Tag Archives: D2C

D2C Model Needs New Customer Approach

According to home insurance provider Hippo, over half of insurance customers would rather go to the dentist than communicate with their provider. This type of sentiment provides a big business opportunity, however, as insurance increasingly becomes a direct-to-consumer (D2C) business. In the next few years, many believe that the large amounts of marketing and ad dollars traditionally spent to drive traffic to mobile apps and websites will struggle to turn web visits into customers.

Insurance carriers, now more than ever, are afforded the opportunity to address friction within the customer journey as customers expect a transparent and more intuitive experience. Today’s insurance consumer embraces the right engagement at the right time. Providing certainty and clarity to customers reduces anxiety and hesitation and drives success for the customer and the business.

In 2013, Geico’s marketing budget topped $1 billion, with a majority of spending on advertising. Not much has changed. D2C newcomers have acquired early customers with design-first thinking, an emphasis on lower prices and more modern policy terms. But the approaches are meant to acquire customers; neither focuses much on engaging the customer.

According to a recent Watermark customer experience survey, CX leaders outperformed the broader market, generating a total return that was 45 points higher than the S&P 500 Index. And customer experience leaders generated a total cumulative return that was nearly three times greater than that of the “Customer Experience Laggards.” Those are numbers any CEO of a traditional insurance company or founder of a major insurtech can rally behind.

How insurance can embrace a different type of customer acquisition

For legacy insurers and a more D2C model, customer experience represents a fundamental and essential shift in mindset. By providing the lower-friction, more customer-centric experience that today’s consumers prefer, legacy insurers and insurtechs can modernize their position in the market. This can all be done by guiding the customer’s experience online through engagement.

See also: How to Earn Consumers’ Trust  

Tom Super, director of J.D. Power’s insurance practice, recently noted that, “According to our 2019 J.D. Power Digital Experience Study, 37% of consumers have never spoken with their agent, and one in 10 consumers report they have never interacted with their insurance company at all.”

This clearly leaves a lot of room to grow customer engagement, and the insurance industry should look more closely at how it calculates customer lifetime value (CLV). There is an opportunity to understand where exactly customer engagement produces sales. For insurtechs and legacy providers alike, the question has become: How do you think about engagement when your customers don’t really want to be there or don’t understand exactly where to go? This is a lot different than typical direct-to-consumer marketing and brand challenges.

Creating a more direct customer experience

To win in this fast-evolving insurance marketplace, providers of all types will need to move quickly beyond branding and focus on the customer experience. The first few seconds are critical—as are all the seconds that follow. Customers will need constant reassurance that things will be explained, the next steps will be clear and the company is there for you.

The key to Guided Digital Commerce is automation for the majority of contacts and preserving your live channels for more complex inquiries. If you can give the customer the right answer to a concern the overwhelming majority of the time, you can deploy a profitable engagement solution that can reach all of your customers instead of just a few. In sometimes opaque insurance products, this is key to building effective customer engagement that supports money spent on the brand.

In practical terms, this means providing relevant guidance to help customers complete their onsite journey quickly and easily. Site design and golf tournament sponsorships are only the beginning. From the moment the customer lands on the home page, the provider should watch for signs of hesitation, struggle or opportunity. Site analytics can help the insurer understand the nature of hesitance as well as how to address it. If visitors tend to get stuck at a given point in the process, offer relevant information in context, explaining what to do and what to expect next. Keeping the customer within the digital channel and increasing self-sufficiency is good for the customer and good for business. Anticipate and act on customer behavior in real time. In a sense, be the best possible kind of insurance agent: one who’s clear, helpful and attentive to the customer’s needs but never pushy.

See also: How Insurtechs Can Win Consumers’ Trust  

Branding, data science, risk-pricing, terms, customer reviews—these are all part of the mix for competitive success. But none of it matters if you can’t keep customers on your site long enough to see what sets you apart. By offering a new and better kind of engagement experience, insurance can start changing customer perceptions from the moment they arrive. When customers are guided to the information they need to make confident buying decisions, they’re more likely to bind policies, give accurate information to enable accurate risk calculation, update their coverage and generate revenue for the business. And that sure beats a trip to the dentist.

