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Data Analysis Offers Tools To Leverage Orphan Accounts

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Producers traditionally have led the charge in life insurance marketing and sales, with customer knowledge largely residing in the heads of local agents and their managers. Major companies have been working to change that equation, however, spending hundreds of millions of dollars to create centralized customer databases, which they hope to leverage in a way that does not compete with the channels.

With system-wide customer information now coming into the hands of corporate marketing teams, the hunt is on for new revenue opportunities. Orphan accounts are front and center in that quest. Especially within insurers that experience high agent turnover, there are vast pools of customers who no longer are served by the agents who initiated their accounts–in some cases, up to 30% of the total customer base.

In prior years when less information was available, there was a tendency to downplay opportunities with these customers. But current research paints a much brighter picture, both in terms of customer needs and purchase wherewithal.

Many orphan account holders are nearing retirement and focused on asset protection, giving insurers an edge over traditional asset management competitors. And this group has more than twice the assets and income of the average policyholder.

But progress hasn’t been as straightforward as many had hoped. The problem is that newly-created central databases, while essential, still aren’t completely sufficient for new marketing initiatives to this group. Containing only internal information about accounts, balances and transactions, they fail to provide insight on the total customer wallet, for example, and recent and impending life events.

Progressive marketing teams are breaking out of this trap as they learn to augment customer records with rich external information, for example from credit bureaus, and then perform a series of deeper analyses that set the stage for specific campaigns. Starting with general insights on cross-sell patterns, for example, providers then can blend in orphan account insights on customer needs and relationship profitability potential, facilitating the creation of tailored campaigns for target customer groups.

It’s not easy to rekindle stale customer relationships. Yet richer marketing analyses of orphan accounts still can pay off handsomely, in direct mail campaigns, in directing the activities of customer service representatives, and in matching new agents with untended accounts. The end result is much higher cross-sell penetration.

Untapped potential

Across the industry, there are literally millions of “fifty-something” customers who maintain life policies purchased in their earlier days, but who ceased additional purchases with a particular carrier when the issuing agent stopped serving the account. Many people in this category have above-average financial profiles. And they have emerging needs for protected assets in retirement; a good fit for insurers. In other words, they are strong prospects.

Especially for carriers with high levels of agent turnover and commensurate high concentrations of orphan accounts, the advent of database marketing has opened a new world of opportunity. For the first time, players can systematically identify and profile static accounts, setting the stage for targeted outreaches that can be managed centrally–a big improvement over the scattered efforts typically seen in the field.

The logical next step is to identify patterns of sales success with similar types of customers who have active agent relationships. The goal is to recreate winning approaches with matching orphan accountholders.

In turn, all of this preparation is intended to provide a clear roadmap for marketing initiatives. Along with targeted direct mail campaigns to orphan accountholders, carriers can use their new tools to make selective agent assignments in the field and even to guide the efforts of representatives operating out of call centers.

It’s a compelling opportunity and undeniably a big stride for the industry, yet there’s a lingering drawback in the new approach–still no relationship context. Lacking the information cues and empathetic insights that spring from live interaction between customers and agents, carriers are seeing weak results from their database-driven campaigns in the early going. Clearly, something more is needed to convert analysis of internal customer information into sales.

While there’s nothing like direct customer-agent interaction, there are still opportunities to harness externally-generated customer information to recreate some of vital knowledge that ordinarily is gleaned conversationally in active relationships. Has the last child moved out, leaving an empty nest? Has the client recently relocated, downsized the dwelling and cut back on spending, perhaps indicating recent or impending retirement? Such changes in life circumstances often signal opportunities to provide new products and services to the customer.

Casting a wider net

To get a fuller picture of orphan prospects, carriers must look beyond their own records.

In other sectors of financial services, including retail banking and credit cards, providers are much further along in acquiring and analyzing external customer data. Primarily using information from the credit agencies, they have learned how to extract salient household characteristics and event triggers that provide insight into customer needs, providing a much richer context for marketing outreaches.

Ascertaining that someone quite probably just retired is very different than simply estimating that he or she might retire sometime over the next two years. The former conclusion provides the basis for specific outreach within a specific context; the latter can only support generalized outreaches with much lower odds of success.

This highlights the larger challenge in marketing to orphan accountholders, which is finding ways to bridge the knowledge gap that opens when client/agent relationships are severed. Internal analysis does provide valuable directional information; marrying it with market information can help to anchor outreaches within the much more personal, and actionable, context of household profiles and life events.

At a time of overall slowness in the life insurance industry, cross-selling to orphan accountholders can provide a breath of fresh air, especially for companies with high agent turnover and big caseloads of severed service relationships. While some players will count themselves fortunate to cross-sell 5 out of every 100 orphan accounts, others will double or triple that ratio. The difference, in large measure, will be marketing success in connecting with customers’ emerging needs.

Sam Radwan is a managing director at Novantas LLC, a management consultancy based in New York City. He can be reached at .


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