Selling Insurance in the Digital Age

Selling insurance in the digital age: While most insurers recognize that consumer behavior is changing, they don't yet understand how to optimize their channel strategies to influence customers and their networks.

The fresh start of a new year brings a renewed emphasis on growth. Companies have to analyze past years' performance, refocus their strategies, and come up with new plans to boost their bottom lines. For 90 percent of insurance CEOs who participated in IBM's 2010 CEO Study, the core answer to the growth challenge is getting closer to customers.

However, understanding and meeting the needs of today's insurance customers takes on new meaning in the digital age. The coupling of the megatrends around the massive adoption of personal technologies, and the pervasive rise of social networking, have fundamentally changed the way people search for, and purchase insurance. It used be that consumers would set up face-to-face appointments with their local insurance agents, participate in a series of background meetings and get handed stacks of literature to select their insurance options. Now, it is more common for a consumer to browse his or her insurance options on their iPad while relaxing at home and then resume that activity during a lunch break the next day at work. Before settling on a decision, he/she may choose to call an agent for clarification of an issue or simply search for the answer by browsing comments from people in online groups who may have had the same experience.

According to the new IBM Institute for Business Value study, "Powerful Interaction Points: Saying Goodbye to the Channel," almost 80 percent of the 21,740 consumers surveyed use more than one interaction point -- such as phone, website or face-to-face meetings -- to select their insurance policies. This trend exemplifies that consumers are spending more of their time and energy exploring and evaluating their insurance options, rather than passively accepting information from their agents and brokers. One-fifth of the respondents said they use more than four different interaction points to search for insurance.

While most insurance providers recognize that consumer behavior is shifting, they have yet to understand how to optimize their channel strategies to influence their customers and their networks. Most smart insurers have known for some time that they cannot appeal to customers by selling complex insurance products using a blanket, one-size-fits-all approach. That is why customer segmentation has been such a popular industry strategy for the past 20 years. But to succeed in today's world, providers have to go a step further to understand what motivates consumer purchasing decisions. They have to identify customers as distinct individuals, engage them with targeted offerings in the right forum, and encourage positive experiences with their organizations to then prompt customers to make ringing endorsements to their friends and families.

The great thing about living in the digital age is that the personalization aspect of the insurance selling equation is remarkably easy. Much of this coveted information about consumer preferences is amply available and accessible online. Insurers can learn a lot about their customers and their behavior by engaging with consumers through popular social media channels such as Facebook, Twitter and LinkedIn. It is here where consumers are "talking" and telling the world of their endorsements and criticisms. And it has never been easier for insurers to tap into consumer thinking.

What Insurers Need to Do

Saying goodbye to the channel as a unilateral sales strategy is the first step in getting closer to today's smarter consumer. Insurers must embrace multiple channels -- those that actually connect and complement each other -- so that consumers can enjoy choice and flexibility while interacting with insurers. Providers must work at understanding consumers on a deeper, more personalized level.

Here are three steps that insurers can take to build and grow their customer relationships:

Increase the number of available interaction points: As consumers want to use multiple touch points to search for and purchase insurance, insurers should make their products and services accessible via nontraditional channels such as Web, mobile, etc., and get into the practice of courting customers using mobile phone and social networking sites. These interactions should be branded consistently, present identical information, and allow users to switch interaction points without losing information provided at other points of contact.

Follow your customers and invest in analytics: Insurers should study the data around consumer search and purchase decisions to deliver better services and engender loyalty. Consumers should be engaged to reveal data about their preferences so that providers can develop personalized recommendations and offerings. A technology investment in analytics can reveal valuable behavioral data that will allow insurers to compare interaction point offerings to the preferred mix of targeted customers.

Improve interaction quality: Customers are demanding good advice, a wide range of customized products and offerings, and fast and efficient service. To boost customer loyalty, insurers must focus on perfecting its interaction quality so that they can turn consumers into true advocates of their businesses.

Unimaginable just a decade ago, the rise of the Internet, mobile phones, and social networking is changing how consumers shop for and purchase insurance. Customers are becoming harder to satisfy and harder to maintain, so that means insurers have to work that much harder at building and sustaining their customer relationships.

Insurance has shifted from a seller's to a buyer's market. And while modern consumers are willing to buy, it is not all about price. Insurers also have to provide quality service and reach customers with the right interaction mix. Analytics offers a more telling segmentation that will allow insurers to better understand what products their customers are looking for, and how they want to interact with their insurers once those purchasing decisions are made.