Mining customer data

Is CRM paying its way for you?

Is CRM paying its way for you?

Knowledge of a customer's spending patterns and lifestyle is becoming the single most important competitive strength in the personal finance planning sector.

However, research among some of the UK's most prominent life insurers suggests that IT directors are failing to supply information to the business about the most profitable customers and products.

IT directors need to ensure that their companies' customer data meets data protection regulations and that software systems can mine the information in order to gain an edge over rival firms. In effect, IT directors are becoming corporate treasurers for a company's most valuable resource.

Many life and pensions firms have aging back-office systems which may not be joined up, so valuable customer data can fall through the cracks.

In contrast, companies in other sectors have a huge range of knowledge about their customers' lifestyles. Supermarkets, for example, not only know how profitable Mrs Bloggs is, but also that she recently had a baby because nappies have become part of her shopping list.

A supermarket may see a customer on average once a week. The up-to-date information provided by these weekly visits gives it a much greater chance of customer intimacy. One soap powder provider stopped providing a plastic scoop so that the customer had to call an 0800 number and provide details to get one - a marketing strategy that gave it access to up-to-date customer information and provided a huge commercial advantage.

In the personal finance sector, about 90% of the most popular life and pensions products are sold via intermediaries, either through an independent financial adviser or some one tied to selling products from a particular provider. About 66% of intermediaries are independent from product providers and, therefore, separate legal entities in the eyes of the information commissioner.

Policy information required by an IFA is generally held by the product provider. The provider is legally obliged to ensure that all the information is correct, secure and up-to-date. Currently, the custodians of these risks are the legal departments. The product provider may also use another company to administer the resulting policy, so customer information is fragmented.

However, there is tension between the marketing and legal departments, where marketing may want to increase distribution by accepting more IFA channels, while the legal department is sensitive to the number of increased commercial or reputational risks. The IT department is responsible for the data protection in both these channels and their potentially conflicting priorities.

IT managers at life and pension companies have to do more than simply invest in new customer relationship management software and update back-office systems. They must also act as peacemakers between legal and marketing departments. If they succeed, every one will win, including the customer.

Euan Robertson is director of financial services integration supplier Spektra

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