Data at Work

Barely recovering from the financial crisis and facing disruption from new technology, the insurance industry has to leverage on information outside of their organization to compete in today’s economy.

With the global economy still struggling to recover from the financial crisis, insurers have been fighting to maintain policy numbers amidst low interest rates. Life insurance products have become less attractive due to low rates and interest in investment-linked policies have declined as a result of the uncertain economy. In addition, the widespread adoption of new technology across all industries has raised customer expectations of insurance solutions and interaction channels. In order to maintain their competitive edge, insurers are looking into mobility data to help them stay competitive in today’s market.  

What is mobility data?

Mobility data refers to the trajectories of people and objects. In the insurance industry, the movement patterns of people in a city are of particular interest. This is commonly referred to as footfall, which involves measuring the number of people in and around an area within a period of time. With mobility data, insurers can explore new ways to optimize advertising, understand the needs of their customers and create new products.

Redefining the insurance industry with mobility data

Here are three examples of how insurers can use mobility data to increase conversions and create new products. In each example, anonymized mobility data around Miami, Florida, between 1 October 2016 and 31 October 2016 was used. The data is available from DataStreamX.

1. Improve targeted advertising 

Targeted advertising involves placing ads based on factors such as demographics, buying history and consumer behavior. This form of advertising allows advertisers to connect with audiences who are able to relate to the benefits that the product offers, increasing conversion rates in the process at the time it is needed. For targeted advertising to be effective, a strong understanding of demographics and consumer behavior is necessary.

In this example, we examine how MetLife can use mobility data to execute a real-time advertising campaign based on the location and intent of car buyers who are visiting automotive shops along NW 36th Street, Miami, Florida. The density heat map below shows the distribution of footfall traffic around two automotive shops in this area.
 

The red areas represent footfall traffic around Bill Seidle Suzuki, a car dealer specializing in new cars. The green areas represent footfall traffic around Chicago Motors, a car dealer specializing in used cars.

Based on this information, a real-time targeted advertising campaign could be carried out in this area to encourage new and used car buyers to purchase MetLife auto insurance. Using mobility data, MetLife could customize the advertising message to address the needs of new or used car buyers in the area so as to increase relevancy and conversions. By leveraging on mobility data to identify potential target audiences, insurers such as MetLife can increase conversion rates and improve the return on investment of their advertising campaigns.

2. Maximize revenue by upselling

Upselling is a sales technique where insurers offer customers the opportunity to purchase additional products and services. Such can include extra coverage on top of basic policies or upgrading basic coverage to a more comprehensive one whenever they are traveling overseas. The key to upselling is to offer relevant products to the customer at the right time. In order to upsell effectively, insurers have to understand their customer’s intent.

In this example, we examine how AllState can use mobility data to uncover customer intent in order to upsell effectively. Marketing managers at AllState could start with the question –what additional products would their customers want if they are going on a trip to Miami?

The answer to this can be easily found by looking at mobility data. The figure below shows the proportion of visitors who rent cars when they arrive at Miami International Airport.

We see that a considerable number of travelers, almost 13 percent, rent a car once they arrive at Miami International Airport.

Based on this information, AllState can offer upsell services such as car hire excess insurance in addition to basic travel insurance for customers who are traveling to Miami. This would allow AllState to maximize their revenue and provide customers with a delightful travel experience. Besides maximizing revenue through upselling, anticipating the needs of customers would allow AllState to build a level of trust with their consumers that will inspire their enthusiastic loyalty.

3. Create new products by understanding customers

Building the right customer relationships is essential for any insurer. Not only does it increase trust and loyalty, which results in repeat business, but also leads to customers recommending your product to their family and friends. Understanding who your customers are and what they want would help you customize your products and services to meet their needs.

In this example, we examine how Liberty Insurance can use mobility data to create new product offerings. The figure below shows the distribution of visitors to Hartsfield–Jackson Atlanta International Airport who have landed there at least two times a month.

We see that the majority of frequent flyers to Atlanta are from New York (5 percent, green), followed by Washington DC (4.5 percent, green) and Miami (4 percent, blue). The other cities contribute to less than 3 percent of the total frequent flyers population.

Based on this information, Liberty Insurance could focus on frequent flyers who frequently visit Atlanta from Miami, New York and Washington DC to offer customized travel insurance packages for these demographics. Personalized advertising messages and special offers could be designed around their needs to cross-sell or up-sell travel related insurance products to these newly identified consumer segments. By leveraging on mobility data to understand customer geographies, broad customer groups can be further segmented into smaller groups to allow for more effective allocation of marketing resources and to maximize cross-selling and up-selling opportunities.

Maintain your competitive advantage with mobility data

Insurance is a business built around risk and having a wealth of information is critical to mitigating such risk. With information such as mobility data, advanced demographics and external datasets, insurers will be able to improve their understanding of their customer’s needs, intent and expectations by leaps and bounds. Besides being able to advertise effectively to prospects of all ages and routines, insurers can also leverage on such data to increase customer engagement. In an industry with increasingly price sensitive consumers and stiff-as-nails competition, effective customer engagement may be the deciding factor that separates the winners from the losers.

How do I get mobility data?

Obtaining mobility data for use in decision-making may be a difficult task for the uninitiated. Variables such as the time of day, seasonality and local trends make mobility data nearly impossible to measure accurately by manual counting or sampling. These factors also affect the reliability of conclusions based on footfall data alone. As a result, mobility data is often used in conjunction with other types of data such as demographic data, allowing users to formulate and test their hypotheses.

Accurate and reliable mobility and demographic data can be obtained from mobile app companies who provide anonymous location and demographic information of their users at a small fee. If it is your first time purchasing data, consider using online marketplaces such as DataStreamX to help you get in touch with suppliers of mobility data easily.