Decision-Driven Marketing maximizing customer engagement Featuring as an example: SAS Real-Time Decision Manager Authors: Deb Smallwood, Founder Published Date: August 2014 This perspective is based on SMA s ongoing research on Big Data and Analytics in insurance. SAS has purchased distribution rights. 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 1
Table of Contents About This Perspective This SMA Perspective is a summary of SMA s ongoing research on Big Data and Analytics. SAS has purchased distribution rights for summary results of selected research and opinion. This is not paidfor research. Decision-Driven Marketing 3 Business Capabilities 4 Technology Capabilities 5 About SAS 7 Company Overview SAS Real-Time Decision Manager Breadth and Functionality Strategy Meets Action Commentary 8 About Strategy Meets Action 8 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 2
Decision-Driven Marketing In the hyper-connected world of today, where technology is interwoven into every aspect of life, insurance customers expect consistent and informed experiences across the channels, devices, and locations of their choice. Customer engagement has changed significantly, thanks to our hyper-connected world plus challenges that are unique to insurers. Most insurance products are inherently complex. The number of interactions with the customer are relatively few. There has been rapid growth in aggregator websites in recent years, disrupting traditional sales models. Customers today have different expectations than they did a short time ago presuming on-demand attention delivered my way. With technology interwoven into every aspect of life, one device or another is always at hand. In this omni-channel world, insurance customers expect consistent and informed experiences even when those experiences occur between and among channels, through multiple device types, and in a variety of locations and times. Successful marketing methods that have endured and served the insurance industry well can no longer be expected to produce the results that insurers need to grow their businesses and make a profit. The traditional marketing processes or models that have been developed around marketing department campaigns and/or event marketing simply will not deliver the desired results in today s digital world. Further hampering growth and profit, outmoded approaches cannot capitalize on the influx of robust data that is now available through social, text, and call centers. Customers expect insurers to understand their needs, their desires, and their expectations in real time, in any location, via any device, at the right time, and in the right context. Other industries, including retail and travel, have demonstrated that customers will react and respond when the right offer or advice is presented. While the art side of marketing will always continue to be important, the science side, underpinned by analytics, is taking center stage as insurers recognize how informed, real-time decision management can deliver competitive advantage in insurance. Many insurers, particularly those saddled with inflexible systems, inaccessible data, and insufficient information, are facing major challenges in creating effective, real-time engagements. Some insurers are finding that the return on investment for traditional campaigns is falling short, with response rates not meeting anticipations. Others are concerned that messages are not as relevant as they should be and do not reflect the overall relationship the insurer has with the customer. SMA s research and direct work with insurers emphasizes that no matter their size, insurers would like to be able to target customers and prospects more precisely. They struggle with their current inability to immediately coordinate, much less personalize, offers in response to a variety of inbound channels. Today s environment is real-time or no-time. Customers initiate and interact as they choose. To be responsive and win in this new world of digitalization, there are new requirements: targeted customer precision; personalized campaigns that are directed to a segment of one; consistent, tailored messaging; and individualized coordination and customization of product offerings based on each customer s specific needs, preferences, and requirements. Effective engagement today requires real-time marketing with real-time decision management. Decision-driven, real-time marketing is continuously evolving with noteworthy success in a variety of industries, including the insurance industry. Interactions supported by messages that are timely, relevant, and tailored are creating excellent customer experiences and driving business growth. Real-time decision management is being used 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 3
to shape offers that are based on past actions and behaviors and statistically sound predictions of future behaviors. Examples of highly effective efforts are growing daily. Online retailers have been tracking and capitalizing on past preferences and predicting future interests for years. Communications companies have significant experience in equipping their service agents with the intelligence to make a next-best offer. The intelligence deployed by prominent browsers presents marketing ads and offers based on past search and buying behavior. A considerable number of insurers are taking advantage of these and other capabilities, but the opportunities for our industry have barely been tapped. Business Capabilities The goal for insurers is to be able to create an ideal customer engagement at each and every interaction. This means that insurers need to be able to provide relevant and insightful advice, recommendations, services, and offers at exactly the right time with the right accompanying message. As shown in Figure 1, there are two primary business capabilities that are required to deliver optimal customer engagements: the ability to effectively conduct and manage real-time interactions that are personalized and customized, and the ability to make both reactive and proactive real-time decisions. Figure 1. Right Offer, Right Time, Right Channel Source: Strategy Meets Action 2014 Success requires the power to take rich data, coordinate and consolidate it, and then use analytics to transform it into useful information. The insights make it possible to intelligently shape the conversation in the context of the set of circumstances that surround a particular event or situation the right content or offer, at the right time, via the right channel. Both marketing and operational analytics, as well as the data and processes that surround them and feed them, must all work cohesively to deliver the 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 4
robust information and insights that create a meaningful and positive customer experience with personalized and customized messaging. The marketing environment needs to be highly dynamic, allowing insurers to rapidly capitalize on market shifts and product opportunities. Marketing must be coordinated across channels (social, call center, web, face-to-face, paper, direct marketing, thirdparty marketing, and others). It must be quick and easy to integrate new channels. Capabilities need to be in place to wisely manage the channel choice for outbound interactions. It should not be difficult to take advantage of new sources for demographic data, social media intelligence, and other information. There needs to be a quick and reliable way to collect, manage, and integrate internal data, external data, and big data so that it can be used for advantage in areas such as price optimization, campaign segmentation, and next-best advice and offers. A consolidated, current view of the customer relationship coupled with the ability to make sound, automated business decisions in real time enables insurers to create a meaningful conversation with a prospect or customer. An understanding of customer preferences and their buying and behavior patterns makes it possible to create a stronger relationship one that leads to a loyal customer. Technology Capabilities The technology capabilities that are required to support real-time interactions and realtime, decision-driven marketing involve a number of technologies and solution areas that are highlighted in Figure 2. Figure 2. Decision-Driven Marketing Technology Capabilities Source: Strategy Meets Action 2014 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 5
Effective, decision-driven marketing implications include: Successful decisiondriven marketing requires complete and current data, analyticsbased insights, advanced marketing tools, complex channel management, and a modern architecture and systems environment built for speed one that is capable of supporting high volumes of interactions, massive amounts of data, sophisticated intelligence engines, and easy integration with core systems. Data Management. To effectively support real-time interactions and real-time decisions, data must be comprehensive, complete, current, and readily available providing a complete, single-view customer profile. This requires the ability to collect and manage data from online and offline channels, the intelligence to tie that data together in a meaningful way over time, the flexibility to integrate it with complementary data (such as externally sourced data and big data), and the ability to integrate the appropriate data with core systems and any ancillary systems that support customer interactions. Achieving these objectives is difficult enough with structured data. But now insurers must manage a wide variety of unstructured data such as social media data, notes embedded in core systems, contact center logs, and emails. Predictive Analytics. Analytics-driven judgment sits at the very heart of real-time decision-making capabilities. Critical to success is the ability to combine analytics and models with business processing logic to deploy the decision-making insights into operational environments. This requires planning for flexibility and easy integration in every aspect of the IT architecture and systems. Advanced Marketing Tools. Through the use of cutting-edge marketing tools, insurers can reduce the dependency on scarce IT resources in planning, executing, and monitoring inbound and outbound marketing strategies, campaigns, and results. The capabilities of these advanced tools provide closed-loop marketing benefits delivering the power to listen, engage, leverage, and refine when and where it will be most advantageous. Channel Management. Technical capabilities need to be in place to support and manage an ever-expanding number of diverse channels. On the front end, this requires a highly flexible omni-channel platform that can readily adapt to new devices and their functions and features. In the middle and on the back end, it means systems and solutions that can be easily integrated with tools, data sources, engines, and more. Successful channel management involves the ability to optimize the management of each channel s characteristics as well as the ability to coordinate the channels to deliver maximum value at every touch point. Speed. High volumes of customer interactions, massive amounts of data, sophisticated intelligence engines and tools, integration with core systems must all be managed cohesively and instantaneously. The implications are significant scalable, high powered computing strength linked to an adaptable architecture to make real-time marketing decisions. Insurers need a modern architecture and systems environment one that can support real-time interactions and real-time decisions. This modern environment must be able to manage any challenges and hurdles that are currently impeding progress to becoming a next-gen insurer. A huge and growing volume of historical data must be effectively managed, manipulated, and turned into more valuable assets. Analytics insights must be robust, operationalized, and effectually used to generate predictive scores. Multiplying channels must be wisely coordinated. The complexity will only escalate, and in this fast-moving environment, embedding decision logic in operational systems is not a sustainable plan. A viable alternative for many insurers might be found in the cloud. 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 6
The benefits of realtime, decision-driven marketing capabilities are significant. Among the many productive results are improved acquisition and retention rates, reduced overall sales and service costs, and higher conversion rates. Marketing must be integrated with all key areas of the business, providing a closed loop for all marketing campaigns, allowing the organization to make decisions quickly and execute expeditiously. The benefits of real-time, decision-driven marketing capabilities are profound: increased customer acquisition rates, improved retention rates, higher levels of customer satisfaction and loyalty, improved conversion rates, and lower overall sales and services costs as prospects and customers choose to shift to an electronic channel. About SAS Company Overview SAS is a market leader in business analytics software and services, and the largest independent vendor in the business analytics market. SAS offers award-winning solutions that help insurers worldwide with data management, fraud detection, risk management, regulatory compliance, customer intelligence, and other critical needs. With more than 1200 insurer clients, the insurance industry contributed over 10 percent of the total company software revenue of $3.02 billion in 2013. SAS Real-Time Decision Manager Breadth and Functionality SAS Real-Time Decision Manager combines SAS Analytics with business logic and contact strategies to deliver enhanced real-time recommendations and decisions to interactive customer channels including websites and call centers. The solution automates and enhances the decision-making process for high-volume, customer-facing systems and helps insurers execute focused, consistent strategies across channels. Business users can construct decision processes in an interactive, visual environment using an intuitive user interface for constructing decision processes. Without the requirement for any complicated coding, marketers are able to build decision processes that incorporate various data sources and can apply advanced analytic techniques and business logic. A management console allows marketing users to easily move campaigns and decision diagrams from design to test to production. Real-time analytics and business rules are applied to both historical and real-time data, and a wide variety of analytic capabilities including customer lifetime value, propensity, attrition, and risk modeling, are infused into the decision-making process to ensure relevant, insightful marketing offers in real-time dialogues. As a result, customerfacing employees can quickly make decisions that enrich the customer experience and increase profitability. For more information about the SAS Real-Time Decision Manager visit http://www.sas.com/en_us/software/customer-intelligence/rules-engine.html. 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 7
Strategy Meets Action Commentary Powerful solutions like the SAS Real-Time Decision Manager hold great promise for helping insurers evolve to become a next-gen insurer. Embracing such capabilities will give insurers major competitive advantage, help them to engage customers, and enable them to better manage the business. While the bar for engagement excellence is largely being set by companies outside the insurance industry, the leading insurers of today those that have seriously invested in modernizing and optimizing their systems and data are making major progress. These insurers fully understand how empowered digital consumers are changing fundamental business models in all industries. They view real-time interaction and decision capabilities as instrumental to their future growth and profit. Their goal is to create appealing offers on the fly, at the exact moment when customers are engaged in considering the value proposition and evaluating alternative options: the right offer, at the right time, through the right channel! In our industry, trust and loyalty are exceptionally important. For many insurance lines of business, these factors carry significant weight in the ability to acquire new customers and keep them. Customers are demanding rich engagements. There is no question that decision-driven marketing will help insurers achieve new levels of success. The technology requirements are complex and they touch many business areas within the organization. The challenges are not trivial mastering the data, integrating models with business logic, operationalizing analytics, and then adapting and refining both the models and business logic for continuing advantage. Getting from A to Z won t happen overnight it is indeed a journey, and it can be a long one. However, the business capabilities that make decision-driven marketing possible are within reach. The first step is to evaluate the current state of capabilities. Next, outline the functional requirements for modernized, optimized capabilities. Then, define a clear prioritized path for the journey ahead. Insurers should be aware of the power of solutions like the SAS Real-Time Decision Manager and should be embracing them. Solutions such as these hold great promise for helping insurers evolve into being a next-gen insurer helping insurers adapt to new and changing customer expectations, create new products, capitalize on advanced technology capabilities, and leverage insights to better manage risk, growth, and profit. About Strategy Meets Action Exclusively serving the insurance industry, Strategy Meets Action (SMA) blends unbiased research findings with expertise and experience to deliver business and technology insights, research, and advice to insurers and IT solution providers. By leveraging best practices from both the management consulting and research advisory disciplines, SMA takes a unique approach offering an unrivaled set of services, including retainers, research, consulting, events, and innovation offerings. We are dedicated to helping the business of insurance modernize, optimize, and innovate for competitive advantage. This SMA Perspective is a summary of SMA s ongoing research on Big Data and Analytics. SAS has purchased distribution rights for summary results of selected research and opinion. Additional information on SMA can be found at www.strategymeetsaction.com. Contact the author Deb Smallwood, SMA Founder at 603.770.9090 or dsmallwood@strategymeetsaction.com. 2014 SMA All Rights Reserved www.strategymeetsaction.com Page 8 SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. indicates USA registration. Other brand and product names are trademarks of their respective companies. 107332_S130344.0914