Welcome to the Listening Post!

Influence Strategy with Data-Driven Insights

Tweet

 

Murli Bulwuswar, VP Innovation and Insights with Farmers Insurance, presented “Hitting Home Runs - Creating Disproportionate Business Impact from Research” at the AMA MRC in Atlanta. The mission of the department he founded, the Insights Creation Group, is partnering with business operators to guide strategy with insights derived from analysis and intuition. “I want to concentrate on research and the right brain, on influence and change management. I challenge you to be more reflective about what you are trying to accomplish, what your sense of purpose is, so that you can contribute deeper value.”

The Insight & Innovation Team partners with business operators:

• Asking questions
• Developing hypotheses
• Building statistical models
• Conducting financial analysis
• Recommending strategy
• Partnering in pilot implementation

While the insurance industry is data rich, Farmers did not have a team like this before but for 80 years has been salesforce driven in understand customers.

The team marries the intuitive and analytical. Unlike many other research departments, which are narrow and deep, the Insight & Innovation team is broad, providing a combination of right brain (creative) and left brain (complex) thinking to evolve from asking “what happened” to “what will happen” to “what is the best outcome”.

The team wants to transform research “to thought leadership driving action”, striking a balance between logic and emotion, “asking questions that matter”. Unlike others within a corporation, you in the research department have unique skills and unique access to data, Murli said. Researchers tend to overfocus on methodologies rather than outcomes. Murli shared three case studies to illustrate these points:

• After being asked “How do you connect service levels to customer-satisfaction surveys?” the insights team redefined this question as, “How do differentiated customer service levels impact incremental retention?” They analyzed actual retention, customer behavior, by customer attitudes (satisfaction). The team broke this out by different customer segments, tying retention to operational measures to identify that there was little ROI for providing the best service level: it simply didn’t improve retention sufficiently to justify added investment. This research outcome was more important to the audience than the tools and methodology used.
• The team moved from research to action on CLV (Customer Lifetime Value). Out of every 100 customers Farmers attracted, the top 20 generated two-thirds of the revenue and 80% of the profit. The bottom 10% brought in a $1,000 in revenue, while the top 10% brought in $18,000 in revenue. Farmers agents varied widely in their average CLV: the best agents had five times the CLV of the lowest. The team surveyed the practices and behaviors of agents, segmented them by agent CLV; the survey was self-revealing about the “seven habits” that separated high-value agents from low-value agents. “This was valuable but academic. What did we do with what we’ve learnt?” Murli asked. His team partnered with the Farmers distribution team and selected high-volume, low CLV agents for a pilot; these agents were trained in the best practices and generated a 25% increase in CLV vs. the control group. “We helped them succeed, behind the scenes.” This is influencing Farmers’ distribution strategy and whom the firm should be recruiting as agents.
• Tasked with identifying agents “gaming the system” and causing revenue leakage (for instance, offering an ABS discount for cars built before ABS was released), the I&I team broadened this to understanding other agent behaviors that affect agent level profitability: what are the agent economics? By conducting this analysis, the team identified $750 million in lost revenue attributed to agent behavior, if all agents could act as top-tier agents.

Because change is disruptive, you have to proceed with care when working with others in your organization. “When you suggest change, you are challenging their view of the world and their experience. You need to address this insecurity, making them feel that you are not parachuting in to give them this world changing insight but working with them to help them succeed, so that at the end of the tunnel there is limelight for them.” In the process, Murli learnt, “Flashes of brilliance are not self-explanatory. You need to promise incremental change.”

The pain is worth it. Murli concluded, “Top tier research must think revolutionary, and act evolutionary – create change, not just propose it! The litmus test is the financial impact you drive, focusing not just on insight but innovation.”