for the players of the European life and pensions world: asset managers and pension providers, multinationals and customers. The report particularly focuses on France, the UK, Germany, Spain and Italy, and looks at the key issues, industry response, opportunities created and the shape of the future market. UK Group & Personal Pensions Update 2003 This report is data-driven accompaniment to Datamonitor's existing analysis portfolio and provides ongoing competitor intelligence. It updates the SynThesys Life information for 2002 and provides a top 5 individual competitor focus to allow benchmarking and trend insight. Published: Product Code: Published: Product Code: Sep-03 DMFS1571 Oct-03 DMFS1614 For more information on reports and briefs, go to: Subscribe to Monitor A monthly update of Datamonitor's new products, delivered to you by . monitor@datamonitor.com

7 focused Place your order now... Simply fax back this form to Hundreds of hours of analyst time distilled into a few pages I would like to order: Price* Customer Retention in the Life and Pension Market: To Have and To Hold () The Pensions Common Market (DMFS1571) UK Group & Personal Pensions - Update 2003 (DMFS1614) Mass Market Distribution - Survey Series (BFFS0240) Total * Please refer to our website for pricing details. Complete your details: Name Job Title Department Company Address State/Province Post Code/ZIP Country Tel Fax Sign below to confirm your order: Complete payment details: Please indicate your preferred currency option: UK US$ Euro Yen I enclose a cheque payable to Datamonitor plc for $ (+ p+p $30 UK/$60 rest of world) Please invoice my company for /$/ Please debit my credit/charge card / _ (+ p+p $30 UK/$60 rest of world) Amex Visa Diners Mastercard Card No Expiry Date _ / _ Cardholder Signature Cardholder address Please supply purchase order number here if required by your accounts department: EU companies (except UK) must supply: VAT / BTW / MOMS / MWST / IVA / FPA number: Datamonitor products and services are supplied under Datamonitor s standard terms and conditions, copies of which are available on request. Payment must be received within 28 days of receipt of invoice. I do not want to receive future mailings from Datamonitor and its related companies. Occasionally, our client list is made available to other companies for carefully selected mailings. Please check here if you do not wish to receive such mailings. WEB by fax: by phone: by fsinfo@datamonitor.com web: