Other parts of this series:
Vitality and Tesco: Case studies in effective data monetization
In my previous two posts I spoke about the unparalleled revenue potential that insurers have at their fingertips in the form of personal data. Seventy-five percent of customers are more than willing to share their personal information with insurers, provided that they are open about their intentions, give people a measure of control over the use of their data, and offer them something in return.
The sad truth, however, is that many insurers are not equipped to harness that data and convert it into profits. Nor are they the only players on the field – they have to compete with companies in telecommunications and banking, among others, as well as new entrants to the market that have superior capabilities for monetizing data.
In this post, I’ll look at two such companies: Tesco and Vitality.
The case of Tesco
Tesco, the giant retail group with revenues of £55 billion ($75.4 billion) in 2017, saw the untapped potential in their grocery shopper data and offered it to consumer packaged goods companies. They realized that shopper data could tell them and their suppliers a rich story about people’s behavior and what they want from their shopping experience.
Tesco has managed to ask and answer the ultimate question: What do customers want? The answer lies in their everyday behavior, which can be pieced together through the breadcrumbs they leave behind in the form of their personal data. This kind of insight is invaluable to the insurer who wishes to lead in the new. When service providers can identify and satisfy customer expectations, they are paving the way to long-term customer loyalty.
The case of Vitality
Vitality is a loyalty rewards program that has taken off in many parts of the world with over five million customers globally. It started as a partner of South African insurer Discovery, and today has alliances as far afield as China (with Ping An Group), Europe (Generali) and the US (John Hancock) among others. Vitality recognizes that customers are willing to modify their behavior – and become more loyal – if they are rewarded adequately, which is why more and more insurers are signing up to be a part of the winning formula.
Insurance carriers use the Vitality platform to gain insights into the behavior of their customers. This allows them to assess and price their risk more accurately, offer more value to their customers in the form of personalized risk protection and other services, as well as initiate new revenue streams. Customers receive rewards for their healthy lifestyle choices, which in turn lead to better health outcomes and fewer insurance claims. Vitality believes that investing in the health and wellness of customers over the long term delivers powerful returns—both for the insurer and the customer.
Vitality collects data about customers’ lifestyles, health and spending patterns. Customers allow it access to their everyday habits by wearing fitness monitors, using linked retail loyalty cards, and regularly completing online lifestyle questionnaires. They earn points for exercising, buying healthy food and other salutary activities, and can redeem these points through any of a large number of ecosystem partners.
Both case studies show how insurers can think outside their traditional way of doing business. In order to take full advantage of the revenue potential of their data, insurers need new skills, new business models and innovative cultures. Digital ecosystems are born every day as insurers, who lack the necessary digital skills and perhaps also brand strength and reach, form partnerships with companies that can help them monetize their data. Insurers have, for example, already started partnering with Amazon’s Alexa platform to sell insurance through Amazon Echo. This type of platform can create new ways to deliver value to customers, as well as new revenue for carriers.
In the last article in this series, I will talk about the five key questions insurers need to ask to develop a vision of effective data monetization. For more information on the topic, download the “Data Rich, Profit Poor” report or visit Accenture Strategy online.