Today’s insurance companies are facing different challenges compared to the past. Digitalization, customization and the rise of the gig economy are only a few examples of changes that happened in the last decades. However, one challenge remains the same – distribution.
Let’s look at the acquisition cost ratio for example. It has risen substantially for insurers. If you compare it to 2004, you can see a rise of 7% for the top 30 carriers in the world. This can be partly explained by the fast-paced changes in technology and customer needs, which are both demanding to keep up with. That’s why emerging leaders of tomorrow need to focus on optimizing distribution channels and improving their sales techniques. Let’s also not forget, that tech developments and consolidation in the distribution area are changing the insurance markets fundamentally.
That’s why we want to provide useful strategies for successful insurance sales in the ever-changing digital environment. As we see it, there is a tremendous opportunity in these challenges to bring sales processes within your organization to the next level.
Insurances have always been considered a push product. You need intermediaries such as brokers and agents. You need these intermediaries to push insurance products and tell people about risks and offerings. However, it comes at a high distribution cost for the insurer and results in a lack of personalization for the customer.
As a pull product, insurances can be directly sold by the insurer and/or be embedded as a smaller part of the bigger product. This provides direct engagement with the customer. But be aware: this approach requires constant attention when protecting against new risks with innovative covers. Another positive aspect of this approach: embedded insurance will enable several not yet existing markets.
We have seen that over the last two years the pandemic has shown the possibility (or just accelerated an ongoing ‘demographic’ development) of reaching customers directly via digital sales channels. Those channels are – among others - websites, social media, and apps. This type of direct distribution is supported by changing consumer behaviour and increasing the number of internet users. Consumers are encouraged to make decisions and purchase policies independently. Our job as insurers has become to ensure information availability and a great user experience. Let’s look at the several ways of doing so:
Messaging must address the problem and its’ solution.
Clearly, communication is an integral part of digital sales. Your potential customers do not wake up thinking about insurance, but rather the problem they have. The classical storytelling approach in sales tells us to start by addressing the pain point and proposing the solution afterwards. This way insurers can take the prospect on a journey where the main hero is the customer.
How do you get in touch with a potential policy buyer? People tend to search for information before buying a complex product like insurance. What is the first thing that the prospect read about the insurer’s offer? If it doesn’t address the customers problem, maybe it is time to rethink your messaging.
And if you address the problem, please don’t play with fear and safety like one did last 50 years. Use real content providing humour and/or peace of mind, and not the 100th stock picture of a happy family.
Optimization of website and social media channels as a source of all necessary information.
Social media posts can be used as a way of sharing information with prospects and acquiring leads. Companies often undermine this powerful way of meeting their customers where they are. By sharing relevant content, insurers not only make customers aware of their product offering. They can personalize their offers based on targeting metrics as well. Moreover, it can be used as a brand-building tool to ensure customer trust.
However, there are more ways to reach your potential customer than just on Instagram. Use smaller platforms and go with professionally executed and content-driven marketing campaigns.
Matching what you want to accomplish with clients’ needs.
The critical decision-moment: your potential client's first impression when reviewing the application form. A puzzling process with unclear steps can lead to potential customers giving up on the application. There are several easy ways to improve this:
By making UX work both for you and your customers, you can lower the customer acquisition cost and create brand loyalty. Please consider we live in 2022. Use data where available and pre-fill your flows – also in terms of coverage and options (and while doing that, of course, consider GDPR & Co.)
In an ideal world, every insurance policy would be an individual one.
Use data analytics to customize the customers shopping experience. In an ideal world, an insurer would have enough information about every single customer to tailor insurance products to make them 100% customized – in terms of individual coverage with the right pricing. However, we can’t provide that - yet.
Until then you can start by clustering customers into groups that are heterogeneous next to each other, but with customers as homogenous as possible within the group. This way you can basically match customers and policies like Netflix matches their viewers with movies.
Please remember: a simple product sold online should stay like it is – simple. Meaning: only personalize where it’s needed and provides benefits for both, customers and you as an insurer.
Customers will see more value if there are more touchpoints with the insurer.
By now you might have realized that in today’s consumer-first society this old insurance industry saying isn’t really valuable anymore. People actively shop to protect themselves against possible risks in the market full of companies offering similar products. A person seeking to buy a policy evaluates offers based on the value it creates.
Be aware of today’s heterogeneous user journeys depending on the sold insurance product, the target group and location. These Journeys can be very different. Optimize and set your touchpoints with your potential customer in the best way possible (by trying and learning.
Most importantly: do not stop interacting with the customer after the completion of the sale. By ensuring that the product is helping them solve your customer’s needs, you can build strong long-lasting relationships. Answer concerns and questions your customers might have. By showing your availability and care, you can easily earn trust and loyalty.
Reliability is a way to loyalty. Be there when they need you the most.
You might be asking yourself, how to actually earn this kind of trust and transcend reliability. There are various ways. One of them is being there for a customer in critical moments or knowing what they want - before they do. Trust is the foundation for all the above-mentioned aspects of a successful customer relationship: starting from the first point of contact to creating a long-term value.
Independent of where you are in digital sales – consider where you want to be. In the end, it doesn’t matter if you pay an intermediary or Google/Facebook. Distribution cost is distribution cost. Fit the strategy to your needs – be quick, learn and adapt. Digitalizing your befriended intermediaries can also be a way to go.
And if you are an insurer with challenges in Europe – we are happy to help. 😉