Analysis of Internet Purchasing Behavior

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					                                                                                        9/28/2011




        Analysis of Internet Purchasing
                   Behavior

                             October 3, 2011
                               In Focus S i
                           CAS I F      Seminar

    Kevin Levitt        Roosevelt Mosley, FCAS, MAAA            Nick Kucera
Senior Vice President              Principal                     Consultant
   comScore, Inc.        Pinnacle Actuarial Resources   Pinnacle Actuarial Resources

                                                  Experience the Pinnacle Difference!




  Discussion Topics
      Current State of Insurance Marketing
      Customer response analyses
      comScore background and data
      Description of research
      Characteristics of shoppers
      Model development
          Analysis of quotes submitted
          Analysis of policies purchased
      Impact of price on conversion
      Unstructured data
      Additional Research
                                                                                2




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Current State of Insurance Marketing

  Explosion in the investment that insurers are
  making in marketing
  Many different advertising mediums are being
  used
    Traditional, internet, social media, etc.
  Has led to the understanding that customer
  behavior is about more than price
    Customer service, reputation, convenience
  Different elements are important to different
  market segments

                                                              3




Customer Response Analyses
             Marketing Effort
                                                 Quoting
                                                 Analysis
                                                 A l i
                   Quote
                                                Conversion
                                                 Analysis
                   Sale
                                                  Lapse /
                                                Cancelation
                                                 Analysis
            Renewal Quote
                                                Retention
                                                 Analysis
                Renewal

                                                              4




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Customer Response Analyses
 Quoting analysis: analysis of the likelihood of a
 prospective insured obtaining an insurance quote from
 you
 Conversion analysis: analysis of the likelihood of a
 prospective insured that has received a quote purchasing
 insurance from you
 Lapse/Cancelation analysis: likelihood of an insured not
 lapsing or canceling the policy mid-term
 Retention analysis: analysis of the lik lih d of a current
 R      i      l i       l i f h likelihood f
 insured renewing with you



                                                          5




Customer Response Modeling –
Challenges for Insurance Companies

 Model structure and parameterization
 New territory – learning curve
 Priority
 Internal data availability
 Internal data applicability
 Availability of price change data
 Measuring market competitiveness
 Applications

                                                          6




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      comScore Background & Data




                                                              7




 comScore is a Global Leader in
 Measuring the Digital World
NASDAQ            SCOR
Clients           1700+ worldwide
Employees         900+
Headquarters      Reston, VA
                  170+ countries under measurement;
Global Coverage
                  43 markets reported
Local Presence    32 locations in 23 countries




                                                      V0910

                                                              8




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What We Do….
We provide digital marketing intelligence that helps
our customers make better-informed business decisions
and implement more effective digital business strategies
       p                          g                  g
We measure the continuous online activity of 1 million
people in the U.S. who have granted us explicit permission
to confidentially measure their Internet usage patterns.
Our consumer panel is a representative cross-section of the
U.S. population, worldwide regions and individual countries
We also have permission to:
   Survey panelists
   Match to third-party databases
   Append offline data



                                                                9




The Trusted Source for Digital
Intelligence Across Vertical Markets
      9 out of the top 10             9 out of the top 10
      INVESTMENT BANKS                AUTO INSURERS


      4 out of the top 4              9 out of the top 10
      WIRELESS CARRIERS               INTERNET SERVICE
                                      PROVIDERS

      47 out of the top 50            9 out of the top 10
      ONLINE PROPERTIES               PHARMACEUTICAL
                                      COMPANIES

      45 out of the top 50                           p 0
                                      9 out of the top 10
      ADVERTISING AGENCIES            CONSUMER FINANCE
                                      COMPANIES

      9 out of the top 10             9 out of the top 10
      MAJOR MEDIA COMPANIES           CPG COMPANIES
                                                              V0910




                                                              10




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Auto Insurance Quote Detail
 Data is captured from what panelists see using
 scraping technology




                                                                               11




Auto Insurance Quote Detail
Data for 5 Top Auto Insurance Company Sites
  – Quote                                     – Drivers
     • ZIP code                                  • Age
     • Bodily injury liability limits            • Gender
     • Coverage package                          • Marital Status
     • Premium quoted                            • Industry/Occupation
     • Final Purchased Premium                – Vehicles
     • Company name                              • Vehicle year/make/model/type
     • Homeownership                             • Vehicle use
     • Whether SSN entered                       • Annual mileage
     • Primary driver education                  • Comprehensive deductibles
     • Current Insurance Information             • Collision deductibles
            • Whether currently insured       – Incidents
            • Length of gap in coverage          • Incident Type
            • Length of current carrier          • Incident Description
            • Length continuously insured
            • Prior BI Limit

