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February 22, 2017

Insurtech: The Approaching Storm

Summary:

A customer-centric marketing approach starts with the realization that there is no “average” customer.

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Customer-centricity and mobile engagement: the next wave of innovation to disrupt the insurance industry?  

The individual customer has to be at the center of the marketing strategy of every company that wants to succeed. A customer-centric marketing approach starts with the realization that there is no “average” customer. Customers have different behaviors and preferences — and this presents rich opportunities to move past a “one-size-fits-all” marketing approach. Customer-centric marketing teams think of their customer base as their greatest long-term investment.

A customer-centric approach means targeting the right customer through the right channel and sending the right message — at the right time. It also helps teams align around a strategy that will drive long-term value to the business, acquiring high-value customers and keeping them coming back.

The consumption habits have deeply changed in a competitive environment where the customers face information overload.

The smartphone has become the primary reference when searching for information, comparing products, finding the best deals and connecting with a brand/organization. The smartphone has become the first screen, the reference for our daily activities.

“Mobile is the future.” With these very words in 2010, Eric Schmidt, the then-CEO of Google and now chairman of Alphabet, gave us a glimpse of what was going to happen. And he hit the target!

As citizens and customers, we live surrounded by dozens of different devices, and the screen of the smartphone has become the main reference for all our activities. Mobile is not just another channel, it is a proxy of the customer — an entirely new lifestyle.

The awareness that the rhythm of our existence is marked by the mobile revolution is certified by three common stats:

15: The minutes between when we wake up and when we turn on our smartphones.

150: How many times we check, on average, our smartphones during the day.

177: The minutes we spend, on average, every day looking at the screen of our mobile devices.

Customers today do not go online. They live online.

Better yet, they experience an endless sequence of moments — in a nonlinear balance between the online and offline worlds.

See also: Top 10 Insurtech Trends for 2017  

Your customers are ready to buy. They are ready to buy from you. They are just asking for one simple thing: that they can receive relevant information on their smartphone when it is the right time.

According to Google research on “micro-moments” that offer memorable experiences to customers, a retail brand must develop and cultivate three qualities:

Be There: The ability to show up when and where the customer has a need or desire.

Be Useful: The ability to be there with relevant content and to become a primary reference.

Be Quick: The ability to think and act fast. Speed is essential across all stages of the customer journey.

At the core, the brand-new customer is driven by technology.

The super-shoppers are tech-savvy, and you cannot even remotely think to engage and monetize them as you did with the clients in past decades. If you do not speak the new shoppers’ language, you will never capture their attention, and, ultimately, you will lose all relevance.

What does it mean to be relevant in the mobile age? Easy. Rethink the marketing strategy, how to connect with customers (online and in-store) and how to convey contents and values.

In a few words, you must use technology to establish your brand as a trustworthy source of information and inspiration. And you must do it not once and for all, but improving day after day after day.

Study and understand the super-shopper; be present in the micro moments that matter; stay relevant; and be epic. Only then you will conquer shoppers’ hearts and minds.

Shopping in the era of micro moments often starts when people have a need or desire to purchase a product. Once they feel this need, they start looking for ideas, a search that will lead them to online communities, social networks, video tutorials and company blogs. Only then will they evaluate the different options and eventually decide what (and where) to buy.

In these moments, you have to be there and be useful to win trust and loyalty.

“Be there” means you must identify the most important micro moments and commit to being there, whenever and wherever a shopper is searching, especially on mobile.

“Be useful” means you must provide valuable contents when your customers need them, on any channel — social media, point of sale, advertising, blog, social commerce, etc.

“Be quick” means you must provide the required and valuable information at the right time and in the right manner.

Has the moment come for an old-style industry like insurance to turn the page? Several experts, managers, entrepreneurs and investors engaged in the insurance space consider that 2017 will be the year of insurtech. Some strongly believe that every successful insurance company will be insurtech soon!

An intelligent use of the technology in this industry can generate opportunities to close the protection gap, reduce the anti-selection issue, optimize loss ratio with personalized proposals and reduce overall processing cost. All this in a customer-centric approach.

The Internet of Things and artificial intelligence are undoubtedly two main drivers of the evolution in the industry, and we have seen several interesting applications already on the market. A lot of insurtech startups are investing all around the world in these technologies, which enable insurance carriers to propose innovative and customized coverage to their customers while  “blue ocean” opportunities are appearing.

See also: 10 Predictions for Insurtech in 2017  

Traditionally, the insurance industry business model is focused on:

  • Identifying the pool of customers that might have risks assessed;
  • Targeting those customers and assessing the risk for each class;
  • Selling differently priced policies and spreading the risks over the pool of customers; and
  • Trying to retain those customers as long as possible, offering lower price for longer contracts.

This approach is, by definition, based on the concept of “standardization” — the opposite of “customized” from a marketing point of view — and, even if it was one of the golden rules of the insurance business for several decades, it has become obsolete nowadays.

The insurance industry has always been data-rich, but, traditionally , it is quite unstructured, or, at least, the models used are quite old and simple.

Being connected has become the talk of the town, and insurance companies are one of the main interested parties in this discussion — some of them even being actual promoters of change and innovation.

Consumers are becoming more and more connected, whether it is at home, at work, behind the wheel, when they engage in sports or leisure activities and so on.

The surrounding environment is becoming smart and is being incorporated in the connected ecosystem, thus creating opportunities for insurance companies — opportunities that must be managed appropriately to maximize value. Here, big data analytics play a huge role, as the quantity of collected data and variables is getting higher and higher.

The IoT real-time data collection and sharing power will create significant opportunities in finer product segmentation and more specialized pools of risk and predictive modeling to better assess risk, as well as improving loss control and accelerating premium growth.

The IoT is the network or system of related computing devices and sensors, and it can communicate with other devices on the network. These objects, or “things,” are capable of transmitting data.

In the end, for insurance carriers to harness the power of the IoT, each will have to first think creatively about what data to gather and how to use it.

A system based on IoT and big data analytics can identify patterns and provide optimized solutions based on real-time input. Up-front: A seamless user-friendly interface can transform the way companies communicate with policy holders.

The IoT’s impact within insurance is coming fully into focus. At the highest level, better use of IoT and sensor data means insurers have the opportunity to:

  • Establish direct, unmediated customer relationships;
  • Gain more granular and precise understanding of who their customers are and how their needs change over time; and
  • Individualize offerings of products and features.

Within IoT applications, artificial intelligence is also helping (or disrupting, depending on how you see the matter) the sector in different ways.

The abundance of data can be used to refine customer segmentation and provide personalized offers based on personal features.

Artificial intelligence offers predictive recommendations that are backed by complex algorithms and data and have the ability to analyze process flows for bottlenecks, improving overall company and customer satisfaction. Algorithms compare answers and information provided by customers to make appropriate recommendations for each risk scenario.

The algorithms are constantly at work to better understand humans and their thought processes through machine learning, which allows AI to analyze human behavior and provide predictive consulting based on each individual’s wants and needs.

So, AI can help increase customer engagement and retention with personalized offers delivered at the right time, in the right way, at the right price.

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About the Author

Andrea Silvello has more than 10 years of experience at internal consulting firms, such as BCG and Bain. Since 2016, Silvello has been the co-founder and CEO of Neosurance, an insurance startup. It is a virtual insurance agent that sells micro policies.

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