While insurers have been taking their lessons from the Apples, Googles, Amazons and Ubers of the world, an even more appropriate example may come from one of retail’s most established brands — Walmart. Walmart is 57 years old, yet it is the #1 company on the Fortune 500, and it has been for the last six years in a row. Its revenues are double that of the second highest company, Exxon Mobil. Despite its age, Walmart has been innovative from its beginning and it has been flexible, resilient and most of all — highly competitive as customers and the market have changed over those 57 years. Reading a list of Walmart press releases will show you just how responsive Walmart has been to counter the threat of online retail, particularly Amazon.
By the end of 2019, 75% of the US population will be able to receive Walmart next day delivery for most products — with no “membership” charge, such as Amazon Prime.[i] Walmart is also building out its grocery delivery services, using digital and voice technologies, such as Google Assistant to allow people to add items to their Walmart Grocery cart.[ii] Even more advanced logistics are in test phases. Walmart is currently experimenting with grocery delivery (even putting the groceries away in a home) and middle-mile delivery with autonomous vans and cars.[iii]
From a marketing standpoint, Walmart uses its strengths to maintain its consistent brand across bricks and mortar retail and online ordering and delivery. Transactions are fluid, smooth and flexible. You can order online and pick up at the store, you can walk in or you can order for home delivery and you can return at a store or via mail. It’s all about options for the customer.
Critics point out that Walmart is currently losing money on its online strategy development and accompanying logistics, but with the exceptionally deep pockets and massive data on customers and their purchases from its traditional business, it is highly likely to turn an online profit faster than Amazon did and according to Morgan Stanley analyst, Simeon Gutman, it is “well down the path to profitability.”[iv]
Preparing for future customer needs requires today’s investment
For insurers, Walmart is yet another great example of the traditional business fueling the investment of the future business – much like Netflix, another tech giant which we discussed in our blog, Finding a Business Model to Fit the Customer of the Future. Insurers can take advantage of this same model by modernizing and optimizing today’s business while they create their future business, and they have the tools to understand the model shift due to the many demographic and survey indicators available. Surveys and reports, such as Majesco’s consumer and SMB surveys, are painting an accurate picture of the future customer.
In last week’s blog, we asked, “How well do insurers understand their customers?” This week, we follow up with an equally-relevant question, “How can insurers prepare to meet future customer needs?”
To answer both questions, we’ve consulted the cross-survey results from our consumer, SMB, Strategic Priorities and InsurTech primary research. To preview our findings, be sure to view our latest webinar, Achieving a Win-Win in Insurance. As we move through some of Majesco’s findings, we’ll look not only at how buyers (customers)view their own consumer habits, but we compare those perceptions to actual sellers (incumbent insurers - leaders, followers and laggards and InsurTechs) opinions and plans. Are buyers and sellers aligned? If not, how far apart are they? To give us our future focus, we’ll also compare buyers across generational lines, viewing how Gen X and Boomer opinions stack up against Gen Z and Millennial opinions. The differences and gaps will give insurers real food for thought and real insights that beg action.
Channel choices forecast a shift
Majesco’s cross-survey results allow us to view trends in 3D. Instead of just seeing how buyers are moving in aggregate, we can see how both individual customers and small-to-medium business customers are trending against one another. We can add to that dimension the view of InsurTech sellers and their opinions regarding the same issues. Plus, we can track the opinions of leaders, followers and laggards within the insurance companies. I mention this just to highlight that every trend Majesco has identified is supported by these several dimensions.
The view of Agents makes a great example. Buyers, particularly Gen X and Boomers, still find agents to be highly valuable in the insurance process. Among consumer and SMB Buyers, Gen X and Boomers are 57% to 75% likely to use an agent/broker when researching or buying insurance. Gen Z/Millennial SMB Buyers are still likely to use an agent 55% of the time when researching or buying. But it changes dramatically with Gen Z and Millennial consumer buyers. They use agents significantly less at 37%.
However, the real story is the expectation gap between these Buyers and Sellers, insurers and InsurTechs. Insurers – leaders, followers and laggards – use agents between 80% and 100% of the time --- a gap of 25% to 73%, suggesting a likely over-reliance on the traditional agent/broker channel. Are Sellers also over-allocating resources to this channel to the detriment of investment in other channels, thereby losing out on potential buyers?
