Segment-of-One Personalization Part 1: The End Goal

The merits of well-executed personalization are legion. Financial institutions (FI) can potentially generate up to $300 million in revenue, for every $100 billion in assets under management by interacting with customers in hyper-personalized ways.  The reality is that many providers have struggled to deliver the tailormade experiences those customers expect. In banking, for instance, nearly 90% of firms fall short. So much so that two-thirds of their clientele feel that most retailers deliver a much better personalized experience.

FIs are currently lagging in their ability to offer true omnichannel experiences, leading customers to deflect to competitors with more personalized experiences, according to the World Retail Banking Report 2022 published by Capgemini and Efma. The typical consumer has come to expect personalized experiences in their digital lives, right from online shopping recommendations to curated music playlists to TV show suggestions based on their watch history.

Banks and insurers have an opportunity to do better, leveraging advances in technology. By gingerly gleaning information the customer offers, organizations can anticipate needs, make personalized recommendations, and prevail during the moments that matter.

Let’s consider a customer hard pressed to make an investment in property, due to a poor credit score. She receives a tailored mortgage offer from her bank. In this instance, being a long-running customer, the bank had formed a good understanding of her financial situation and aspiration. Furthermore, knowing that she had saved appropriately to put down a reasonable deposit, the bank proposed a personalized offer with a list of rates and payments to expect. She agreed, content that she was additionally presented an opportunity to improve her credit score and financial standing.

Personalization is about delivering such valuable services or products to customers based on personal experiences and historical data. It helps to build trust and drive results and revenue. In many ways, personalization is the magic potion that lets organizations deliver solutions to their customers before they even perceive they have a problem.

This isn’t a novel trend, but rather a throwback to business models that drew consumers to FIs before the advent of mass marketing. Decades ago, consumers would visit banks or insurers wherein they would know personnel on a first-name basis. The situation today is very different, with much more fragmentation.

To meet the growing demand for personalized experiences, carriers leverage segmentation based on characteristics such as demographics and age to design the most appealing offers. With the abundance of available data and sophisticated technology, insurers can drill down to the segment-of-one. Hyper-personalization has far-reaching benefits, helping to drive more lead generation, improve revenue, and boost loyalty. There are 3 prevalent means to achieve personalization:

1. Personalized bundles: Bundling helps carriers create unique customized offerings to garner customer loyalty. Allstate offers a range of bundles, the most popular include home and auto, renters and auto, renters and motorcycle insurance. Customers benefit from multiple types of protection while enjoying multi-policy discounts.
2. Personalized communication: Nearly 9 in 10 customers who switched their insurer or bank were unsatisfied with the way they were contacted. Health insurer Aetna has partnered with Apple to use health history and smartwatch data to provide personalized health recommendations and set customized fitness goals.
3. Personalized quotes: In addition to tailored recommendations, insurers can leverage customer analytics to customize plans and dynamically adjust quotes. Progressive Insurance’s Snapshot program personalizes insurance rates based on actual driving and offers a customized premium.

Personalization is a win-win proposition. Tailored real-time digital customer experiences are a potent differentiator in today‘s context. It adds value to customers as well as FIs. With the right technology foundation, FIs can supplant outmoded attitudes with modern digital strategies to reap untapped benefits and watch their investments accrete over time.

Part-2 unravels select successes and strategies.

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