Online Buying Clicks With Consumers

StatsWatch

Online Buying Clicks With Consumers

Robert Regis Hyle

The number of customers looking online for personal auto coverage–both purchasing and researching–continues to rise as carriers strive to differentiate themselves amid all the clutter.

Personal auto insurance has developed a look and feel that makes it relatively easy for carriers to market on their Web sites. Despite the advances, though, Craig Weber, senior analyst and author of the Celent report “Personal Auto & the Online Customer,” believes the biggest surprise to arise from his research is 15 percent of respondents are closing their purchases via the Internet. “We were a little surprised at the number of people who actually are buying online, and the success of major online carriers such as Progressive and GEICO probably is driving those results,” he says.

Five years ago, researching products over the Internet was considered a novelty, but today it has become a natural byproduct of our culture, according to Weber. “People do consider the Web to be a primary research channel now,” he says. What surprised him concerning the increase in buying online was that such shopping is not confined to younger demographics. “We think those customers are looking for convenience and simplicity without the interaction of an agent,” he says.

Weber remarks Progressive has been successful in its online efforts because the carrier recognized some customers need agents and other customers don't. Progressive uses the online channel to support both of those groups. Progressive Direct is the low-price alternative that doesn't offer personalized recommendations such as an agent would offer, but it gives shoppers a low price, Weber notes. However, the Progressive Web site also allows shoppers to generate a quote from Progressive's Drive brand. “[Progressive] has found a way to put the agents and the direct channels online next to each other and have them coexist peacefully,” he observes. “I think other insurers will go down that path eventually.”

What differentiates carriers that are good at their online presence from carriers that are not so good is the amount of choice they offer customers, Weber contends. One choice for shoppers is whether to use an agent or not. Other options include how to research a policy, how to buy a policy, and how to connect that purchase to the quoting process, he adds. “As more carriers put quoting functionality online, the better ones will find a way to connect that online quote to an online purchase,” he says.

Carriers need to offer options to shoppers who are uncomfortable giving their credit card information over the Web, Weber continues. Options for those worried about security and privacy include an 800 number to allow customers to complete the transaction over the phone, a capability to print out a completed application and mail it in, or the ability to request a call from an agent. “It's really the integration of the online experience and the purchasing experience that differentiates top-tier carriers,” he says. “There are technical issues that have to be overcome, and there are cultural issues. Both can be a struggle. But Progressive, GEICO, and AIG are demonstrating all [the issues] can be addressed with some effort.”

Agents always will be needed, Weber acknowledges, but giving customers a choice over the Web allows shoppers to start the process online and finish it offline. “Agents should recognize there are efficiencies for them, as well, if their customers start online,” he says. “A Web site done right actually can funnel customers who are presold to agents and improve the agents' process, too.”

The piece of the shopping experience most carriers struggle with is packaging advice for customers who are not comfortable with car insurance–the role usually played by agents, Weber indicates. “The online systems have to address that point somehow to make customers comfortable with auto insurance,” he says. “Auto insurance is a highly commoditized product, but even so, there is discomfort with how it works and what levels of coverage are needed. Every company could improve the way it explains its product and the way it makes customized recommendations for coverage.”

It is hard to win a personal auto sale purely on price, Weber believes. “The fact the large national brands such as Allstate and State Farm still are market-share leaders even where they are not the low-price carriers suggests customers are willing to consider other factors such as service,” he concludes.