Comparing these statistics with our findings for other channels, such as aggregators, websites and mobile apps, we get a very clear picture to this answer – highlighting that Sellers have a great opportunity to incorporate the Walmart strategy into their own businesses — maintaining strength in profitable channels, while preparing to serve buyers through other methods.
Preparing the customer experience instead of preparing channels.
Insurance leaders and InsurTechs may inadvertently be “checking out” too soon while they are developing channels that are growing, but that are still underutilized. First, let’s look at current utilization numbers to identify trends.
A full 32% of insurer leaders and laggards are using comparison and aggregator sites to reach buyers and markets, but currently, only 6-13% of all buyers are visiting them. Between 56-75% of insurers and InsurTechs are using their websites to reach customers when only 27-44% of buyers are using them. When it comes to mobile apps, 44% of InsurTechs, and insurer leaders and followers are using them to reach buyers and markets. Currently, only 4% -6% of Gen X/Boomer buyers are using mobile apps and only 12% - 20% of Gen Z/Millennial buyers use them for researching and buying insurance. These statistics bode well for insurer preparation because all of these channels are growing in use across all generational groups.
What is more important, however, than their individual growth, is their individual contribution to the greater holistic customer experience. Just as the Walmart buyer has choices on how to purchase and how to receive products, the insurance buyer is looking at the insurance brand as the sum of its customer experience parts, including all channels.
In light of this, sellers should be developing a platform across all devices and channels that gives buyers consistency throughout their experience and journey. If buyers can begin in one location and seamlessly move across all channels with excellence in service, the individual components have contributed to the holistic experience.
Think of this concept in terms of product simplicity and complexity. Insurance is incredibly broad in its applicability and so it is very broad in its potential for product development and service. At the “light” end of the spectrum, an on-demand product for temporary camera coverage can likely be sold and serviced with an app and nothing more. At the “heavy” end of the spectrum would be complex commercial insurance products that need to cover everything from equipment to liability and everything in between. Though some portions of that kind of coverage may be serviced with apps and websites, agents will be a necessary channel for the complex needs.
This is the reason that a holistic platform services approach makes the most sense for today’s sellers. Adding channels without an omni-channel strategy does not align to buyers’ expectations for working together seamlessly. Tomorrow’s customer needs are going to be met by those sellers, whether incumbent insurers or InsurTechs, who have the foresight to invest in the platforms that will make them competitive. This will keep them aligned to buyers of all types and it will keep them relevant to future products and markets. Majesco provides these platform technologies to insurers, reinsurers, MGAs and startups, to prepare them for the experience-led future buyer. Our cloud-based insurance platform solutions and our microservices-based Digital1st Insurance platform-as-a-service, allow insurers to rapidly launch, test, and scale innovative new products and business models.
For a greater understanding of future coverage and engagement, be sure to read Majesco’s upcoming thought-leadership report, The Future of Insurance. For an overview of Majesco findings, be sure to tune in to our future-focused webinar, Achieving a Win-Win in Insurance.
[i] Associated Press, Walmart launches free next-day delivery, taking aim at Amazon, CBS News Online, May 14, 2019, https://www.cbsnews.com/news/walmart-next-day-delivery-will-be-free-taking-aim-at-amazon/
[ii] Ward, Tom, Want Walmart to Help You Grocery Shop? With Our New Voice Capabilities, Just Say the Word, Walmart Corporate Newsroom, April 2, 2019, https://corporate.walmart.com/newsroom/2019/04/02/want-walmart-to-help-you-grocery-shop-with-our-new-voice-capabilities-just-say-the-word
[iii] Hofbauer, Randy, Walmart Pilots Grocery Delivery via Autonomous Vehicles in AZ, Progressive Grocer, January 8, 2019, https://progressivegrocer.com/walmart-pilots-grocery-delivery-autonomous-vehicles-az
[iv] Sozzi, Brian, Why you shouldn’t care about Walmart losing $1 billion a year online, Yahoo Finance, July 8, 2019, https://finance.yahoo.com/news/who-cares-if-walmart-is-losing-1-billion-a-year-online-as-it-battles-amazon-183420696.html