Leading South African insurer Metropolitan Life has chosen SAS to provide customer intelligence that will help the company reduce early defaulters and attrition, as well as improve customer share of wallet and customer life-time value.
Metropolitan Life expects to be able to improve customer retention by 40% among first-year policyholders. The ability to predict - within around 90% accuracy - the likelihood that a new policyholder will default in the first year means that Metropolitan Life can implement interventions and campaigns to retain these customers. Four or five times more customers default in the first year than in the second and third years so success in preventing attrition at the end of the first year also substantially increases the likelihood of the insurer maintaining a profitable relationship with its customers in subsequent years.
Metropolitan Life is also using SAS to analyse customer value in order to optimise the company's market segmentation model and is beginning work on profiling customers for up-selling campaigns. The company is testing which type of campaign - for example a call centre welcome call when the policy is due for renewal - is most likely to result in customer retention.
"The insurance market is highly competitive and there's currently a high interest in directing disposable income towards retail credit - which sections of the South African population have not had access to before - leaving the life insurance new business market flat," says Metropolitan Life's Senior Manager of Client Management AJ Kruger.
"Consequently, we must focus on increasing share of customer wallet among our existing client base as aggressively as acquiring new customers. We've focused on customer retention as the area where accurate intelligence will deliver the highest return on investment. We're expecting a return on our SAS investment of 200% over three years, amounting to around R10 million (just under $1 million).
"That's assuming we only used SAS for customer retention, whereas in fact we see far greater potential for SAS in helping us meet other customer-centric goals such as measuring customer profitability and profiling customers for up- and cross-selling campaigns."
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