The Irony Behind Ignoring Consumer Sentiment
There seems to be a growing mismatch between what consumers want from their insurers and how insurers are attempting to satisfy them. Is it intentional or is the lack of alignment between insurers and their customers due to some unforeseen technology hurdles that require too much work to correct?
When looking at insurance trends, it just so happens that the key relationship indicators are all pointing toward growing communication issues. To build long-lasting relationships, insurers need to address their external communication issues, but only after they have determined that they are truly interested in listening to what the customer has to say.
In April 2015, Majesco commissioned a survey and report of 1,000 insurance customers in the UK. The respondents came from a broad cross section of occupations, ages and incomes. The survey pointed out some well-known insurance industry issues and also uncovered some details that may be worth further exploration. And while this was UK consumer based research, it has implications and insights for all geographical markets.
In a two part blog, I am going to focus on both the findings and what actionable items we may extrapolate from them.
The first of our findings was clear and striking. What insurers seem to think is important to consumers, isn’t always what consumers prioritize when it comes to choosing an insurer. For example, Majesco’s report uncovered a disparity between consumer priorities and insurer priorities, based upon current marketing practices.
|Insurer Marketing Priorities||Consumer Buying Priorities|
|Giving consumers a competitive price||Purchasing at a fair, understandable price|
|Building loyalty and referrals through promotional branding fluff||Obtaining relevant products|
|Receiving a high level of service (from wide set of options)|
|Achieving clarity surrounding products|
|Finding simplicity in the insurance process|
Though the insurer marketing priorities are certainly generalizations, the information on what customers want came straight from survey statistics regarding many crucial points where insurers relate to their clients.
So, where are insurers listening to customer priorities and where do they need to listen a little more?
Everyone seems to agree, price is important. Insurers’ primary marketing vehicles and their general focus seem to be on remaining competitive by giving consumers a competitive price. Consumers are now closer to real-time pricing information than they have ever been. Yet here is where we begin to find some ironies.
Pricing Irony #1 — Majesco’s study pointed out that many (not all) consumers are focused on price. Focusing on price and not a.) service levels, b.) relevant products or c.) ease of access may alienate 30-40% of insureds. The policyholders least focused on price are naturally those who are more affluent — those who can afford more products and higher premiums to cover greater assets. When insurance companies don’t listen to their most affluent policyholders, they risk losing “stable,” traditionally loyal customers.
Pricing Irony #2 — Clients are more likely to find pricing information on aggregator sites than by going to their own insurer’s website. While some insurers were digitally sleeping, aggregators cropped up and stole their messaging. Aggregators may be a source of fuel for new business, but they are most certainly also poised to be a major contributor to client attrition. Technology improvements and marketing efforts aimed at price messaging WITHIN the client base can help stem the flow of lost policyholders.
Besides pricing ironies, there are two service ironies that cropped up in Majesco’s survey as well.
Service Irony #1 — One in three survey respondents felt that insurers were failing on minimum expected service levels. The Majesco survey found that between 47% and 60% of respondents are contacted by their insurance company only once per year! The irony here is that insurers are traditionally risk-averse, doing anything to avoid incurring an additional 1-2% of risk. Yet disruptive technologies have brought to market a new breed of competitor that threatens to grab 33% of their business because of inattention. That is a tremendous risk! Improving service through more digital and mobile communication (and even through more phone calls and mailings) will lower insurer risk.
Service Irony #2 — What consumers are asking for, such as improved self-service through improved technology, will actually save insurers on administrative costs. While some insurers seem to be waiting for a better scenario, there is no time better than now to strategize around a labor-saving business case that improves customer communications. In this case, listening to the customer will do more than improve relationships, it will improve the bottom line.
The Majesco survey uncovered additional surprising data as well, related to desired products vs. product offerings. Younger insurance customers (under 35) were surprisingly less influenced by price than older customers, pointing out that price, while always being important, may become even less important than service, brand trust and product types in the coming years.
Nearly every finding can be tied back to a preconceived notion about how insurers relate to their customers. It is clear that often insurer perceptions are no match for consumer realities. To clear away these notions, insurers need to listen to their customers, listen to trends and embrace the idea that giving the customer what he or she wants can be a key to success.
In my next blog, we will look at the practical aspects of developing a listening organization. What actions can insurers take to hear their customers, act upon their needs and anticipate the development of products that will take them into the next generation? How can technology assist insurers as they rebuild a relevant relationship? I hope you’ll join me as we discuss several options insurance companies can utilize to stay effective and to remain competitive.