Root Grew Customer Profitability with Performance Advertising

Cole worked at Root Insurance full-time from 2018 to 2020. Root Insurance was not a consulting client, but the results outlined in this case study represent Cole’s individual contribution results that can be expected from working with Cole as a Scalable Marketing client.

Customer Analytics: We created models that predicted customer retention and lifetime profitability based on key indicators such as marital status, homeowner status, number of vehicles, and more.

‍Data-Driven Performance Campaigns: We developed automated bidding algorithms that helped ensure the customers we acquired would be highly profitable to the business based on expected lifetime value, retention rate, and conversion rate.

‍Conversion Rate Optimization: We built a custom integration with our vertical search partners to pre-fill any previously-entered user information and immediately present customers with a quote on the Root website, increasing conversion rates by up to 50%.

Cole started working at Root Insurance shortly after their Series C fundraising round. At the time, they were a lean startup team, licensed to write car insurance in less than 20 states, and working to grow aggressively on their path to additional funding rounds and IPO.

Root’s goal then was two-fold: acquire more customers, and achieve a set cost-per-customer. They found early success with marketing campaigns promoting the Root app on Google and Facebook as one of the few mobile-first car insurance advertisers, but began to see rising acquisition costs as they tried to scale app campaigns further. They also saw higher costs on website campaigns due to competition from industry incumbents like Progressive, Geico, and Liberty Mutual.

Cole was tasked with developing additional marketing strategies that offered competitive acquisition costs and scale to Google and Facebook mobile app campaigns.

After auditing Root’s existing marketing efforts, Cole identified that web traffic offered not only significant potential for scale, but greater control over customer profitability.

He started with vertical search networks (aggregators of quote comparison sites and partners - think Expedia or Hotels.com). These sites offer advertisers a substantial amount of user-supplied information for targeting and bidding purposes, as they ask users to fill out personal information to compare the best rates for that user.

With ~3 years of historical customer data, Cole believed he could predict customer value and profitability based on several of the fields available for targeting and bidding on vertical search platforms. While acquisition costs could be higher due to increased competition, he believed he could achieve substantially higher customer profitability by specifically targeting high-value, high-retention customers.

Predictive Modeling

Cole worked with analysts and data scientists at Root to develop three predictive models for Customer Retention, Customer Lifetime Value, and Customer Profitability. He found that customer lifetime value and profitability were directly correlated with factors like age, marital status, homeowner status, and number of vehicles owned.

Data-Driven Bidding Algorithms

Cole then set up integrations with Root’s vertical search partners to receive auction data and built custom bidding algorithms that generated advertising bids based on a user’s information, Root’s predicted customer value, and the channel’s historical conversion rate.

This allowed him to “right price” customers and ensure Root was acquiring customers with nearly 50% higher profit margins. As Cole worked to scale these campaigns and optimize his models, he set up additional integrations between Root and their vertical search partners to generate auction bids in real-time, further increasing customer profitability by an additional 75% for a 150% total increase. From 2018-2020, Root scaled vertical search campaigns by over 10x using these predictive models and bidding algorithms.

Conversion Rate Optimization

Cole identified further opportunity to reduce acquisition costs for web traffic by building a “click-to-quote” integration with external partners that collected user information before referring traffic to Root. This integration allowed Root to pre-fill their web forms with any information a user had previously supplied, often enabling users to receive an immediate, personalized quote after reaching the Root website.

Root saw 30% - 50% increases in conversion from visitor to customer via vertical search campaigns by removing the user friction of having to re-enter personal information. Root continues to leverage this integration with affiliates and partners for increased web conversion rates.

By 2020, Root scaled their web acquisition efforts by over 10x while dramatically increasing customer profitability by identifying their most profitable customers, targeting those customers with data-driven performance campaigns, and creating customer experiences optimized for conversion.

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