Customer 360-Views Reveal Opportunities
Data generates new products
Insurance brands increasingly adopted new technology to recruit and retain customers.
They organized and analyzed customer data to understand how the needs of various life stages can signal new business leads. This development affected both life and property and casualty sectors of the category.
It represented a sea change for an industry traditionally driven by entrepreneurial agents more incentivized to write new business than sell more products to existing customers.
Until now, customer data had been abundant but dispersed, a legacy of insurer agent networks and siloed organizations. Increased analysis potentially enables insurers to offer products and calibrate rates that are personalized for individual Up 19% clients rather than devised for a demographic segment.
No company has yet integrated all its data into coherent and comprehensive 360-views of individual customers. But it is likely that one or two top tier providers will achieve this goal by the end of 2013. These other developments also affected the insurance category:
Hurricane Sandy battered the northeastern US in October 2012, causing as much as $50 billion in damage, which impacted property and casualty carriers. The hurricane's location, in the world's largest media market, magnified any dissatisfaction with payout speed.
Financial pressures shaped consumer decisions about discretionary spending, turning the conversation about life insurance to price.
Auto insurers experimented with telematics. When customers agreed to have an electronic device installed in a vehicle to record their driving habits, the insurer could customize rates according to the results.
More sophisticated data analysis will enable insurers to tailor messages to the needs of particular customers or potential customers. Agents will receive more reliable leads and be paired with customers who are more relatable according to age and other demographics.
This kind of interaction should help insurers more effectively differentiate and build their brands around service. Today, brands generally compete on price and the speed with which they can offer consumers rate information or respond to claims. Aggregating sites, which are especially active in the UK, intensify price shopping.
Along with data analysis, social media is also changing the potential—and the vocabulary—of insurance marketing. The idea of customer social lifetime value is supplanting the simpler notion of customer lifetime value.
This newer metric considers not just the lifetime purchase potential of the individual customer, but that potential compounded by the size of the customer's network of contacts.
Social media reaches new clients
Social media is especially critical for reaching the uninsured and young people, often less inclined than their parents to invite an insurance agent into their home for a conversation about term life around the kitchen table.
Brands like Geico, State Farm, Allstate, and Progressive were active in social media. The Internet and social media are transforming the traditional view of insurance, from being a product sold to people, to being a product people buy.
Leading brands also developed mobile apps for smartphones and tablets, particularly in property and casualty, where apps sometimes can be used to file claims. And brands continued multichannel communication strategies that included telemarketing and direct mail as well as agents.
Insurers also tried to reach young people and the uninsured through nontraditional channels. Some of these potential customers are more comfortable in a "third space," neither home nor office.
State Farm experimented with a storefront espresso bar in Chicago called Next Door. Visitors can enjoy refreshments and free Wi-Fi, while gaining access to financial counselors, with no hard sell.
Efforts to reach the under-or-non-insured included a program by MetLife to sell insurance packages in a box, which began testing in pharmacy departments at several hundred Walmart stores late in 2012.
Customers who purchase policies, which come with relatively low face values, subsequently call a toll-free number for a health screening from MetLife. If they pass the screening, the credit on a prepaid card is activated. Those who fail to qualify for the insurance can either receive a refund or use the credit anywhere that accepts Discover.
Insights BrandZ BigData™
Brand importance rising in insurance
Historically, insurance is a low involvement category with products sometimes purchased out of necessity, not choice. As a result, brand plays a smaller part in driving value.
But judging by the emergence of powerful insurance brands in fast growing markets, this may not have to be the case in future. In China, for example, brand plays a significant part in the insurance category, according to BrandZ™ research.
The brands from China in the Top 10 Insurance category ranking outperform the insurance brands from the US and UK in key BrandZ measurements of "meaningful" (appealing and meeting needs) and "different" (unique in a good way and trend setting).
1 . Be selective
It's not about finding every prospect out there. It's about finding the right prospects, those who resonate with the brand and will remain loyal to it over a lifetime, as customers for products that fit their changing insurance needs.
2. Be personal
It's critical to reach target audiences through every available channel: direct mail, retail, mobile, online, telesales and agents. But the competitive advantage goes to the brand that can connect the data dots into a message that's relevant and sounds like it's for a person, not a demographic.
3. Be online
That's where people shopping for insurance are likely to be. Especially young people. For them a compelling website is more persuasive than a lot of brochures scattered over the kitchen table. Post reviews. People are interested in seeing what others have to say about the brand. Ratings and reviews increase conversion rates.
4. Be a first mover
In a conservative category being a first mover doesn't come naturally. And, realistically, it buys a competitive advantage for only a limited time period. First mover innovation, supported with brand building, however, can become a sustained differentiator.
5. Value customers
It's difficult to measure the lifetime value of a customer. But on average, it costs 10 to 12 times more to gain a new customer than to retain an existing one.
6. Value customer networks
It's probably impossible to measure the lifetime social value of a customer. But it can be enormous. Many customers influence large social networks. Inspire these customers to become brand advocates. Their networks hold tremendous long-term value.