                                                                               12




                                                                                           6
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  Auto Insurance Quote Detail Data –
  Source of Traffic Data
      Source of traffic is broken out into the following
      categories:
             P id search
             Paid      h
             Natural search
             Webmail sites
             Other referred
             Non-referred
      For search, we know the search engine, click type
      (paid/natural), and the search phrase
      For webmail sites and other referred, we know
      the referring site

                                                                                  13




  Pinnacle & comScore Research

Marketing Effort
                    Population   Target        Description

                    Auto         Quote         Of those that visit the website, people
                    Insurance    Initiated     with what characteristics are more likely
                    Website                    to start the quote process?
     Quote          Visitor

                    Quote        Quote         Of those that initiate the quote process,
                    Initiated    Submitted     what is the likelihood that they complete
                                               it?
                    Q t
                    Quote        Policy Bind
                                 P li Bi d                                       quote
                                               Of those that actually submit the quote,
      Sale          Submitted                  how many complete the purchase?




                                                                                  14




                                                                                                  7
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            Characteristics of Shoppers




                                                                                                           15




        Data Summary – Means of Entry
                                        Model - Quote Submitted
                                           Means of Entry
    80.0%                                                                                                  600
                     570                                      559
                                                                                         546
  70.0%                                                                                                        F   S
N
                                                                                                           500 r   u
u
                                                                                                               e   b
m                                   463
  60.0%                                                                                                        q   m
b
                                                                                                               u   i
e                                                                                                    411
                                                                                                           400 e   t
r
  50.0%                         46.8%                                                                          n   t
                                                                                                               c   e
o
                                                                                                               y   d
f
    40.0%                                                                                                  300
                                                         32.6%                                                 o p
V
                                                                                                               f e
i 30.0%
                                                                                                                 r
s                                                                                                          200 Q
i
                                                                                                               u 1
t 20.0%
                                                                                                               o ,
o
                                                                                                               t 0
r                                                                                                          100 e 0
                9.7%
s 10.0%
                                                                                   5.4%          5.5%          s 0


     0.0%                                                                                                  0
            Natural Search   Non-Referred           Other Referred           Sponsored Search   Webmail
                                                    Means of Entry

                                        Exposure Percentage         Frequency per 1000                     16




                                                                                                                              8
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                                    Data Summary – Session Day/Time

                                                                                                                                                      Model: Purchase Made During Session
                                                                                     30.0%                                                                                                                                                                                                 120.00
Exposure (Sessions with completed quote)




                                                                                     25.0%                                                                                                                                                                                                 100.00




                                                                                                                                                                                                                                                                                                        Purchase Frequency (per 1,000)
                                                                                     20.0%                                                                                                                                                                                                 80.00



                                                                                     15.0%                                                                                                                                                                                                 60.00



                                                                                     10.0%                                                                                                                                                                                                 40.00



                                                                                     5.0%                                                                                                                                                                                                  20.00



                                                                                     0.0%                                                                                                                                                                                                  -
                                                                                                                                 Weekday Day (9-5)




                                                                                                                                                                                       Weekday Late




                                                                                                                                                                                                                      Weekend Night
                                                                                                     Weekday Morning




                                                                                                                                                           Weekday Evening




                                                                                                                                                                                                                                                      Saturday




                                                                                                                                                                                                                                                                            Sunday
                                                                                                                                                                                        (10PM+)




                                                                                                                                                                             Session Day/Time




                                                                                         Data Summary – Driver1 Age
                                                                                                                                                      Model: Purchase Made During Session


                                                                                      18.0%                                                                                                                                                                                                    100.00

                                                                                      16.0%                                                                                                                                                                                                    90.00
                                           Exposur (Sessions with completed quote)




                                                                                                                                                                                                                                                                                               80.00
                                                                                                                                                                                                                                                                                                        Purchase Frequency (per 1,000)




                                                                                      14.0%
                                                                                                                                                                                                                                                                                               70.00
                                                                                      12.0%
                                                                                                                                                                                                                                                                                               60.00
                                                                                      10.0%
                                                                                                                                                                                                                                                                                               50.00
                                                                                       8.0%
                                                                                                                                                                                                                                                                                               40.00
                                                                                       6.0%
                                                                                                                                                                                                                                                                                               30.00
                                                 re




                                                                                       4.0%
                                                                                                                                                                                                                                                                                                        P




                                                                                                                                                                                                                                                                                               20.00
                                                                                                                                                                                                                                                                                               20 00

