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Jomar F. Rabajante and Allen L.Nazareno

University of the Philippines LosBaos

WHEN THE CUSTOMER WRITES HISOWN STORY

A SEGMENTATION SCHEME FOR THEA SEGMENTATION SCHEME FOR THE

LIFE INSURANCE MARKETLIFE INSURANCE MARKET

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Life insurance is not just aboutbusiness, it is also personal.

Life insurance products are notbought but are sold.

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The Segmentation Scheme

Agent

MarketingDepartmen

t

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helpful in customer profiling in two ways:Product Matching and Semi-PersonalizedCustomer Care.

useful in enhancing renewal payments (lifeinsurance does not lie on the 1st -year premiumpayments alone)

useful in the follow-up marketing activities suchas up-selling and cross-selling of otherinsurance products

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let the clients write their own story withagents guidance

make a concept map by starting with acentral concept and then branching out

to more, related concepts

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quantify qualitative decision making

capture the uncertainty in humanjudgment

used to decide which priorities (calledas criteria) should be ranked first,second, third, and so on

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TABLE 1. Saatys Scale for PairwiseComparison

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The comparison matrixA, which followson the clients judgment between therelative importance between two

factors, is constructed.

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The matrix above is transformed into afuzzy comparison matrix with adifferent membership scales

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TABLE 2. Scale for Fuzzy PairwiseComparison

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The scales used in the table follow therelationship:

1

ijij

ij

ara

= +

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The priority weights are determinedusing the following formulas:

1

ii n

i

j

bw

b=

=

1

1

1i

n

j ij

b

n

r=

=

where,

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The consistency of the generatedcomparison matrix is determined using

the consistency ratio:CR =(Consistency Index of matrix A)

(Random Consistency of matrix A).

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0.283905

0.336879

0.379216

W =

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new technique in grouping the customers

demographic and psychographic profiles are tobe considered, as well as the relatedness of thestories of the customers

integration of all the outputs from the mind

map and Fuzzy AHP

other than customer profiling, the insurancecompany can also determine what kind ofcustomers the agents tap

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Robust Product Matching

Prod

uct D

Prod

uct B

Product C

Product A

Characteristic U(Unique

forProductD)

Characteristic V

CharacteristicW

CharacteristicX

Characteristic Y

Characteristic Z

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Customer

1

Customer

4

Customer

3

Customer

6

Customer

7

Customer

5

Customer

2

OFFER

MARKETING

ACTIVITY I

OFFER MARKETING

ACTIVITY I, II or III or

none

A connection

means that the

two customers

have the same,

let say, priority

J.

1/Rank of Char J = 1/2

(1/Rank of Char K = 1/ 4) + (1/Rank of Char L = 1/3)

OFFERMARKETING

ACTIVITY II

Semi-Personalized Customer Care

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Artificial Neural Networks, Cluster Analysis andother multivariate statistical analysis areused for grouping customers. However,Network Analysis is a new data miningtechnique, which does not only give list ofgroups but can also give visualization of andflexibility in the grouping.

Customer profiles need to be updatedfrequently, e.g. 2 to 3 years. Softwaresshould be used for a large database.

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The customer stories must beheard, and this will help the

insurance industry spread thebenefits of having financial

protection.

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THANK

YOU.