How to Be Agile in Today’s D2C Era

Direct-to-consumer (D2C) sales have shaken up multiple sectors, from retail consumables to insurance sales. While D2C sales of property and casualty insurance have the potential to improve customer satisfaction, increase upselling and boost retention, moving into the D2C space also poses challenges for insurers that have invested heavily in more traditional models.

Here, we look at some of the biggest challenges D2C poses, the opportunities available and how P&C insurers can improve their direct appeal to consumers without losing their traditional strengths.

The Challenge of D2C

D2C models are threatening traditional participants in a number of industries with their ability to adapt, innovate and streamline — skills that are tough for established players to exercise quickly,Groceryshop cofounder Zia Daniell Wigder notes.

“Ultimately, monopolistic players are stuck in a paradigm that is very profitable, but that leaves them with reduced ability to innovate and form direct, meaningful relationships with their customers,” Widger writes.

While Wigder’s analysis focuses largely on retailers, many of the same challenges of D2C competition apply to P&C insurers. In particular, P&C insurers need strong connections with customers. These relationships boost customer retention and provide key insights into behavior and risk that play an essential role in the development, pricing and deployment of insurance products.

And the D2C model makes customers want to build relationships with companies. As Ben Sun, general partner at Primary Venture Partners, tells Wigder, “New D2C brands emerging today understand these challenges and have built platforms that directly attack those vulnerabilities and provide consumers something of real value — either a far superior shopping experience, higher-quality goods, cheaper products or greater convenience.”

An outstanding shopping experience, better coverage, lower prices and increased convenience are high on the wish lists of those seeking P&C insurance — and, when D2C models can provide them, they become more attractive than their predecessors.

See also: Why More Don’t Go Direct-to-Consumer  

Even newcomers to the insurance market, however, face hurdles that sectors such as retail do not. Jay D’Aprile, executive vice president at Slayton Search Partners, says the complex web of legal regulations surrounding insurance creates additional hurdles for companies planning to either start on a D2C model or include a D2C option among their approaches.

Fortunately, these challenges also present opportunities.

D2C Opportunities for Insurers

A 2016 Timetric report on D2C innovation in insurance found that the prevalence of internet technology in consumers’ lives — and the transparency that brings to every industry — has shifted the balance of power from insurers to consumers in our industry. Most insurance companies’ customers now demand fast, efficient, digital-centric access to insurance information and products.

Often, a shift in the balance of power can feel like a cloud with no silver lining. Yet the power shift actually creates a number of opportunities.

Expanded (and Tailored) Product Offerings

Concerns over “choice paralysis” have long led P&C insurers to maintain a relatively small catalog of offerings. Insurance is complex, and a longstanding belief that too many options would cause customers to walk away has resulted in a reduced number of product offerings.

While too many choices can be overwhelming, the existence of many choices, alone, isn’t typically the problem. “There is no upper limit to the number of options you can provide customers. With our private exchange, companies are offering 30 or even 300 choices to customers with a great experience,” Liazon cofounder Alan Cohen says.

The trick, he adds, is to present options in a way that customers find intuitive to navigate. Personalization, packaging that clearly indicates differences in value and information access to support customer decisions allow D2C companies to lead customers easily through any number of choices.

What does this mean for insurers? As technology helps insurance companies develop new products more quickly, P&C insurers are no longer limited from the customer side when it comes to tailored offerings. It becomes easier for insurers to provide precise, personalized coverage — and doing so simultaneously feeds customers’ desires for personalization and specificity, boosting their likelihood of returning to the insurer.

Increase Employee and Customer Satisfaction at the Same Time

In a 2016 report, Liazon found that companies using a D2C approach to both customer-facing products and employee-facing information tripled their employee satisfaction and doubled their customer satisfaction.

How? In both cases, the D2C approach made the product in question — whether it was auto insurance for customers or health insurance for employees — easier to access. Questions could be answered more quickly, often with a quick browse on a website or mobile app. Selecting benefits or coverage was easier and more transparent and felt more personal.

Companies that use these tools to collect customer or employee data have seen big boosts from their D2C approach, as well. “By leveraging analytics, we can deliver promotions and offers more efficiently to our consumers,” former High Ridge Brands CEO James Daniels explains, “and build our brands using owned media assets including our millions of Facebook Fans, email subscribers and website visitors vs. solely relying on paid media channels and at-shelf promotions.”

