Esurance–Competing on Analytics

Recently I caught up with my college friend John Swigart who now runs the marketing organization at Esurance. When the conversation inevitably drifted to business, I asked about how Esurance was using data to make decisions. I was expected to hear the same old story—big failed data warehouse projects, piles of underutilized reports, frustration about not being able to understand how the business was performing. I was way off.

It seems that John works for the rare company that has managed to live the analytics dream. Esurance competes on analytics—not in the idealistic model highlighted by Tom Davenport, whose "full-bore" analytics competitors are defined by:

"Top management had announced that analytics was key to their strategies; they had multiple initiatives under way involving complex data and statistical analysis, and they managed analytical activity at the enterprise (not departmental) level...

...Employees hired for their expertise with numbers or trained to recognize their importance are armed with the best evidence and the best quantitative tools. As a result, they make the best decisions: big and small, every day, over and over and over."

That’s window-dressing. John didn’t make any grandiose pronouncements of Esurance’s analytical achievement or talk of the best tools and most complicated models. He simply stated that data-based decision-making has been a part of the culture from the very beginning and he considers it essential to running a smart business. A few points that he emphasized:

  • Clear linkages between metrics. There needs to be a well-understood hierarchy that has important financial measures at the top (i.e. revenue) and connects to the underlying drivers.
  • Frequent reviews of reporting. Senior managers get together on a regular basis to look through the core reporting. These meetings are detailed, but somehow useful enough that people stay committed to the process.
  • Learning takes time. John recognized that Esurance cound not be as evolved in their understanding of the business without a commitment to this approach from the very beginning.

After getting off the phone with John, I asked him to respond to a few questions so our readers could get a taste of their approach:

How has Esurance managed to develop a culture that embraces decisions using data?

We don’t make decisions based "I think we should this." We look at data to find out what we know, then decide what to do based on the facts. We identify expected outcomes up front and determine how we are going to measure the change before we implement something. Also, a data-driven culture starts at the top of our organization.

What processes do you have in place to get the right data in front of the right people?

We have centralized data warehouse and reporting structure. Everyone gets their data from the same place and the metrics are universal. This took 3-4 years to get it right, and we built it from scratch. It takes a substantial commitment to pull off.

What is the role of the analyst in your organization? What tools do they use?

We have technical analysts and DBAs in our business intelligence group that deal with the more technical issues. In Marketing, then, we have analysts how are on the individual marketing teams that work closely with the business people. The use some basic tools, nothing terribly fancy.

From an analysis perspective, what do you do when you are testing new marketing opportunities?

All tests are done with as much of a controlled environment as possible. With so many moving parts, this can be difficult, but is important.

How has analytics contributed to the success of Esurance?

Truly one of our competitive advantages. We would not be where we are today without great data and a dedication to using it through all levels of the organization.