                                                                                       2.0%                                                                                                                                                                                                    10.00

                                                                                       0.0%                                                                                                                                                                                                    -
                                                                                                                       19


                                                                                                                            20


                                                                                                                                                 21


                                                                                                                                                      22


                                                                                                                                                           23


                                                                                                                                                                              24


                                                                                                                                                                                      25-29


                                                                                                                                                                                                      30-34


                                                                                                                                                                                                              35-39


                                                                                                                                                                                                                                      40-44


                                                                                                                                                                                                                                              45-49


                                                                                                                                                                                                                                                          50-54


                                                                                                                                                                                                                                                                  55-59


                                                                                                                                                                                                                                                                          60-64
                                                                                              <=18




                                                                                                                                                                                                                                                                                     65+




                                                                                                                                                                                   Age Driver 1




                                                                                                                                                                                                                                                                                                            18




                                                                                                                                                                                                                                                                                                                                                9
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                                                         Data Summary – Number
                                                             Vehicles/Drivers
                                                                     Model: Purchase Made During Session


                                           70.0%                                                                                       90.00
 Exposur (Sessions with completed quote)




                                                                                                                                       80.00
                                           60.0%




                                                                                                                                                urchase Frequency (per 1,000)
                                                                                                                                       70.00
                                           50.0%
                                                                                                                                       60.00

                                           40.0%                                                                                       50.00


                                           30.0%                                                                                       40.00

                                                                                                                                       30.00
                                           20.0%
       re




                                                                                                                                               Pu
                                                                                                                                       20.00
                                                                                                                                       20 00
                                           10.0%
                                                                                                                                       10.00

                                            0.0%                                                                                       -
                                                   1/1




                                                            1 / 2+




                                                                         2/1




                                                                                       2/2




                                                                                                     2 / 3+




                                                                                                                  3+ / < 3




                                                                                                                             3+ / 3+
                                                                               Policy Number Vehicles / Drivers




                                                                                                                                                   19




Data Summary – Bodily Injury Limit




                                                                                                                                                   20




                                                                                                                                                                                      10
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     Model Development




                                   21




   Modeling Techniques

            Neural
           Network
           N      k

Decision              Regression
 Tree                  Analysis


           Ensemble



                                   22




                                              11
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   Quotes Submitted Analysis




                                         23




Submitted Likelihood Model – Decision Tree




                                                    12
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Decision Tree – English Rules
       Low Estimate
          IF total_pages <      11.5
               total_ssl_page
          AND total ssl page <       9.5
                                     95
          Quote Initiated: 0.4%
       High Estimate
              IF aig EQUALS 1
              AND      11.5 <= total_ssl_page
              AND       4.5 <= visit_time
              AND means_of_entry IS ONE OF: WEBMAIL NON-REFERRED SPONSORED SEAR
              NATURAL SEARCH
              AND total_pages <        15.5
              Quote Initiated: 71.4%




Quote Submitted – Number of Prior Visits

                                 Number of Prior Site Visits
      1.200

R
e
                   1.000
                   1 000
l     1.000
a   S
t   u                             0.889
i   b
v   m 0.800                                                   0.779
e   i
    t                                                                             0.668
L   t
i   i
      0.600                                                                               0.557
k   n
e   g
l
i   Q
      0 400
      0.400
h   u
o   o
o   t
d   e
      0.200
o
f

      0.000
                    0               1                         2                    3       4
                                                     Number of Prior Visits

                                        Relative Likelihood of Submitting Quote                   26




                                                                                                             13
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                             Policy Purchased Analysis




                                                                                                                                                           27




                                                           Age of Driver
                                                     Model: Purchase made during session

             1.40                                                                                                              18%
                                                                                              131%
                                                                                                                               16%
             1.20                                                                                    118%
                                                                                117%
                                                                                       111%                                    14%
                                                                                                            104% 104% 103%
             1.00                                                        100%
                                                                                                                                     Exposure Percentage




                                                                                                                               12%
Relativity




             0.80                                                                                                              10%
                                                           76%
                                                     69%         72%
                                               67%
             0.60                                                                                                            62%8%


                                         47%                                                                                   6%
             0.40              41%
                                                                                                                               4%

             0.20      20%
                                                                                                                               2%


             0.00                                                                                                              0%


                    Sessions with Completed Quote
                    Modeled Relativity                                 Age Driver 1
                    One Way Relativity


                                                                                                                                                           28




                                                                                                                                                                      14
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                                                                     Education

                                                              Model: Purchase made during session
                             2.50                                                                                                                         50%