How to Innovate

D2C provides opportunities to increase agility, not only in the sale of P&C insurance products but in the way an insurance company understands customers, analyzes risk and does business. Technology provides the key.

An agile insurance business in a D2C world “typically requires a multi-channel approach, including web, mobile, social, email and phone,” D’Aprile said. “Interaction on each of these plains must be tracked coherently to cater to the increasingly non-linear customer journey.”

And, as Daniels noted, tracking customer interactions matters. Currently, insurers are limited by the systems they’ve build to track only certain types of customer data — and by legacy computer systems that can’t crunch available data efficiently. To get ahead of this problem, insursers will need to explore more expansive ways to capture and understand customer data.

A strong D2C platform is only part of the equation. “If DTC is not a strategy that is deeply ingrained across the entire enterprise, customers will quickly see it for what it is: a smoke screen,” D’Aprile said. “Fancy technology cannot overcome operational siloes and uncoordinated business functions.”

See also: Why Are Direct-Sales Carriers Winning?

While D’Aprile mentions a multichannel approach as one solution to this problem, increasingly savvy customers who interact with insurers through multiple channels may come to read “multichannel” as a smokescreen, as well, because the experience in each channel is still different, BOLT’s CEO Eric Gewirtzman says.

An omni-channel approach puts the customer experience, insurers’ access, agents’ information and data analytics under a single umbrella, maximizing the agility of the entire system while offering customers the personalization and speed of a D2C approach, according to CRM software provider Ameyo. Omni-channel allows for more agility in a D2C world — whether or not an insurer wishes to prioritize D2C insurance sales.

What P&C Insurers Are Missing

Twitter feeds of industry influencers lit up about ZhongAn’s recent $1.5 billion stock offering. There was a feeling in the air that the P&C insurance industry had finally turned a corner, reaching for direct-to-consumer distribution with open arms.

However, customer satisfaction studies from J.D. Power indicate that U.S. insurers aren’t quite there yet. While more consumers shopping for auto coverage use D2C channels for quoting, only 10% of those quotes turn into new business.

Consumers have high expectations when purchasing products through digital channels, so insurers need to provide more than a pleasant experience. They need to provide a wow moment.

We recently conducted a survey of P&C insurers. What we found is that the “wow” experience is eluding many. While 68% say they view digital distribution as the most important aspect of their future growth, fewer than 25% are fully happy with their efforts to date.

The elusive “wow” factor is holding many insurers back from realizing the benefits of going direct-to-consumer.

What are they missing?

Raising Acquisition Rates in P&C Insurance

Insurers that aren’t online are missing the chance to engage with nearly 70% of the market. That’s the number of consumers who prefer to use online channels to research coverage.

Turning a casual observer into a customer depends on the strength of your D2C capabilities. Some websites are off-putting. They speak primarily about the insurer, provide a complicated quoting process and fail to advise customers on coverage gaps. In this digital environment, the customer feels like a pawn, being moved through a complex series of maneuvers to determine product pricing or to purchase insurance coverage.

If we turn this scenario around to one where the website speaks to the customer, provides easy quoting of insurance products and advises the customer on coverage gaps, we see a more personalized shopping experience emerge.

See also: 3 Ways AI Improves P&C Economics  

In case you’re wondering how open consumers are to this type of digital advisorship, Accenture has an answer. It recently polled more than 32,000 consumers and found that 74% are open to advice about insurance from digital sources, and many find that it’s faster, offers greater convenience and delivers more impartial guidance.

A comprehensive direct-to-consumer strategy plays a strong role in acquisition rates. A leading D2C insurer expanded its digital capabilities and saw new business increase 8% in the quarter the enhancements were made.

Supporting Customers in their D2C Experience

While consumers are keen to embrace digital, what happens when they have a question that can’t be answered online? They are going to need an agent, but after experiencing the top-tier digital bliss of your D2C channel they aren’t going to be inclined to purchase if the agent is slow or less personal.

Industry influencer John Cusano said that to complement digital distribution channels, and remain relevant to their customers, insurance advisers need to use an array of digital tools to efficiently manage routine tasks as well as to service increasingly demanding and knowledgeable customers.

