Forecasting the next likely purchase events of insurance customers: A case study on the value of data-rich multichannel environments

• Published in: International journal of bank marketing 2018-09, Vol.36 (6), p.1125-1144
• Main Authors: Mau, Stefan, Pletikosa, Irena, Wagner, Joël
• Format: Article
• Language: English
• Subjects: Age; Automobile insurance; Bank marketing; Case studies; Customer relationship management; Customers; Gender; Households; Insurance industry; Insurance policies; Insurance premiums; Marketing; Objectives; Personal information; Policyholders; Retention; Studies
• ISSN: 0265-2323; 1758-5937
• DOI: 10.1108/IJBM-11-2016-0180

PurposeThe purpose of this paper is to demonstrate the value of enriched customer data for analytical customer relationship management (CRM) in the insurance sector. In this study, online quotes from an insurer’s website are evaluated in terms of serving as a trigger event to predict churn, retention, and cross-selling.Design/methodology/approachFor this purpose, the records of online quotes from a Swiss insurer are linked to records of existing customers from 2012 to 2015. Based on the data from automobile and home insurance policyholders, random forest prediction models for classification are fitted.FindingsEnhancing traditional customer data with such additional information substantially boosts the accuracy for predicting future purchases. The models identify customers who have a high probability of adjusting their insurance coverage.Research limitations/implicationsThe findings of the study imply that enriching traditional customer data with online quotes yields a valuable approach to predicting purchase behavior. Moreover, the quote data provide supplementary features that contribute to improving prediction performance.Practical implicationsThis study highlights the importance of selecting the relevant data sources to target the right customers at the right time and to thus benefit from analytical CRM practices.Originality/valueThis paper is one of the first to investigate the potential value of data-rich environments for insurers and their customers. It provides insights on how to identify relevant customers for ensuing marketing activities efficiently and thus avoiding irrelevant offers. Hence, the study creates value for insurers as well as customers.