Tag Archives: aggregators

The Bad Actors Among Lead Sellers

In today’s online shopping environment, lead sellers and lead-buying marketers alike work well together toward the same goal of delivering a great customer experience; however, they often struggle with an array of challenges along the way.

The Evolution of the Lead Seller-Lead Buyer Relationship

The relationship between online lead sellers and lead buyers began as a very simple one, in the late ’90s. The lead seller was also the lead generator—who dealt directly with the lead buyers.

But it wasn’t long before small- and medium-sized publishers realized they could make money by generating leads that they would then sell to the large lead generators that had direct relationships with the lead buyers.

This resulted in lead generators that would also aggregate leads generated by smaller publishers. By the mid-2000s, the large generators and aggregators began to monetize individual leads further by sharing them with other large generators and aggregators that had unique end-buyer relationships.

Initially, this transpired in a private, trusted transaction environment with strict rules in place that were easily enforced. Two companies worked together to maximize the monetization of each other’s leads. Collectively, they made more money, and the consumer had more options available. It was a win-win-win for everyone in the ecosystem.

As more of these private sharing arrangements developed (driven by the additional monetization opportunity), the technology evolved to support it. Hence the ping post ecosystem, which publishers, aggregators and generators leverage to best monetize leads. Much like in a stock exchange, sellers and buyers come together to create an efficient market with a variety of options for the consumer, and the highest bidders are typically the entities with the best consumer offer.

See also: Changing Business Models, ‘New’ ERM  

The Present State of the Lead Seller-Lead Buyer Relationship

In insurance, the relationship between sellers and buyers is generally strong, as long as the publishers, aggregators and generators play by the rules.

For example, leads should only get sold to a certain number of buyers in a shared-lead world, and exclusive leads should only be sold to one buyer. Other examples of rules include:

  • No manipulation of the consumer data
  • No recycling of leads later
  • No fake leads
  • No non-TCPA-compliant leads
  • No incentive-driven leads
  • No unauthorized sales to stated end-buyers

It is the “bad actors” that don’t play by these rules in the ping post ecosystem that can cause significant problems. We can look to the evolution of the mortgage and education verticals to learn how to solve these problems.

Solutions for Today’s Lead Seller Challenges

TCPA Compliance. One of the most stressful challenges that lead sellers face today is TCPA compliance. Given that TCPA case filings increased more than 940% between 2010 and 2015, coupled with the fact that consumers are being encouraged to file suits by some law firms, the TCPA has become a huge hurdle for sellers to overcome.

Both lead sellers and buyers must avoid exchanging non-TCPA compliant leads and make sure they have persuasive evidence of consent in the event they, or end-buyers, face a complaint or lawsuit.

Measuring Consumer Intent. Another challenge sellers face is gaining the ability to measure the intent of each consumer.

With insights into the individual consumer journey, you gain the ability to measure the intent—and therefore the value—of each lead. There are technology solutions available that enable you to measure consumer intent.

Those Bad Actors Not Playing by the Rules. Many lead buyers are actively leveraging technology to validate consumer data as “good data” and some using de-duping solutions to minimize buying the same lead twice.

In the ping post ecosystem, much of the data on the origin and history of a lead is “contributed data.” The challenge of eliminating old or recycled leads, dupes, fake and no-intent leads stems from a lack of ability to verify that “contributed data” as fact. For example, an insurance lead aggregator buys a lead from another aggregator or from a generator and agrees to only sell the lead once and only to one, specific insurance provider. This is contributed data, but there is no way to validate it as fact. What sometimes happens is a bad actor will sell that lead to other insurance providers or hold it for a week or so then sell it again—a recycled lead. There is no transparency and little accountability.

To validate contributed data as factual, you have to establish a “chain of custody” to verify that each lead seller participating in the ping post system is playing by the rules. Then, if there is ever a problem or complaint, you have data to help the lead generator or buyer that is experiencing a problem identify where in the chain the problem occurred and expose the bad actor.

The Most Crucial Area for Improvement

Improving Lead Value – To continually improve relations with their buyers, sellers always seek ways to cultivate greater value in their leads.

The simplest solution is for sellers to distribute the highest-intent leads possible and do everything possible to eliminate selling “no intent” leads to their clients.