                                                                                                                                                          45%

                             2.00                                                                                 196%                                    40%

                                                                                                                                                          35%




                                                                                                                                                                Exposure Percentage
                             1.50                                                                      155%                                               30%
                                                                                                                               149%
                Relativity




                                                                                           146%
                                                                               131%
                                                                       126%                                                                               25%

                             1.00                             100%                                                                                        20%

                                                                                                                                                          15%
                                            70%

                             0.50                                                                                                                         10%

                                                                                                                                                          5%

                             0.00                                                                                                                         0%


                                    Sessions with Completed
                                    Quote
                                    Modeled Relativity                          Primary Driver Education



                                                                                                                                                     29




Price Sensitivity – One Session
                                                  Model: Purchase made during session
             1.20                                                                                                        60%


                                                      106%
             1.00                    100%                                                                                50%
                                                                                                                               Exposure Percentage




             0.80                                                             79%                                        40%
                                                                     76%                                           76%
Relativity




                                                                                          71%

             0.60                                                                                                        30%
                                                                                                       52%

             0.40                                                                                                        20%



             0.20
             0 20                                                                                                        10%



             0.00                                                                                                        0%

              Sessions with
              Completed Quote
              Modeled                                Percent Final Quoted Premium greater than Minimum Quoted Premium
              Relativity




                                                                                                                                                     30




                                                                                                                                                                                            15
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Price Sensitivity – One Month




                                                                                                                        31




               Regression Preliminary Results

                                       Model: Purchase made during session
             1.20                                                                                                 60%


             1 15
             1.15                       5
                                      115%                                                                        50%


             1.10
                                                                                                                        Exposure Percentage




                                                                                                                  40%
Relativity




             1.05
                                                                                                                  30%
             1.00                                                       100%
                                                                                                            97%
                                                                                                                  20%
             0.95


                                                                                                                  10%
             0.90


             0.85                                                                                                 0%

                    Sessions with
                    Completed Quote
                    Modeled                  Did user come to insurer’s site from another insurer’s site?
                    Relativity




                                                                                                                                                    16
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                        Unstructured Data




                                                                                                                   33




            Search Phrase Analysis

   Categories                                                    Process
         Specific companies                                            Remove punctuation
         “Quotes” – auto,                                              and non-characters
         homeowners, life,                                             [|./!#?*$%()-@]
         insurance                                                     Parse phrase into words
         Value – cheap,                                                Summarize the
         affordable, etc.                                              frequency of each word
          p        g
         Specific agents                                                               p      g
                                                                       Correct for misspellings
         Circumstance - teen                                           Build cluster analysis to
         Other – TurboTax,                                             determine key word
         hydrogen fuel cell                                            associations
Insuranced insurance: insurance0 insurance3 insurances insurancer insurancej insurancel insuranceg insurrance inssurance
           insurannce insurancce iinsurance innsurance insuraance isnurance insuarnce inusrance insuranceco

                                                                                                                   34




                                                                                                                                 17
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Cluster Text Analysis




                            35




Summary & Additional Research




                            36




                                       18
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Cumulative Lift




                  37




Lift Chart




                  38




                             19
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  Additional Research
Marketing Effort
                   Population   Target        Description

                   Auto         Quote         Of those that visit the website, people
                   Insurance    Initiated     with what characteristics are more likely
                   Website                    to start the quote process?
     Quote         Visitor

                   Quote        Quote         Of those that initiate the quote process,
                   Initiated    Submitted     what is the likelihood that they complete
                                              it?
                   Quote
                   Q t          P li Bi d
                                Policy Bind                                     quote
                                              Of those that actually submit the quote,
      Sale         Submitted                  how many complete the purchase?




                                                                                 39




  Data Considerations
      Voluntary panel
      Only captures internet shopping trends
      Does not marry online shopping with offline
      shopping
      May not track same user on separate
      computers
          p




                                                                                 40




                                                                                                20
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Potential Applications
1. For potential insureds with a higher likelihood of purchasing
   a policy, steps can be taken within the quote and purchase
            to         that th     t      d       td
   process t ensure th t the customer does not drop out    t

2. For potential insureds with a higher than average likelihood
   of purchase, insurance companies would be able to market
   more aggressively to these potential insureds

                   f        l      d h have a l
3. For segments of potential insureds that h               h
                                                    lower than
   average likelihood of purchasing a policy, an insurance
   company can identify and investigate where these lower
   than average likelihoods are and try to increase the
   likelihood of purchase
                                                                     41




                      Questions?




                                        Experience the Pinnacle Difference!




                                                                                    21

				
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