Optalitix believe that data should form the basis of how any business is constructed, even more so during times of significant change. Using your data better helps business managers see more, know more and do more.
Our experience working with many different clients in a variety of business environments enabled us to prepare a list of data uses that every good business should think about.
1. Boost sales by identifying your ideal customers
Your customer data contains valuable insights on the customers that are most likely to buy (the sales propensity). By harnessing these insights, you will identify your most likely sales opportunities, and ensure you focus your efforts on converting these leads. This is an application of the 80 / 20 rule – 80% of your sales will come from the top 20% of your sales leads measured by conversion likelihood. Customers applying this principle see a 20% to 50% uplift in sales.
2. Improve retention by focusing retention effort
Customer lapse likelihood is easy to measure using your data. By identifying the customers with the highest risk of lapse, you can focus retention efforts on these customers, ensuring a far more focused approach and better outcomes. Optalitix customers reduced their lapses by 33% using this approach.
3. Increase profitability by finding the most profitable customers
Identifying your most valuable customers is critical to improving profitability. This can be achieved in many different ways, e.g. by premium value, premiums less claims, or lifetime value which allows for all the costs of the product. Applying these measures allows you to focus retention on your best customers, and improve the value generated by your sales.
4. Improve your pricing, gear up your profit
Data should be used to improve pricing by analysing the profitability of different customers, conversion likelihood, retention likelihood, etc. Pricing is an ongoing, continuously evolving task that needs to adapt to changes in the market and also to your own business drivers. Understand your data and how it can be used to improve your profitability. Small changes in pricing can deliver outsized gains in profitability.
5. Reduce the cost of claims to boost profitability
For insurers, the cost of claims make up the majority of their cost base, often equating to up to 90% of premium, while profit margins are often only 3% to 5%. Managing claims better significantly boosts the bottom line, and data will identify the opportunities to do this. Optalitix has helped reduce claims costs by over 10% for our customers in the motor insurance and healthcare space, creating significant increased value.
6. Identify fraud to reduce losses
Criminal activity has increased as a result of the COVID-19 pandemic, resulting in significant losses for businesses. By understanding your data better, it is easier to identify unusual events that could indicate fraud. The tools available to track unexpected events, and investigate them, allow companies to reduce their exposure to criminal activity.
7. Manage your portfolio risk to write more business with less volatility and capital requirement
Each new policy carries risk, and as this risk mounts, the potential for large losses increases accordingly. Real-time data tracking changes in portfolio risks allows insurers to manage their book better, taking on and retaining the right risks based on their current circumstances. The data helps provide critical insight to the management of risk, empowering insurers to write more business with less risk and capital.
8. Make better decisions by measuring profitability in real time
It’s critical for fast-moving businesses to know how much value is being created, this can be difficult to determine until accounts are produced. The data in your business can be tracked in real time to determine real value, allowing more informed management decisions that drive businesses to greater profitability.