That means uniting siloed systems and giving agents a single view of the customer across products.

When insurers get this right, it plays a big role in generating new business, as is evidenced by a prominent insurer in the D2C space. This insurer recently enhanced the digital experience for its consumers and internal agency. As a result, conversion rates rose to 35%, and sales doubled year-over-year.

Customer Loyalty Is Possible in P&C Insurance

Bain’s recent survey of 172,000 insurance customers confirmed what many in the know have been indicating for a few years now. Frequent interactions generate loyalty.

Historically, insurance has been a low-touch business. Insurers send out renewal papers with a request for payment every six months to a year and, beyond that, only engage with customers if there is a claim.

Consumer demand for high-quality touch points goes back to digital pioneers like Amazon. They’ve constructed a business out of putting customer needs at the forefront and generating a “wow” experience from the first interaction.

As customers make their way across a site, they are guided by product recommendations and pricing comparisons. Each of these touchpoints make customers feel central to the buying experience, and they come back for more.

This is where D2C comes in for insurers. Digitizing customer information makes for more efficient data retrieval and better application of consumer analytics. The insights derived can pinpoint interaction opportunities, including cross-selling moments, all in real time.

According to Bain, the more touchpoints the better, as insurers that master the art see net promoter scores that are 15 points higher than other insurers.

D2C Adds up to Stronger Acquisition, Retention and Loyalty

In our survey, 77% of insurers are seeing demands for direct-to-consumer channels of engagement. That’s because consumers have grown accustomed to interacting through the channel that is most convenient in the moment, and they like the simplicity of purchasing online.

Insurers with strong D2C channels send a clear message to consumers. It says they are in touch and ready to put their customers at the center of their business strategy. Customers deliver loyalty in return, driving up retention rates and buying more products.

See also: P&C Insurers: Come Out of the Dark Ages  

To better serve customers and encourage retention, a top customer-experience leader recently improved its direct-to-consumer offering. Despite increasing its advertising budget, the insurer reduced its expense ratio and increased conversions 4% in a single quarter.

Are you still searching for a digital identity? If so, what are the main impediments you’re facing?

Is ‘Direct’ a Dirty Word for Insurers?

The second-worst-kept secret of the year, after the launch of Google Compare in the U.S., is Berkshire Hathaway announcing its plans to sell insurance directly to business owners over the web. Quelle surprise.

I recently spoke with a C-suite exec who told me that “direct” is a dirty word.

Perception is reality.

In reality, though, “direct” is a lousy term that doesn’t do justice to the implementations that today’s technology has to offer that are often in direct alignment with an insurance company’s business model.

The conversation becomes uncomfortable to some once the word “middlemen” is introduced. It doesn’t have to be.

There are two primary outcomes to direct selling: (1) eliminating the middlemen or (2) empowering them. For visualization purposes, consider the following three brands:

Quotemehappy.com occupies the left extreme of selling directly to consumers. A spin-off of Aviva since 2011, the online insurer only provides phone support if a customer has a claim. For all other inquiries, there is browsing. Then there are the Geicos of the world, where insurers offer the convenience of buying on the web with the assurance of speaking to an agent, when needed. To the right extreme, Plymouth Rock provides an example of an insurer that has a patent-pending technology that matches online quotes to agents either pre- or post-purchase. There are several other players occupying the comfortable middle with direct-to-consumer models that offer varying degrees of human interaction.

Typically the outcome is determined by the company’s original distribution channel: whether offline, web or mobile. The table below further illustrates how versatile “going direct” can be:

  • Geico, Policy Genius and Cuvva are examples of insurance companies that implemented a direct-to-consumer strategy from the get-go; here, direct is a no-brainer.
  • Plymouth Rock and Quotemehappy.com via Aviva signal companies that implemented a direct-to-consumer strategy in an attempt to address a change in the market.
  • Allstate acquired Esurance to buy its way into the direct market, and so did AmFam with the acquisition of Homesite.
  • Also, AmFam invested in insurance comparison site CoverHound.

When all is said and done, direct selling is first and foremost a marketing channel that empowers the consumer. Sans proper marketing and messaging, the online insurance journey is transactional at best, and players risk commoditizing their product.

“Commodity.” Now there’s a dirty word for you.