What do today’s
customers want from insurance providers?
They want
understanding, interaction, even a relationship. But they vary in when and how
they wish to learn, interact and build a relationship.
Insurance providers
have to understand not only when but also how to best help customers with their
needs, Lynn Kesterson-Townes, worldwide commerce marketing leader for IBM, told
the Insurance Marketing and Communications Association (IMCA) Annual Conference
in Nashville this past summer.
Firms that figure out
how to serve millennials will be able to capture other customers more easily
and keep them, the e-commerce expert said.
That’s what customers are
looking for today. They’re looking for an understanding of their personal
situation when they’re having an event, when they’ve actually had a change in
their own situation, and they’re looking for people to help them cope with it.
According to
Kesterson-Townes and research she shared from IBM, the insurance marketing and
communication strategies of the past no longer work because insurance customers
have changed.
“Obviously, they’re the same people, but the
way they want to interact with their insurers is very different these days,”
she said.
One way customers have
changed is that they are less loyal than customers used to be.
In the past two years,
37 percent of customers of insurers contracted with IBM report that they
switched their insurers. This churn rate is rising, it’s up 13 percent over the
last few years.
“That’s because we
believe that in today’s customer-activated environment, marketing and
communications strategies that used to work are no longer working to sustain
retention or to significantly grow the business,” she said.
Bob and Ann
Kesterson-Townes
shared two examples. One was a man, Bob, who had a car windshield claim. He
also had a $50 discount coupon that would have helped pay his deductible.
“Except for reasons
that no one can understand, the insurer didn’t let the auto glass place accept
the coupon. No one’s actually to this day figured out why not. Bob’s still
baffled why his insurer wouldn’t let his coupon be used. The auto glass place
didn’t understand it. Bob had to pay the full deductible. Guess what else? The
auto glass place didn’t lose a customer, but Bob switched insurers,” she said.
The other story was
about Ann, whose husband just died in a fatal car accident. She received a
condolence letter from her insurance carrier. Unfortunately, in the same
envelope Ann also received a letter from the same insurance company informing
her that her coverage was being cancelled.
“Unbelievable, right?
Unbelievable. How did the marketing and communications department get to this
point? Sorry your husband died and oh yeah, we’re canceling your policy! Did
they not want to use another stamp? You wonder what was going through the heads
of people, right?” said Kesterson-Townes.
According to the IBM
consultant, these insurers were not thinking about their insureds at these
critical times of interaction.
“That’s what customers
are looking for today. They’re looking for an understanding of their personal
situation when they’re having an event, when they’ve actually had a change in
their own situation, and they’re looking for people to help them cope with it.
They’re looking for that from their retailers, from their airlines, and from
their insurers,” she said.
Interaction Points
She said today’s
customers also expect all of the people they have relationships with to be able
to respond in the same way. “Therefore, marketing and communications functions
in insurers need to be more nimble, more innovative, and better able to engage
with their customers and help their entire ecosystem along as well,” she said.
“They don’t want
channels. They want interaction points, and we’ve changed that language on
purpose because channels infer a one-way communication. From me to you, from
the insurer… ‘Let me push this product to you.'”
As examples of
interaction points Kesterson-Townes cited emails from brokers,
face-to-face-meetings, talking to a customer service representative over the
phone, and click-throughs on a website, even a comparison website.
“As digitally enabling
technologies empower and connect customers more easily with businesses and with
each other, a one-size-fits-all marketing and communications strategy no longer
works. In fact it’s competitively disadvantageous because what we used to have
is an organization-centered economy and now we have an individual-centered
economy,” the IBM executive told the communications professionals.
Today’s customers are
using a variety of web-based interactions to talk to insurers, she said. In the
beginning information and quoting stages, they are using a variety of
interaction points and they don’t necessarily purchase where they’re searching,
IBM’s research shows. In fact, it shows an 18 percent shift away from personal
interaction and toward digital interaction at the beginning.
Personal Touch
But that doesn’t mean
personal interaction is dead.