To best accomplish this, sellers must require any upstream publishers and generators to adhere to the simple rules that sellers and buyers have established and have a mechanism in place to verify any contributed data surrounding exchanged leads. If anyone is still following the antiquated practices of a bad actor, it’s going to catch up to them eventually.

See also: Developing Programs for Shifting Channels  

Bad actors are bad news for the entire ecosystem, leaving a bad taste in the mouth of buyers, that can cloud relationships with reputable sellers and result in a deterioration of value to all participants. By exposing the bad actors, sellers can avoid a race to the bottom, ensure they deliver a great consumer experience and deliver high-intent leads—and the resulting growth opportunities—to buyers.

Technology is available to the lead-gen industry today to enable the chain of custody and associated data trail. We encourage everyone to join this insurance industry initiative.

Is the Era of Aggregators Ending?

A conclusion concerning insurance aggregators (aka comparison portals) in the Accenture Distribution and Agency Management Survey is: “Irrespective of insurers’ views on the role of aggregators, it seems they are here to stay.”

This conclusion is supported by many others, but I venture to doubt it . The aggregator business may be nearing a tipping point.

There are (normal business) threats like:

  • heavy competition (usual in a successful and booming market)
  • takeover by the insurers (ending neutrality, a key issue for a serious comparison offer)
  • high cost of acquiring customers (apportioned to the customers)
  • pressure on product development (requiring cheaper derivatives of existing products, producing less transparency for the customer and making the process of buying insurance even more complex)

Maybe those can be overcome but I see a more fundamental threat for aggregators. 

Comparability

Comparison of coverages and premiums is possible because of the standard insurance products we have in all markets. Products were already quite standard, but the aggregation business has forced them to become even more comparable.

See also: The New Age of Insurance Aggregators  

Insurance, which generates little interest among buyers and which has price as the main buying parameter, might have lived happily ever after as a mature, not innovative market, but….

The New Insurance Is No Insurance

Forced by extreme pressure and pushed by new technology, a new type of service is being deployed: The insurance industry will move from claims handler to claims preventer.

Creating a safer environment for the customer and his/her beloved and belongings; optimizing prevention via smart vehicles, homes and people; analyzing the residual exposure and insuring only the part that is worthwhile to transfer — this is where insurance is headed.

There are huge opportunities for the insurance provider that is willing and able to shift to:

  • Real customer-centricity
  • Customer engagement with continuing advice and loyalty programs
  • Long policy life-cycles, away from aggregator dominance and costs
  • New products and services
  • New earning models
  • A safer and greener environment

All will result in customized and optimized interactive protection and insurance services for the complete household. There will be one-to-one services, on the road to living services (see also Fjord Report).

Non-Comparability

So what’s to compare in one-to-one services and products? In living services?

Of course, customers will need some guidance in this new world, as well. But it’s going to be a completely different ball game than the relatively easy “matching and ranking.”

The Peak

There is so much going on, to develop and to learn that this new world will take some time and the mass market has to follow, adopt and adapt. Therefore, I believe the aggregator business has not reached the peak YET.

But, in my opinion, for aggregators the sky is not the limit, and they are not here to stay. At least not in their current modus operandi.

See also: Understanding Insurtech: the ABCs  

Ultimately

The U.K. seems ahead with close to 70% aggregator-involvement in car. So there’s a fair chance that the U.K. will be leading in reaching the peak, as well.

Technology is developing very quickly, and prices are falling rapidly. Tech companies, OEMs, consumer electronics giants, telcos, media and utilities are already rolling out worldwide their connected devices and ecosystems. Millennials and other digital natives do expect continuous connected value added services in return for their effort and data.

Revolution will come suddenly and from unexpected sources.

Thinking on Core Systems Is Backward

Insurance technology spending is high. In April 2015, Celent estimated that global insurance technology spending would top $181.6 billion by the end of 2016. This spending will include a combination of standard modernization, keeping legacy systems alive and well, supporting infrastructure projects and (increasingly) building digital and data frameworks.

Many insurers remain focused on upgrading or maintaining their core systems. The common internal debate is whether the insurer should maintain the legacy system or start over by adopting a modern solution. This debate almost completely ignores the proper approach to determining the answers to technology decisions, placing the cart squarely ahead of the horse. If one accepts the basic premise that core new business, policy, claims and billing management systems are really just table stakes, why not focus on the business — improving growth, increasing market penetration and improving both the combined ratio and profitability?

