Identify customer churn and potential at an early stage
3. identify changes
As fascinating as it is to understand your own customers and their reasons for churn, only deriving and implementing measures delivers real added value. Ideally, the reasons for churn can be ranked according to their influence and quick improvements identified. If deriving measures is not possible at this stage, further data analysis can be used. An evaluation of frequently occurring measures in other industries can also be helpful. Depending on the measure, the adjustments will benefit all customers, a selected group of customers, or the presumed churning customers.
Even if the OKP comprises a fixed scope of services, there is room for maneuver for optimization measures in the design of the services. In the area of supplementary insurance, there is further potential for product improvements. For example, free digital supplementary services are increasingly finding their way into the insurance environment and represent potential for product improvements. Customer satisfaction and loyalty are of course central elements of possible measures. It is conceivable, for example, that customers are proactively contacted and supported or that onboarding processes are optimized.
In the context of churn management, it also makes sense to re-evaluate and, if necessary, expand the company's own up-selling and cross-selling measures. Customer churn can thus be positively influenced. In addition, in the ideal case, the lost revenue from churned customers can be compensated for by up-selling and cross-selling alone (negative revenue churn).
No matter which measures are identified, they should never be developed in isolation. Methods such as human-centered design can help to identify the right measures. Using existing data, the effect of designed measures can often be tested and quantified.
Together with the measures, success factors with key performance indicators (KPIs) and their target values should also be identified so that the success of measures can be evaluated later. Defining KPIs is often difficult, especially if good reference values are lacking. However, practice shows that with some research and for assumptions made, good KPIs can be found. If the assumptions later turn out to be incorrect, individual KPIs can be discussed and adjusted afterwards.
It has become established practice for complex projects to conduct an initial pilot, and this is no different for churn management. If possible, identified measures should be tested on a reduced scale.
After the comprehensive preliminary work, the implementation of the identified measures starts. Depending on the measure, the resulting changes may have an impact on employees and/or insured persons. Accordingly, it may be worthwhile to accompany the implementation with dedicated change management. Depending on the measure, the customer may not notice the implementation of churn management because the changes mainly affect internal processes, for example.
Without good measurement procedures, the effect of measures will remain unclear. If comprehensive monitoring of churn management has not yet been set up, this is the right time. Self-service business intelligence solutions are ideal here, where data has already been prepared in such a way that it can be displayed quickly and flexibly from different views. In a first step, however, reduced approaches can also be pursued here. It is important that the right data is available to assess the effect of a measure. This includes currently available company-wide statistics, for example on churn, new recruits or marketing campaigns.
If measures are taken for specific customer groups, scoring and prediction dashboards at customer level are also useful in addition to the global statistics mentioned above. Ideally, this would allow customer service representatives to view the churn risk for each customer contact and take defined measures.
With the created monitoring of customer churn and its triggers, changes over time can also be monitored. This makes optimization processes much easier. New ideas can be quickly checked for their effect and, if necessary, taken further.
In addition to developments in customer preferences, market dynamics must also be monitored. Assumptions and initial data of analyses and prediction models change over time (often referred to as concept drift). Therefore, the initially conducted analyses should be regularly adjusted, improved and updated with current data. The prediction model for the churn probability of a customer is also by no means static, but must be regularly adjusted with new data.
The introduction of comprehensive and promising churn management should be approached in a structured manner and with a clear plan. The breadth of expertise required requires coordination and at the same time holds the potential for cross-disciplinary ideas and the generation of added value. Health insurance experts, organizational talent, data analysts, privacy officers, IT experts and other stakeholders should work together in highly interdisciplinary teams. Our diverse project experience allows us to support our clients with expertise in all of these areas and to contribute accumulated best practices.
Together, we ensure that the path to churn management does not end after an initial analysis or pilot. Instead, the Eraneos solution approach lays the foundation for data-based identification of mitigating measures and for operational churn management. This not only succeeds in retaining customers, but also enriches other customer-centric initiatives with data and insights in parallel.
Quantitative understanding of risks is part of the core business of any insurance company. Since churn management is based on the quantitative assessment of churn risks and their mitigation, it fits seamlessly into the special risk competence of insurers.
Those who correctly evaluate and use their data know their customers better, anticipate needs and opportunities for new services and products, and recognize market changes and risks in time.
insurance companies must be much more consistent in their focus on customer needs and keep pace with agile competition. Hence, it is important to realize your growth potential in this challenging environment and transform yourself into an integrated financial services provider using today's technology.
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