case studies
JaywingDMG reduces cost per policy acquisition for the insurance sector.
Brief
JaywingDMG has been helping leading UK insurers to improve the profitability of motor policies sourced from previous quote records and lapsed policies. These warm prospects are contacted eleven months after the initial
quote or policy lapse date, typically by direct mail. JaywingDMG has developed and tested sophisticated planning frameworks to inform insurers' future marketing activities to this group of prospects. The objective has been to improve the efficiency of campaigns, reducing the cost per policy acquired and enabling saved budget to be re-focused towards alternative acquisition strategies.
Deliverables
Quote and policy records provide a rich data source for modelling the likelihood of individuals responding or converting to an offer. JaywingDMG's approach is to build a marketing planning framework to identify improved targeting strategies for these monthly acquisition campaigns.
These planning frameworks comprise:
- a response model to predict the tendency of an individual to respond to a campaign
- a conversion model to predict the likelihood of conversion following response
- a segmentation of the prospect database to provide insight on preferred channels, incentives and tone
Response and conversion scores are combined within a planning framework typically consisting of around 25 cells. The cost and profitability per policy is calculated for each cell, identifying a substantial subset of the database delivering negative ROI. The segmentation illustrates that some of these prospects could be more receptive and profitable if an alternative channel strategy was adopted, together with more tailored incentives and creative tone.
Using these frameworks, JaywingDMG delivers a crossfunctional planning workshop to senior marketing personnel, call centre agents and other operational representatives to agree a new targeting strategy, which varies across the planning framework.
For those cells delivering a positive ROI, the current strategy is maintained. For the remaining segments, a new targeting approach is developed and tested. Alternative marketing channels, product offerings and creative strategies are evaluated to determine the strategy best suited to each group, resulting in improved response and conversion rates and hence increased return on investment.
Results
The planning framework provides the opportunity to slash direct mail costs by up to 50% with typically only a 15-20% reduction in policies written.
The savings made by eliminating the unprofitable cells from direct mail communications can then be re-invested in new activities, with better targeted propositions and creative work through alternative channels, including voice and digital.
