Customer Value Management |
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Loyal customers are both a scarce resource and a source of value. Insurers must make maximizing customer value an explicit and measured business goal. Fractal helps insurance companies measure and increase the lifetime value of the customer base by shifting the focus from managing products or marketing campaigns to managing the profitability of each individual customer over the entire life of the relationship. We enable companies to take full advantage of the economics of loyalty by increasing retention, reducing risk, and amortizing acquisition costs over a longer and more profitable period of engagement.
We perform a deep analysis of an insurer’s current customers and deploy our proprietary SegmentX methodology to reveal hidden characteristics and trends that affect value. We classify customers based on their behavior patterns and their migration across segments. We define Customer Lifetime Value (CLV) for a customer as the value he generates for the entire lifetime that he is associated with a product / service. CLV represents the net present value of profits from a single customer. It is the sum of the historic customer lifetime value and the predictive customer lifetime value
CLV = NPV(P1, P2, P3….. Pt)
A customer’s lifetime value serves as a benchmark without which the organization will be groping in the dark. Knowing a customer’s lifetime value can help evaluate the campaign benefits versus the costs or investments. It helps focus on keeping your existing customers longer and make them spend more to realize the expected CLV.
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