Through the Internet and other channels, insurance customers enjoy abundant access to information and choice of providers. But choices made are hardly carved in stone; access to information and the availability of new technology make it easy for consumers to switch providers with a few clicks on the keyboard or swipes on their phone. Welcome to what Accenture calls the “switching economy”—worth an estimated $470 billion annually in premiums.
Accenture research has found that 71 percent of customers are willing to purchase insurance online, and that almost half (48 percent) depend on comments on social media to make their insurance-buying decisions. Forty-six percent of customers with tablets and 37 percent of those with mobile phones have used these devices to interact with their insurers. In addition, customers are increasingly willing to purchase insurance from non-traditional providers, notably online service providers like Amazon and Google.
Despite this fundamental shift in buyer behavior and preferences, insurance companies have responded—at least in part—with traditional techniques: by increasing their marketing and advertising budgets. For example, in 2013, GEICO, State Farm and Progressive spent $2.6 billion in traditional advertising,2 and $110 million on Google keyword advertising for auto insurance alone.
We believe that marketing organizations must look to new sources of differentiation. Research has confirmed what many carriers have realized: the customer experience is the next battlefield. For example, Accenture research found that 74 percent of insurance chief marketing officers (CMOs) believe it is essential or very important to deliver an effective customer experience—but only 64 percent think they’re doing a good job.
And when we surveyed marketers across ten industries, two classes of companies emerged: high-growth companies and low-growth companies. Notably, 89 percent of high-growth companies are focused on the customer experience, compared to 60 percent of low-growth companies.4 Insurance companies and their agents must be prepared to thrive in this new world by providing a consistent, differentiated customer experience that gives existing customers more reasons to remain loyal and gains new customers who seek more than their providers can offer. How do companies win in this dynamic, customer-driven world?
Through engagement marketing: connecting with individuals, creating meaningful interactions based on customer preferences and behaviors, and interacting continually with them over time. To do so, insurers will need to establish an effective engagement marketing strategy, develop data and analytics capabilities to derive the necessary customer insights, and support agents as they foster ongoing customer dialogue. Winning companies will be those that shift from marketing at customers to engaging with them to build meaningful and lifelong personal relationships.