5 Insurance Marketing Trends – What Every Marketer Should Know
Of the many factors affecting how insurance companies go to market, technology advancements and progress in the behavioral sciences are arguably the most important. The following are five insurance marketing trends, each either technology or behavioral sciences advancements, both driving change and creating opportunity for the insurance industry.
Online Channels Becoming Primary – Traditional Channels Move to Supporting Roles
Bain’s 2015 “Global Digital Insurance Benchmarking Report” states that online activity will continue to replace traditional channels at an ever increasing pace over the course of the next three to five years. In fact, Bain projects that 20-40% of the actives being conducted via traditional channels (in-person, phone, and mail) will move online. Specifically, pre-purchase customer research, purchasing, renewals, product cross-sell and upsell, policy servicing, claims management, billing/payment, and customer service will be handled via digital channels first. This will leave traditional channels in an increasingly supportive (rather than primary) position.
The Millennial Effect
Millennials are affecting everything – including the insurance industry. The Millennial generation is the largest generation in U.S. history and is creating tremendous social and business change as they move through the various stages of their lives – just like the Baby Boomers did.
Millennials are, by and large, digital natives and came of age within a world where virtually everything could be immediately accessed online. Insurance companies must turn to increasingly advanced technology to engage and service Millennials. Insurance industry legacy systems were designed for human workflows – in-person, telephone and mail communications dominated – and generally required customers to wait for a response. Millennials, and now other generations, demand that information and service be immediate and able to be accessed in user-friendly ways everywhere, at any time.
Technology Is Playing a Key Role in Customer Relationship Management
Customer service and customer relationship management used to be nearly an exclusively human-to-human enterprise. Customers would share varies pieces of information with insurance agents or customer service professionals and the relationship was managed from there. In sharp contrast, leading insurance customer service centers now have data flowing in from a number of digital sources including social media, wearable devices, mobile devices and other online sessions. Information technology infrastructure for insurance companies now need to be much more robust to properly acquire and manage all of this data allowing customers to be sold and serviced in the manner they demand.
Wearable Devices Having Profound Impact
The Internet of Things (IoT) and the tremendous adoption of wearable technologies is facilitating opportunities for insurance companies to mine and leverage very rich sources of new data. For example, wearable device data is being used to incent customers to increase the performance of healthy behaviors. This new, and massive amount of, data is requiring revamps of IT systems and in many cases is a challenge for insurance carriers that are used to operating in an “analog” world.
Advancements in Behavioral Economics
Various economic theories have always played a big role in the insurance industry. However, for the most part, traditional economic theories assume that human beings are rational actors that do what is best for them. We know this is simply not the case and that people do not always have the time or will power…maybe even the interest…to act in their own best interests.
Behavioral economics studies these supposedly irrational aspects of human behavior and tries to make sense of them. The field studies the why and how of human behavior and when applied to marketing allows marketers to find ways to “nudge” customers toward specific outcomes. Most importantly, behavioral economists realize that people sometimes need a little bit of motivation to make decisions and conduct actions that are in their own best interests.
Some of the key behavioral economics findings for insurance marketers are all about people: they tend to take mental short cuts when they are overwhelmed, are much more sensitive to losses than to gains and are prone to myopic behavior – focusing narrowly on the present rather than the bigger picture future. Each of these are really useful concepts for insurance industry marketers to apply to marketing programs and product offerings.
Insurance companies must adapt to thrive within new market conditions driven by technology and changing consumer behavior. Fortunately, increased understandings from behavioral economics and the overall behavioral sciences are providing new insights to more effectively tap into human behavior and motivation. Ultimately, this will allow insurance companies to strategically influence customer and prospective customer behavior.
For a more detailed look into this topic, a recent article entitled: “The Psychology of Gift Card Incentives” outlines the role of incentives in behavior change programs.