If we do this, we are likely to achieve all of these things AND construct a technology framework that fits now and is flexible for the future. For the sake of conversation, I have come up with three areas where business focus will lead to the right kind of modernization and transformation.

The first two are concrete business goals: reduce the cost per acquisition (CPA) and increase customer retention. The third is less concrete and more philosophical: embrace change by improving an understanding of the opportunities it may provide.

Reduce Cost Per Acquisition

The CPA is the largest cost in the current insurance business model (outside of claims). It is currently under pressure because of the rise in aggregators and comparison sites that are forcing insurers to sell standardized products for the least amount they can. The result is a market designed to churn because of a continual focus on price.

See also: 4 Benefits From Data Centralization  

How can insurers break out of this cycle, reduce the cost per acquisition and use the savings to remain competitive? Here are a few ideas:

  • Insurers should consider a cloud solution for core systems/back-office administration. U.K. insurers have, unfortunately, been slow to adopt shared services and technologies when they are proving themselves in other industries and geographies. Now is the time to consider cloud solutions if they fit with cost reduction objectives and if they can sustain or improve service levels.
  • The industry should use a permission-based consumer data storehouse. Churning policyholders benefits no one and costs all of us a great deal of time and effort. What is needed is a true permission-based marketing model, where consumers grasp the benefit of letting insurers see relevant profile information. This would enable the direct-to-consumer or small-business framework where insurers would provide a digital front-end that “pre-fills” the quote with existing data on the customer or other third party data, streamlining the process. It would also enable insurers to better match tailored products to prospects, instead of having to offer standardized products.
  • Insurers should hone data-driven target marketing. Today’s data sources and analytics allow for much more granularity and fine-tuning in the marketing process. With the right tools, insurers can now use consumer-provided data and detailed third party data to provide qualified offers to only those consumers and small businesses that fit a certain product’s risk profile. This would reduce CPA and improve risk selection.

Increase Customer Retention

With a high cost per acquisition, customer retention becomes an increasingly critical metric for insurers, particularly because initial acquisition costs are recouped over multiple years. The increasingly price-sensitive market has reduced the number of multi-year policyholders. Industry studies have shown a clear correlation between a customer having multiple policies with a single insurer and their retention rate. Yet with the exception of multi-car policies, there has been little effort in creating an overarching combined personal lines product with auto, homeowners put forward by U.K. general insurers. This is in stark contrast to insurers in the U.S. market that have been focusing on the customer relationship with a goal of a multi-policy environment and customer retention business processes.

Most U.K. insurers’ core insurance systems are legacy systems built around the product, not the customer. Realigning technology choices, process reengineering and customer-centric product development will result in the ability to offer multi-risk and multi-year policies (and discounts) and preventive risk management services. These will help to build loyalty and retention.

Embrace Change and New Ideas

Technology is enabling exciting changes in insurance. Whether it is innovative new products, new customer relationship business models, implementing modern core insurance solutions, leveraging new data sources or embracing new technologies — each offers an opportunity to begin the journey to a new future that is rapidly unfolding in the industry.

New technologies will give insurers improved data, better analytics and lower transactional costs through self-service. Consumers will benefit with services closer to an “Amazon experience” with a greater level of insurance understanding.

See also: How Technology Breaks Down Silos

To capitalize on the opportunities presented right now, insurers must embrace new ideas and change before new entrants do so and disrupt the industry. Insurtech is the conceptual umbrella containing insurance ideas and technologies that are rewriting the rules of insurance and helping insurers succeed. Internal education on the highlights of today’s insurtech landscape may be an excellent catalyst for change within your organization.

Preparing for change should still include conversations about the core insurance solution. The core can serve as a catalyst for change instead of an inhibitor to market potential. Discussing even a small part, such as the financial benefits of core change, can fuel both creativity and a desire to create and capitalize on a new model. Nothing will pull leadership together faster than a plan for real growth and solid change where efforts are directly tied to outcomes. Those are healthy approaches to core conversations.

So where do we begin?

To begin, focus on business priorities. If you do this, your organization will end up with the right technology solutions and a core system that fits and supports the business. You’ll make technology investments, not expenditures. Your costs will be lower. Your customers will be more loyal. You’ll recruit better businesses. And you will keep the horse in front of the cart, enjoying the way systems and processes and people work in unity to accomplish goals.