CHANGING of THE GUARDIAN

SBHD: Pulling together its customer records to set up a marketing database, Guardian Insurance Group called in US firm Harte-Hanks. And, as Jane Dudman reports, the company is already seeing the benefits of tightly-targeted campaigns

After years of keeping customers records on separate files Guardian Financial Services, a subsidiary of Guardian Insurance Group, decided to bring in a system to develop a single customer database. The PCIS system, which has been running since April last year, was written by US company Harte-Hanks. The company specialises in this type of work and has had a direct operation in the UK – based in Beaconsfield – for the past five years.

A key factor in choosing Harte-Hanks was the relatively low cost of PCIS. “In total, the system has cost less than £100,000,” says Guardian Financial Services marketing director Stuart Gitsham.

PCIS is being used in three areas. The first is lead generation. Harte-Hanks takes files from Guardian, cleans them up and dedupes them. Programmers then append other types of transactional information, such as channels of distribution and how long policies have been held. Together with Acorn lifestyle and occupation classifications, this enables the final system to pull together a single database.

The company has already seen some of the benefits of this approach. Lead generation included opportunities for cross-selling, once the company had matched its 1.25 million policies against a customer base of just under 1 million.

The system is also being used for a number of the company’s customers that are not serviced by a company agent or independent adviser. “We need to put these people out to our salesforce, and the benefit of the Harte-Hanks system is that we are able to match the sales executive against the profile of the orphans,” says Gitsham. So if a particular executive excels at selling to the over-50s he can be allocated people in that category.

A third area being targeted is long-term customer loyalty. “If we can improve our long-term lapse rates by one or two per cent by improving loyalty that will be a good payback,” says Gitsham.

To this end, Guardian is putting together a company magazine. But, rather than sending the title to its entire customer base, the company is targeting the customers it thinks are most likely to respond to the loyalty initiatives and product offerings being promoted in the magazine – reducing its cost.

Gitsham adds: “We have already sent mailshots using the Harte-Hanks database. When we launched our `Critical Illness’ insurance we knew exactly what kind of customer groups would benefit from it.

“The new system enabled us to be much more selective in finding the customers who fitted this profile. Consequently, we didn’t have to do a blanket mailing, which clearly saved us money.

“We can also continually monitor the effectiveness of our mailings and refine the profiles accordingly.

“Before, we couldn’t do any profiling ourselves. The only way this was possible was to go to an outside mailing house, which took our total client list and extracted data for us. But this tended to be costly and quite time consuming,” says Gitsham.

A final bonus of using the system is feedback into other areas, he adds. “In market planning and product work we will be able to look more closely at what we are doing and sharpen it up”.

The system takes an analytical approach, rather than an interactive view. Although sales people out in the field will be able to do update records, such as flagging customers who have requested they should not be sent direct mail, the main system is updated centrally to preserve the integrity of the database.

But Gitsham adds a note of caution about the system: “The people using the system have a good background in business analysis. That is important because you need to have someone interested in looking at what is underlying the figures, and what they mean. You have to think about the system – it isn’t all just there on a screen.”

Gitsham had to persuade his own in-house computer team that it would be a good idea to install the system. “Like all IT departments, they are proud of what they can do and there was an initial feeling that they could write a system like this themselves. But the IT manager recognised, as I did, that if we tried to develop this type of system we would spend as much time and money putting together the specifications and doing the business analysis as it would cost us to buy the system. It was better to spend the £100,000 and see what we could learn from there. So it was a clear cut decision,” says Gitsham.