Corona Direct

Insurance company increases long-term customer profitability by 20 percent

Published on 29-Jul-2010

"Two years ago we were mailing four million letters annually at an average cost of $.50 per letter. We decided on a strategy that would help us mail less while maintaining our prospect conversion rate, so we looked for software that would allow us to achieve this goal. After modeling using IBM SPSS software and then fine-tuning our prospect mailings, we were able to reduce our costs by 30 percent while maintaining new customer conversion rates." - Philippe Neyt, Commercial Director, Corona Direct

Customer:
Corona Direct

Industry:
Insurance

Deployment country:
Belgium

Solution:
BA - Business Analytics, BA - Business Intelligence, Big Data & Analytics, Big Data & Analytics: Customers

Overview

Founded in 1931, Corona Direct is Belgium’s second largest direct insurance company, employing 150 people and generating revenues of $69.3 million in 2009. A subsidiary of the Belgian-French banking and insurance company DEXIA, Corona Direct provides customers with products such as car, fire, and property insurance.

Business need:
Corona Direct is Belgium’s second largest direct insurance company. To sustain its current level of growth, Corona Direct’s customer acquisition campaigns needed to be profitable. Historically, the cost of securing new customers exceeded first-year revenues by almost 50 percent.

Solution:
The company turned to IBM SPSS predictive analytics software solutions to efficiently create, optimize and execute their outbound marketing campaigns. Campaign costs were reduced by 30 percent – making them profitable. Additionally, long-term customer profitability increased by 20 percent, product sales rose significantly and payback for the cost of the implementation was achieved within six months.

Benefits:
As a result of using IBM SPSS predictive analytics software solutions, the company’s acquisition campaigns are now profitable. First-year revenues cover campaign costs, enabling Corona Direct to sustain its growth strategy. In addition: • Campaign costs have been reduced by 30 percent • Long-term customer profitability has increased by 20 percent • Product sales have risen significantly • Payback for the cost of the implementation was achieved within six months

Case Study

Situation

Founded in 1931, Corona Direct is Belgium’s second largest direct insurance company, employing 150 people and generating revenues of $69.3 million in 2009. A subsidiary of the Belgian-French banking and insurance company DEXIA, Corona Direct provides customers with products such as car, fire, and property insurance. Corona Direct markets to prospects and customers through four channels:
• Direct marketing
• Call center
• Web site
• Affinity insurance writing (through which it underwrites insurance programs for third-party vendors)

Critical issue
Corona Direct has been growing rapidly. Direct marketing campaigns play a key role in this growth, enabling Corona Direct to acquire new customers by offering attractively priced insurance products. To sustain its current level of growth, Corona Direct’s customer acquisition campaigns need to be profitable – that is, first-year revenues generated from new insurance policies should pay for the cost of the acquisition campaign. However, in the past, the cost of securing new customers exceeded first-year revenues by almost 50 percent, putting Corona Direct’s growth strategy at risk.

Solution
To turn its unprofitable acquisition strategy into a profitable one, Corona Direct turned to IBM SPSS predictive analytics software solutions. The software enables Corona Direct’s marketers to efficiently create, optimize and execute their outbound marketing campaigns. By using predictive analytics, Corona Direct automatically identifies groups that are likely to respond to a campaign. The company can then perform a sophisticated profit-cost analysis – balancing growth targets against profit margins. With this dual focus on likelihood of response and expected profitability, Corona Direct is able to optimize its potential for growth.

Results
As a result of using IBM SPSS predictive analytics software solutions, the company’s acquisition campaigns are now profitable. First-year revenues cover campaign costs, enabling Corona Direct to sustain its growth strategy. In addition:
• Campaign costs have been reduced by 30 percent
• Long-term customer profitability has increased by 20 percent
• Product sales have risen significantly
• Payback for the cost of the implementation was achieved within six months.

“Using IBM SPSS software solutions to gain a better understanding of our customers and market opportunities have enabled us to outperform the competition in both growth and profitability,” explains Philippe Neyt, commercial director, Corona Direct. “Predicting the needs and profitability of individual customers and prospects is key to this growth. However, creating a profitable acquisition strategy is only the first step. We expect to increase our success rate by 50 percent or more for targeted cross-selling and retention strategies.”

Next, Corona Direct plans to use predictive analytics to increase cross-selling within its call centers and to create profitable retention campaigns that focus on high-value customers. Corona Direct also plans to use predictive analytics to analyze and model historical data to detect fraudulent claims, reduce the costs currently associated with false claim requests and increase profits.

Products and services used

IBM products and services that were used in this case study.

Software:
SPSS Decision Management

Footnotes and legal information

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