By Greg Davies, Gomez Inc.
Financial services' providers have long yearned for an effective way to cross-market additional products and services to their customers. For the past decade, the Web has promised to be the ideal medium for the job. But although brokers, banks, and to a lesser extent, insurance direct marketers, have embarked on massive efforts to Web-enable product distribution and develop data mining and customer relationship management capabilities, as of yet effective cross-promotion on a broad, institutional scale remains frustratingly out of reach.
While the majority of these undertakings remain works in progress, some discount brokers are taking advantage of less-complex opportunities to increase awareness and distribution of insurance products.
Here's what the best offer within the secure, account lookup areas of their sites (and where they fall short):
** Offering life insurance content and "needs assessment" tools in a financial planning context. Online life insurance leaders, such as Prudential Financial and Fidelity's Insurance.com affiliate, have recognized the value of representing information in a manner that coincides with an individual's financial goals (e.g., retirement, estate planning, etc.). Surprisingly, while half of the top-10 firms on Gomez's Internet Brokerage Scorecard sell insurance, few market these offerings in the context of financial planning.
Charles Schwab, in its online "Planning and Advice" area, offers customers a full suite of tools and calculators, including a life insurance tool listed under "Trust and Estate." While it may seem obvious to support insurance offerings within a secure (e.g., logged-in) customer environment, surprisingly few online brokers provide even basic product information.
** Providing instant gratification. E*Trade, through a partnership with Inviva, the holding company for American Life Insurance Co. of New York, allows site visitors to purchase life insurance almost entirely via the Internet. E*Trade customers can request instant online quotes, submit applications online (including digital signatures), make an initial payment and schedule a paramedic visit all via the online interface. Assuming they meet baseline underwriting criteria, online applicants can receive coverage between $250,000 and $1 million for 10- or 20-year term policies, effective immediately.
Although demand for instant life insurance coverage remains unclear, E*Trade is betting higher conversion rates will result from not requiring applicants to wait for a policy to bind. Unfortunately, E*Trade makes it exceedingly difficult for customers to find information on its insurance offerings, so many of its customers remain unaware of this potential service.
** Making policy information accessible in secure account areas. While no discount broker today goes as far in incorporating insurance policies in their holdings summaries as full-service heavyweights like Merrill Lynch or UBS Paine Webber, E*Trade stands out for providing a means for customers to access this information via a link from its secure site.
As discount brokers continue to push upstream in an effort to diversify away from a pure commission model, they must not only advertise supplemental product offerings, but also provide post-sales support. This is especially true for brokers offering investment-oriented (and not simply protection-oriented) policies, such as variable and universal life.
Two years have passed since the repeal of the Glass-Steagall Act. Still, neither this relaxed regulatory environment, nor the growing consumer adoption of online financial services, has enabled financial institutions to greatly expand revenues through online cross-promotion of related products and services, in part because poor content and account data integration remain a significant barrier.
Bottom line: If financial institutions are to make cross-sales a reality, they need to make it easier for customers to find information on related products via their Web sites.
Greg Davies is a senior insurance industry analyst at Gomez Inc., an Internet quality research and advisory services firm in Waltham, MA. He can be reached at [email protected].