Marketers of insurance face two challenging problems:
How do you get someone to buy something they hope they will never use?
And how can insurance companies get beyond just competing on price and start to differentiate themselves by appealing to what really matters to customers?
The answers begin with learning which specific elements of the insurance-buying experience are most meaningful to customers and then prioritizing tactics to fulfill those expectations.
By exploring what affects customers' perception of price and value, companies in an extremely rate-competitive market such as P&C insurance can foster loyalty in powerful ways that transcend premiums.
The key to increasing revenues and profits is to promise and then provide an experience (service, appreciation, perception, etc.) that gets customers to look beyond price in choosing a product or service.
Take car insurance, for example. Many companies are competing based on the value of trusted agent relationships vs. easy, efficient online management. Yet everyone still competes to some degree based on price.
What's more, price shopping online is incredibly easy for customers, and some providers even claim to offer their quote plus those of several competitors, making price comparison even easier.
Therefore, insurance companies that do not want to battle on price have to identify the specific elements that potential customers care about most—because the actual price may not matter as much as customers' perception of the value they will ultimately receive from their car-insurance company.
Companies looking to understand what matters beyond price can begin by exploring the specific elements influencing perceptions of value, such as:
- Who will help me if/when I need it?
- Is the company easy to do business with?
- Does the company make me feel like my business is important?
- How much do I trust the company?
- How has it helped me in the past?
- How will I get answers to any questions I have?
Through customer research and analysis, the company can then identify and prioritize actionable drivers of loyalty, such as:
- Fast access to a single point of contact who cares and is empowered to help;
- Proactive follow-up to ensure issues or concerns are resolved if customer service is contacted or there is a policy change;
- Proactive, personalized suggestions regarding how to save money or structure a policy;
- Clear and proactive explanations of policy line items, pricing and rationale.
It's important to note that companies, of course, must back up their differentiators with action.
For example, companies that tout a highly personalized agent-customer relationship must ensure they actually deliver a fulfilling customer-service experience. Any customer who thinks he's paying a premium for a relationship will have a heightened expectation of the relationship experience.
Even in industries where conventional wisdom tells us that prices and fees are the primary selection criteria, there are many other powerful elements that can make a customer choose one brand over another—as well as remain loyal in the face of solicitation from lower-priced competition.
The overarching message to insurance marketers is this: The perceived value of the service a customer receives is the No. 1 driver of loyalty and renewals. In order to fulfill that call to action, companies must identify what specifically shapes those perceptions and deliver on those key items.
Ultimately, service and relationship experiences are more important than price for most consumers. However, those perceptions are also what feed into a willingness to accept pricing, whether a company differentiates on low prices or great relationships.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.