Riding the Whirlwind

Strategic Interactive Marketing for the Insurance Industry

Key Points:

For insurers, the current battle ground is direct sales. Rising Consumer confidence will see them embrace first home shopping and entertainment on-demand, and then home banking and other financial services.

2.2 The Market Response

2.2.1 Direct telesales are the current battle ground, predominantly for GI products but increasingly for simple life and investment products. There is an expectation that field sales forces will decline and that Brokers will specialise in the non mass markets.

2.2. Use of direct telesales is raising customers' confidence. Home shopping, entertainment on-demand, and home banking will pave the way for using the new mediums for 2more complex financial products and services.

2.2.3 There are concerns at selling commodity products in a mass market. These new distribution mediums will make it even more difficult.

2.2.4 Insurers believe that mass markets are best served with simple products. Brokers have a role for the more complex requirements.

Relationship Marketing is still an objective but one that is getting more difficult to achieve.

- Relationship Marketing Difficult -

2.2.5 Relationship Marketing is still an objective but smarter and more fickle consumers, and diverse lifestyles, will make that objective more difficult to achieve and internal capabilities are lacking. Those with strong brands feel in the most advantageous position. They continue to make significant investments in Relationship Marketing.

2.2.6   1 to 1 Marketing is attributed to the ideas of Don Peppers and Martha Rogers. Its aim is to understand the particular needs of individuals, and then to meet those unique needs. The objective is a significant share of each customer's life time purchases.

Companies saw 1 to 1 Marketing as an ideal, but thought it too difficult and non profitable. They appear locked into a mass market paradigm.

Mass Customisation seeks to provide cost effective 1 to 1 Marketing in mass markets. Insurers felt Mass Customisation will become more relevant as customers focus on added value. The new interactive technologies are an important enabler.

- 1 to 1 Marketing is Ideal -

2.2.7 Companies saw 1 to 1 Marketing as an ideal, but thought it too difficult and non profitable. There were issues of cost justification, privacy, process complexity, lack of internal capabilities (especially with technology), and the impact on existing distribution channels.

2.2.8 Companies appear to be locked into the mass market paradigm. However, insurers are taking pseudo 1 to 1 initiatives including personalised promotions and quotations that are more closely related to individual risk. Larger companies are making significant investments in data mining, kiosks, and interactive-TV.

2.2.9 Mass Customisation seeks to provide cost effective 1 to 1 Marketing in mass markets. Many ideas for Mass Customisation come from Joseph Pine II. Mass Customisation embodies Rapid New Product Development. It is an holistic approach that also includes the selling and servicing activities. Design, development and production are undertaken simultaneously.

2.2.10 Mass Customisation uses a component approach with a product database as its foundation. Feedback loops ensure components continue to reflect customers' changing needs. Staff and organisations need to become market focused. New "intelligent" technology, owned by the customer, will link to insurers' systems. Mass Customisation meets the challenges of an increasingly demanding and fragmenting customer base.

Despite concerns about too quickly embracing the new delivery mediums, companies are making substantial investments in pilots, typically £0.25m to £0.5m in each one. Favourite mediums are telesales (well underway), followed by Kiosks, Interactive TV, and the Internet.

- Mass Customisation More Relevant -

2.2.11 Insurers felt core products with limited options met their customers' needs. Mass Customisation will, they believe, become more relevant as customers focus on added value. Service elements are likely to be the first options.

2.2.12 Barriers to embracing Mass Customisation include a mass marketing culture, a population that is mostly financially unsure, legacy systems, risks of new technology, and possible compliance difficulties.

2.2.13 Outside the insurance industry, many companies are using the new interactive technologies to provide customisation. In an increasingly fast paced society, "time" is becoming an important element of the marketing mix: time to market, response time, delivery time, service time, timeliness, any time, my time!

2.2.14 Companies have concerns about too quickly embracing the new delivery mediums. Reasons are manifold and extend right across the business. One of the biggest questions was whether consumers will embrace these new mediums and if they did, which ones.

One concern was their customers' financial skills and knowledge. Many placed the mass market between Financially Unaware / Unsure and Financially Aware / Unsure. They agreed the trend was to Financially Astute / Sure.

- Substantial Investments in Pilots -

2.2.15 Never-the-less, most organisations are making substantial investments in pilots, typically £0.25m to £0.5m in each one. Favourite mediums are telesales (well underway), followed by Kiosks, Interactive TV, and the Internet (WWW).

2.2.16 Interviewees generally expressed agreement with the Future Customer Segmentation diagram. Many placed the mass market between Financially Unaware / Unsure and Financially Aware / Unsure. They agreed the trend was "upwards" towards Financially Astute / Sure.