“[A]t the point of
purchase, we are still seeing a lot of interaction, whether it’s on the phone
or in person with a broker. What does this mean for insurers? Customers are
obtaining their information and they’re quoting digitally. Then they’re
purchasing a lot of times physically, we would call it,” she said.
She said this means
that insurers need to be proficient at omni-channel marketing, at merging the
digital and the physical experience so that for the customer it feels like the
relationship is “building all along instead of restarting with every new
interaction point.”
Due to the ubiquitous
connectivity, insurance customers are looking for these “customer-centric”
interactions.
To meet this
expectation, insurers need data. “You need to know where your customer is in
the decision process. You need to know what’s going on in their lives to be
causing this decision to be made,” she said.
Lead with Millennials
She stressed the value
in being a leader rather than follower in understanding customers. The best
place to lead is with millennials, the most empowered generation, people who
are under the age of 30.
“You need to embrace
your digital millennials because you can learn a lot from them. Once you get
successful working with them you can use those lessons in other areas,” she
advised.
She said two-thirds of
millennials are demanding customer digital and physical experiences that are
harmonized.
“They want increased
transparency. They want to really interact and have a relationship with you.
They want an understanding of their personal needs. They want fast responses.
They still want advice. But if their needs are not met, they’re even more
likely to switch insurers than the rest of us. But they’re looking for value.
Notice, I said ‘value’ not price,” Kesterson-Townes told the audience.
“We believe that if
you can market and communicate to millennials effectively, you will actually be
able to capture all of your customer segments,” she said.
That’s because, like
millennials, all insurance customers today want four things.
“They want advice,
simplicity, convenience, and value from their insurers, which brings us to
trust. After all, insurance essentially started as a social network among
like-minded people to share risk. How come most customers don’t trust their
insurers?”
She said IBM surveys
show that more than half (56 percent) of customers do not trust their insurer
and that people with low trust in their insurers are almost 20 percent more
likely to switch their providers. “That’s why this is important to you,”
Kesterson-Townes told the IMCA audience.
According to IBM, it’s
not useful to simply look at demographics or ages to segment today’s customers.
Demographics actually offer limited insight into predicting the interaction
point preferences, she said.
“How do you know if
this customer would prefer to talk to an agent online, would prefer to see an
agent in person, or would prefer to interact via email? Will demographics give
you that answer? We would say, ‘No. In fact, they don’t.'”
Sometimes,
demographics even appear counter-intuitive. For example, the youngest age
bracket, those under 24 years of age, are not the most likely to purchase
insurance via the Internet, she said. Nor is it the next oldest age group,
those 24 to 34. It’s actually people 34 to 44 that are most likely to purchase
insurance over the Internet.
“That’s a little
counter-intuitive to some people. Some people would think the younger, the more
likely.”
Psychographics
If not demographics,
then what should insurance marketers rely on to understand customers? IBM
thinks psychographics, or segmentation based on customer attitudes, is the
answer.
“It’s based on
behaviors. It’s based on their needs,” she said. “That is much more indicative
of how someone wants to be interacted with, not just how old they happen to
be.”
She said IBM has found
that psychographic segmentation is four times more likely to point to the right
interaction point than pure demographic segmentation.
IBM identifies six
customer segments, to which it assigns names including Loyal Quality Seeker and
the Price-Oriented Minimalist.
Kesterson-Townes
profiled three examples of growing customer segments.
Demanding Support Seeker
Susan, 33, is
unmarried, an energy consultant, and moving from Seattle to Boston. So she
needs car insurance, and also needs insurance for her new house in Boston. And
she wants life insurance because she’s going to be adopting a child in Boston.
From a psychographic
standpoint, Susan is a “Demanding Support Seeker” in IBM’s segmentation, or as
Kesterson-Townes described her, “she’s high maintenance.”
“She acts like a
traditional insurance customer. She needs a lot of hand-holding. She really
looks to insurers for advice. She trusts them, but she’s also every bit a
person of this age, so she’s a modern empowered consumer,” she said.
