Winterthur Competes on Loyalty, Not Price

With the advent of the Internet age, the rules have changed in the insurance business. There is much greater price transparency, customers are more likely to shop around for the best deal, contracts are shorter, and customer turnover is at unprecedented levels.

As the No. 1 composite insurer in Switzerland, Winterthur decided it would be a mistake to compete on price alone. "We decided to focus on delivering superior service and claims handling to our best customers," says Marcel Stettler, Head of CRM Operations at Winterthur.

But what is a "good" customer?

"From a marketing and business development point of view, it is the ranking in the context of a campaign that's of critical interest, not the absolute current value," says Stettler.

A holistic view
Analyst Andrew Harper used SAS to calculate present and long-term customer value based on a holistic view of the customer.

"It is not just a matter of having powerful analytical tools. Reliable, clean data is critically important to our analysis. SAS enables you to integrate data tables relating to different products quickly and efficiently," says Harper.

Approximately 22 percent of Winterthur customers generate 80 percent of value. So the next challenge was how to focus marketing efforts. "You need to know which customers are likely to leave for the competition and which are likely to buy other products," says Harper. Analysis with SAS enabled Winterthur to identify several priority groups for each campaign.

The results to date have been impressive. "On a selection of the best 50 percent of prospects, we typically get an increase in response rates in the order of 25 to 50 percent," says Stettler.

Managing customer loyalty is even more of a fine art. Having identified the customers who are at risk and put the relevant information in front of the sales agents, Winterthur marketers have to work out how best to approach them.

Agents are impressed by the strategy. "The next step is to put together packages that make the sales agents feel really confident that they can approach valued customers on an individual basis, one that emphasizes both the rational and emotional advantages of staying with Winterthur," says Stettler.

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