August 24, 2015
4 Ways Superstores Can Teach Insurers
by Tim Attia
Superstores like Walmart and Costco show how insurers can create the convenient, one-stop-shopping experiences that consumers want.
A smoke alarm isn’t the only kind of protection on sale at your local superstore these days. Need some life or health insurance with those printer cartridges? You’re in luck. Insurers like Metlife and Aetna now sell insurance policies through superstores. Walmart launched a pilot program with Metlife to sell life insurance policies at 200 Walmart stores, and Costco members can select Aetna health plans offered through Costco’s Personal Health Insurance program — Costco has offered its members discounts on auto, homeowner, renters, umbrella and specialty insurance through Ameriprise Insurance for several years.
Although not every effort has gotten off to a flying start, these are good examples of insurers experimenting with approaches to tap into large, underserved markets and new sales channels and to create brand awareness in a shopping environment where there’s a natural connection with the products they sell.
What I’m most curious about is the impact the superstore channel will have on how these insurers sell. What can insurers learn from two of the world’s most valuable retail brands about creating the kind of convenient, affordable one-stop-shopping experiences that Walmart and Costco offer and consumers so desperately want?
Plenty of things. Here are four:
1) FOCUS ON SELLING YOUR BRAND RATHER THAN YOUR PRODUCT
Walmart and Costco both offer lower-priced house brand products, but neither focuses its attention on selling its own product even though that would obviously benefit the bottom-line. The goal is to own the customer by meeting the brand promise of offering low prices and good value on any and all products that a customer wants to buy. Walmart doesn’t worry about selling a competitor’s product – even with a small profit margin, Walmart still generates revenue and profit, through multiple product sales, and keeps the customer coming back rather than sending him to shop with the competition. It’s good business sense to focus on what the customer wants to buy rather than what a retailer wants to sell.
Similarly, it’s good business sense for an insurer to consider selling products that are a good fit with the brand and that complement other product offerings – even if that means offering a competitor’s product.
Selling a competitor’s products can help insurers facilitate that convenient, one-stop-shopping experience that consumers want. It allows the insurer to keep the customer relationship while generating revenue from underwriting the risk, or from brokerage fees. And in cases where an insurer doesn’t have the experience, appetite or capacity to underwrite the product, it’s better to make fee income than the underwriting income.
An insurer’s No. 1 goal is to own the customer. The insurer that underwrites the product makes one sale; the insurer that owns the customer can sell to her for her entire lifetime. That can mean decades of selling renewals, cross-selling related products and generating referral business.
2) OFFER CUSTOMERS CHOICE
Mac or PC? Chocolate or vanilla? We’re a culture of consumers who covet choice. Even a limited selection is enough to provide customers with this valuable component of the shopping experience. While Costco is cautious about the number of brands it offers (limiting the number of brands allows Costco to get the kind of volume discounts it needs to offer the lowest prices), like Walmart it offers at least two choices of brands for any given product.
Providing a competitor’s products can help insurers, too. The objective is to give customers a selection ample enough that they can compare insurance products and choose the product that works best for them. As with Costco, this may mean offering the customer a choice between two brands that offer different price points and levels of coverage.
3) SELL CUSTOMERS EVERYTHING THEY WANT
There’s nothing haphazard about the layout of a Walmart or Costco. Superstores invest a great deal of time and money walking the walk of their customers. They think through how customers search and shop for products and how those products should be grouped for optimal cross-selling opportunities.
While insurers understand the profitable art of cross-selling, in theory, I’ve witnessed more than a few property and casualty insurers who’ve missed big opportunities to cross-sell products. What happens when that flower shop you just insured needs auto insurance on its three delivery vehicles and you don’t have it? If the insurer isn’t prepared to sell the customer what she wants, the customer will go to the competition to satisfy her multiple coverage requirements.
4) NEVER LET THE CUSTOMER LEAVE EMPTY-HANDED
The path from creating awareness to having a customer walk through the door ready to purchase is long and expensive. A superstore does everything in its power to make sure you have no excuse to walk out the door without buying something.
Factoring in advertising and promotional campaigns, the cost of bringing a paying customer through the door could be as high as $400 to $500 for some insurers. Every insurer’s goal should be to make effective use of a lead by finding some way to fulfill the customer’s product needs.
I’ve only scratched the surface. Now it’s your turn: What superstore selling practices do you think insurers should consider to win market share?