This customer is very
connected and social media savvy but prefers that all of her interactions be
personal, from information gathering all the way through purchase and servicing
after purchase.
“Demanding Support
Seekers, or these high maintenance ones, have the lowest technology affinity in
interaction. They want advice. They want full coverage. They want a one-stop
shop. They want someone on the other end of the phone,” Kesterson-Townes said.
Support Seeking Skeptics
John and Ann Cooke of
Los Angeles epitomize the second segment Kesterson-Townes described. John is a
28-year-old manager at a large retail store. Ann is a 25-year-old nurse at a
local hospital. This couple is extremely active on several social media sites,
especially Facebook (which Kesterson-Townes says is actually for older people
these days).
John and Ann are
discussing buying a new car. They’ve done a lot of research on their own. Now
they’ve turned to Facebook to seek advice from their friends and family on
their experience with three models they are considering.
John and Ann are
“Support Seeking Skeptics,” in IBM’s psychographic parlance. Support Seeking
Skeptics have a medium technology affinity, but when it comes to social media,
they’re “off the charts.”
They don’t feel
well-informed about insurance. They are young and haven’t had a whole lot of
experience with it. They don’t trust insurers. They’re looking for advice about
insurance at the same time they’re looking for advice about which car to buy.
How they prefer to
interact with insurers depends on where they are in the process, according to
Kesterson-Townes. For example, when searching for insurance, they want to hear
from their peers about their experiences. They don’t want to interact with
insurers. But when it comes to purchasing, they will flip to a personal
interaction such as telephone or face-to-face.
“If you’re trying to
sell this kind of group car insurance, for example, make sure you’re Facebook
friends with John and Ann’s friends and network in,” the IBM expert advised.
Informed Optimizer
The third fast-growing
segment is represented by Dan, a 27 year- old single and very successful video
game designer who’s purchasing his first rental property. Dan is an “Informed
Optimizer” in IBM-speak. “These guys optimize everything. They want to have the
right insurance from the right insurer at the right time,” Kesterson-Townes
said.
These customers have a
very high technology affinity, they’re highly self-sufficient, they’re
informed, and they’re willing to experiment.
“They seek an optimal
priced-value ratio. Price is important, but they will shop around for exactly
what they want,” she said.
They prefer to
interact digitally throughout the process if possible, even through purchase
and servicing. “They’re comfortable in that world, but because they want the
tailored product they demand, they’ll get on the phone if they have to, to get
exactly what they need,” she added.
As he researches
landlord policies, Dan would be really impressed if an insurer reached out to
him while he’s online with an appropriate product offer. If a company actually
includes an app that Dan can use to communicate with the insurer throughout the
relationship, Dan would be thrilled.
Merging Digital and Physical
While these three
segments differ in their needs and preferences, they are all engaging in
omni-channel behaviors. Kesterson-Townes said IBM research shows that 80 percent
of insurance customers are already using two or more interaction points for
information gathering and quoting process. Twenty percent are already using
four interaction points or more. Consumers say they expect to be using four
interaction points or more in the near future as they look at insurance.
“Again, now’s a good
time to start thinking about merging those digital and physical spaces,” said
Kesterson-Townes.
She stressed that
personal interaction will remain important. In fact, the highest sales conversion
rate is in transactions through personal contact, with about 80 percent, versus
30 to 40 percent conversion on websites.
Seamless Experience
Customers want a
seamless experience, involving every contact that they have with the insurer,
so they don’t have to start over providing their information at every
interaction. That turns them off, she said.
“Therefore, when they
do talk to, let’s say, your call center rep, marketing is no longer about the
call center rep getting out the right script and starting to pitch whatever
product is the product of the day,” she said. “It really is about understanding
what that customer’s talking to you about and being able to take them to the
next level.”
Marketing is about
personalizing the experience for thousands, or even millions, of customers.
“Whether you’re
responding to a customer in real time or anticipating a need that they didn’t
even know they had, today’s insurance marketing and communications functions
must exceed expectations to give their companies a competitive edge.”
