EXL Acquires RPM Direct For Insurance Marketing Secret Sauce

EXL just announced its intention to acquire RPM Direct, a specialized provider of marketing analytics to property & casualty, life, and health insurance carriers. This is a good fit with EXL’s strategy because:

• Insurance is EXL’s biggest industry vertical, by revenue and headcount. The company has been working an aggressive M&A strategy to differentiate its BPO offerings by adding modern business platform enablement (Landacorp, Blue Slate Solutions), high-value middle office services (Overland Solutions) and advanced analytics (Inductis). EXL continues to move away from the labor-intensive back office-centric BPO support to eyeing platform BPO where possible and wrapping high-value services to BPO processes. 
• EXL’s own standalone analytics business has been growing rapidly since 2006 with its acquisition of Inductis. It has since retained this practice’s identity as an analytics specialist, with solutions for the insurance, healthcare and financial services verticals. Our industry analysis (HfS Blueprint reports) of the analytics services market has consistently rated EXL high on the demonstration of industry-specific analytics capabilities – clients can see the investments the firm makes in domain training along with analytics know-how. Further, EXL has increasingly gone against the norm and gunned for high-end analytics work instead of data management and BI reporting. More than half of its 1,500 strong analytics workforce is engaged in advanced analytics, predictive modeling, and ongoing decision support today.

Given these factors, it isn’t hard to see why RPM Direct would be a perfect fit for EXL, with its sweet spot of marketing analytics specifically targeted towards insurance and healthcare companies. RPM’s capabilities have been developed to mirror the entire marketing department of an insurance carrier. It works across marketing operations and strategy, analyzing large consumer data sets to segment populations, predicts response rates, forecast customer lifetime value, design and execute targeted, multi-channel marketing campaigns. RPM’s relationships with insurance marketers built over the last 14 years will be highly strategic and valuable for EXL. RPM Direct will also expand the EXL’s specialized talent base – analysts working at the intersection of industry vertical and business function, with onshore delivery talent.

However, we believe that these factors complement what EXL would have been able to grow organically over time, and aren’t the most compelling reasons for the service provider to sign the deal. It already had domain knowledge, insurance and healthcare clients and marketing analytics capabilities built over the last 9 years.  The secret sauce that EXL is targeting is undoubtedly RPM Direct’s database on over 250 million consumers and 120 million U.S. households.

The secret sauce that EXL is targeting is undoubtedly RPM Direct’s database on over 250 million consumers and 120 million U.S. households.

On top of this, the company’s access to credit data and experience working with blue chip insurance and healthcare companies has helped it evolve powerful statistical models and methodologies, including 3,000 consumer attributes that can be correlated to the risk and lifetime value (LTV) of policyholders – useful both for developing the right campaigns and writing successful premiums. Plus, RPM Direct’s experience in going beyond analytics and using the insights to design and execute marketing campaigns is compelling. Creative development and production services based on campaign performance metrics will fit nicely into EXL’s high-value front and middle office services strategy.

This acquisition further evidences HfS Research’s observations on service providers and buyers moving from traditional BPO into the “As-a-Service economy”. Consumer shift to digital is compelling marketing departments to use data, analytics, and technology to work together in new ways, where traditional marketing principles and processes are no longer enough particularly for consumer-facing industries. RPM’s marketing operations, data and analytics ingredients can be effectively applied into healthcare, retail, and banking, all areas in which industrialized but individualized targeting and engagement are increasingly critical to master. With the downstream cross-vertical potential of RPM Direct, EXL seems to be positioning itself as the ‘master chef’ of personalized engagement.