Every year, Forrester surveys U.S. adults about how they research and buy insurance. My latest research, co-written with Peter Wannemacher, a Forrester researcher, shows the evolving trends in the U.S. auto insurance “buyer’s journey.” The focus of the research is how changing consumer behavior impacts carriers and agents.

The research draws insights from the from Forrester’s North American Technographics Benchmark Survey, 2009 (U.S., Canada), which surveyed 48,412 adults in the United States. Additional data was drawn from our North American Technographics Investments And Insurance Online Survey, Q3 2009 (U.S.), which surveyed 4,814 online adults in the United States.

U.S. Auto Insurance Customers Go Multi-channel for Research and Purchase
U.S. insurance distribution continues to evolve as growing numbers of customers turn to the Web to research and buy insurance. Many pundits still declare the Web is dominating insurance distribution, which is simply not true. Customers may start their research online, but many cross channels and purchase in person, through the call center or via mail.

When we asked U.S. online adults who got a quote before buying insurance, what channel they used: 38% received a quote through the phone while 33% received a quote online. The phone and online channels accounted for nearly 66% of auto insurance quotes. Only 21% of online adults received a quote through an in-person channel (e.g. agent).

But the story changes when auto insurance transitioned from quote to application. We asked U.S. online adults who bought an auto insurance policy in the past year what channel they used to apply for auto insurance: only 18% applied online; 32% via the phone and 38% in-person through an agent. Our data shows that the agent channel still provides the most influence on auto insurance applications and purchases.

To Sell More Policies, Insurers Need a Solid Multi-channel Strategy

Today’s auto insurance shoppers are more likely than ever to cross channels when moving from research to application to purchase. The old adage says “go where the fish are,” and many eBusiness executives are now “following the consumer” across channels. eBusiness and channel strategy executives need to cater to customers who increasingly are using multiple channels, and crossing between them. To thrive in this multi-channel world, eBusiness and channel managers should follow these fundamental steps to channel success:  

•  Define and evangelize a multichannel strategy. eBusiness and channel executives need to put a stake in the ground and create clear multi-channel—and cross-channel—strategies. For many traditional insurers this can start with a commitment to build, or expand direct-to-consumer efforts. Critical to this effort, and any multi-channel, customer-focused effort, is buy-in from senior management. Channel managers must decide what multi-channel offerings should be developed, then articulate this vision internally.

•  Build a customer-centric multi-channel plan. Any multi-channel coordination must be developed around serving the needs of current and prospective customers. Safeco puts the customer first in writing and operates by a set of five guiding principles rooted in customer centricity. The guideline pledges to resolve distribution channel conflicts in favor of customer choice first, the agent second and Safeco third.  

•  Integrate customer data. A comprehensive, multi-channel view of customers helps insurers deliver productive customer experiences, support marketing measurement, and drive new business opportunities. This cross-channel view allows customers to change from one channel to another to complete a sale in their preferred channel. Insurers need a permanent unique customer ID, and a customer data integration tool to merge disparate databases, and to help fuel segmentation and analytics.

•  Segment your customers. With an integrated customer database, insurers must then segment customers by channel behavior, lifetime value and other variables. Static segmentations based on demographics fail to reflect the changing channel behavior of customers. A Baby Boomer may shop more across channels than a Gen Y. Customer segmentation should be driven by real-time or recent customer and channel behavior (e.g. call center versus Web preference). Although more challenging, firms need to segment price-driven switchers, and try to capture higher lifetime value customers. This is possible through behavioral targeting, real-time customer recognition through affiliate and co-registration networks and other interactive marketing tools.

•  Implement enterprise analytics. The next building block to achieve multi-channel success is implementing an enterprise analytics platform and methodology. Again, firms are moving away from simple, static propensity models based on offline analytics. Database marketing agencies and management consultancies are integrating Web analytics tools; IVR and call center tracking; visual diagnostic tools and core business intelligence apps, which helps firms segment, predict and react to cross-channel customer behavior. An integral part of any enterprise analytics effort is an interactive attribution platform such as ClearSaleing, Visual IQ and Atlas. These tools let insurers measure the correct partial value of each channel that drove a desired outcome, such as a quote or purchase. Several major auto insurers are investing heavily in media-mix modeling with vendors like Bowman & Partners and Merkle to optimize market spend across every channel.

•  Offer assisted-service. Our data shows that many U.S. auto insurance customers prefer to quote and purchase through human channels such as call centers or agents. Assisted-service tools such as click-to-chat and click-to-call are essential components to convert Web shoppers to buyers. The travel industry has long used assisted-service to help consumers in the channel they prefer and reduce quote abandonment and comparison shopping. Many insurers do offer assisted-service, but several sites do not offer consistent customer service availability. eBusiness and channel strategy professionals should provide reliable contextual support on product pages, ensure sites have basic support features, such as a customer service or help link on every page, and promote interactive customer support methods.  

•  Use incentives to reward multi-channel collaboration. Many insurers struggle with compensation for agents and attribution to channels as customers cross channels. When customers collide with a siloed set of employee incentives, the result can be lost business for the firm. Agent-based insurers must develop fair and clear compensation plans for agents servicing direct policies.  In addition, variable compensation for many eBusiness and channel managers is based on single-channel conversion metrics instead of multi-channel performance. Senior management must create and reward eBusiness and channel managers through partial attribution and overall multi-channel conversion or risk creating conflict between channels and losing business.

Do you agree or disagree?

Chad Mitchell is a senior analyst with Forrester Research. He covers mobile and social media strategies in insurance, acquisition, cross-sell and retention marketing strategies, comparative raters, online guided selling tools, emerging Web and call center technologies for sales and service, agent portals for marketing and underwriting, and the best practices of leading multichannel firms. Additionally, he advises leading insurers on best practices for public and secure insurance Web sites—analyzing functionality for quoting, policy administration and claims.

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