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Why Insurance is Like Victoria's Secret

At the 2012 Insurance & Technology Summit, CUNA Mutual CIO Rick Roy told the audience that the company's direct-to-consumer strategy is based on some very unlikely sources.

Madison, Wisc.-based CUNA Mutual "is just like Victoria's Secret," according to CIO Rick Roy. Speaking at this year's Insurance & Technology Executive Summit, being held in Rancho Palos Verdes, Calif., Roy said that his company learned this after hiring a direct-to-consumer business leader who had worked at the lingerie brand, as well as other retail organization including Land's End and The Limited.

"We don't win on price or product, we do win on delivering a great direct-to-consumer brand experience," Roy noted. "We win on data insight as to who and how we are offering our products to that market."

Customer retention is important to marketers across industries, Roy added, noting that while it may cost $200 to acquire a new insurance customer, selling that same customer another coverage can cost as little as $22.

[Read about lessons insurers including USAA, Humana and PEMCO have learned from retailers.]

"Getting more than the first sale is really, really key," he said. "The hard part is getting the second and third sale from the same consumer. The transaction cost must go down and sales volume and retention must go up. The business case is really that simple."

Data-driven marketing strategies are key to retaining that customer, Roy explained. The company focuses on "edit points" where the consumer buying decision can be influenced early in the process.

"We don't talk about big data using those words, but we definitely use big data every day in our operations," he said.

In addition, the company learned that retail measures results on a much quicker timeframe than insurers are used to.

"On Monday, we dedicate $1 million to our direct-to-consumer business, and at the end of the week we have to have $3 million in top-line revenue," he explained. "That's a little different focus than the project management we're used to, where things are measured in quarters and in years. It changes the perspective of IT."

IT at CUNA has "a lot of things going on" to enable this new strategy, Roy adds, and initiatives it's taken on have already yielded tangible results.

"Co you have multiple call centers because that's how you're structured internally, sending customers through a bunch of handoffs? It's something you can change easily," he says. "We are implementing a cloud-based solution that allows us to integrate the customer interaction across the call centers. Remember, consumers don't care about your internal structure."

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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