Open Enrollment | Subscribe to Target Marketing HERE
Connect
Follow us on
Advertisement
 

Farmers Insurance's Shiv Gupta on How Predictive Models Can Improve Direct Mail ROI

March 24, 2010 By Heather Fletcher

Considering Farmers Insurance Group has been in business since 1928, it definitely has a lot of historical information about its auto, home and life insurance policy holders. The Los Angeles-based company that began with the intention of insuring the vehicles of rural farmers decided it was time to build on that data and take an intelligent look into the future through predictive modeling aimed at retaining customers.

The process already has yielded a 14 percent increase in Farmers' return on investment for its direct mail efforts. Shiv Gupta, Farmers' director of insight and innovations, says the insurance provider decided to tap a resource it had been using for years—Cary, N.C.-based software provider SAS Institute. About two years ago, Farmers began gathering data and using SAS Analytics to build the predictive model that came online nine months later.

"Our objective was to develop a predictive model for retention and lifetime value of every customer we have in our book of business," Gupta says. "And we have about 7 million households, and the transactions are about 20-fold of that. ... [The predictive model] provided us not only the ability to cleanse large volumes of data quickly and easily, restructure the data so that we could use it for analysis, but then also seamlessly go into the analysis stage and complete that analysis and batch work so that we could actually develop lifetime value numbers for every single household in Farmers—historically, five years back and today."

Gupta explains more of Farmers' thinking:

Target Marketing: How did Farmers Insurance reorganize its direct marketing strategy to have predictive modeling be the foundation?
Shiv Gupta:
So, when we initially started asking the question, "Who are our best customers?" we were able to identify them rather easily, looking at history. Then we said, "Can we predict, day one, who our best customers will be?" And that's when the predictive modeling started to come in. ... Using the data that we collected when they walked in the door, we were able to develop a very strong model that helped us separate those customers who were going to be with us for a significantly lengthy amount of time and those who were likely to detrite quickly. Using that internal model and that data, we were able to map to external data that was provided to us by mailing vendors for our own customers. And through that mapping, we were able to develop a mailing campaign model. Obviously, that mailing campaign model doesn't provide as strong of a separation as our internal model. But, nonetheless, it's powerful enough to where we've been able to get significant improvement in ROI ...

 

SPONSORED CONTENT

MORE ON DATABASE & CRM >>

FROM THE BOOKSTORE

As important as email marketing is, being an expert at it is no easy task. But do not fret. Email Marketing 2014 provides the trends and best practices you need to follow. You'll find: 21 email trends charts featuring data from Who's Mailing What!Analysis of 11 effective cross-channel emails Best practices covering everything from email copywriting and design to data, metrics, CRM, deliverability and more4 email case studies Email Marketing 2014 Trends, Best Practices & Case Studies

As important as email marketing is, being an expert at it is no easy task. But do not fret. Email Marketing 2014 provides the trends and best practices you need to follow. You'll find: 21 email trends charts featuring data from Who's Mailing What!Analysis of 11 effective cross-channel emails Best practices...

ORDER NOW

This PDF book explores a range of marketing metrics and seek to help marketers to answer such questions as:  What metrics to use to determine whether your marketing/advertising programs are accountable? And is it a waste of money, hence a danger to the company, if your marketing strategy and executions are not accountable? How to calculate how much you can afford to spend to acquire a customer or make a sale. And how can you calculate the customer’s lifetime value? How to understand the relative economics between customer acquisition, retention and CRM. How to measure the funnel process and which improvements will have the most impact.Your download of this book will also include model templates that you can use to immediately calculate and increase profitability for all your marketing efforts.  Profiting from the Magic of Marketing Metrics

This PDF book explores a range of marketing metrics and seek to help marketers to answer such questions as: What metrics to use to determine whether your marketing/advertising programs are accountable? And is it a waste of money, hence a danger to the company, if your marketing strategy and executions...

ORDER NOW

 

SPONSORED CONTENT

MORE ON DIRECT MAIL & POSTAL >>

FROM THE BOOKSTORE

This PDF book explores a range of marketing metrics and seek to help marketers to answer such questions as:  What metrics to use to determine whether your marketing/advertising programs are accountable? And is it a waste of money, hence a danger to the company, if your marketing strategy and executions are not accountable? How to calculate how much you can afford to spend to acquire a customer or make a sale. And how can you calculate the customer’s lifetime value? How to understand the relative economics between customer acquisition, retention and CRM. How to measure the funnel process and which improvements will have the most impact.Your download of this book will also include model templates that you can use to immediately calculate and increase profitability for all your marketing efforts.  Profiting from the Magic of Marketing Metrics

This PDF book explores a range of marketing metrics and seek to help marketers to answer such questions as: What metrics to use to determine whether your marketing/advertising programs are accountable? And is it a waste of money, hence a danger to the company, if your marketing strategy and executions...

ORDER NOW

This book explains why experience is everything and how the future of business will come down to shared experiences. Aligns the tenets of user experience with the concepts of innovative leadership to improve business performance and engagement and to motivate readers to rethink business models and customer and employee relationshipsMotivates readers to rethink business models, products and services, marketing, and customer and employee relationships with desired experiences in mindBrian Solis is globally recognized as one of the most prominent thought leaders and published authors in new media, and is the author of Engage! and The End of Business as Usual!  What's the Future of Business?: Changing the Way Businesses Create Experiences

This book explains why experience is everything and how the future of business will come down to shared experiences. Aligns the tenets of user experience with the concepts of innovative leadership to improve business performance and engagement and to motivate readers to rethink business models and customer and employee relationshipsMotivates readers...

ORDER NOW

 

COMMENTS

Click here to leave a comment...
Comment *
Most Recent Comments: