We know two things about insurance customers: they demand personalization, and they are fickle.
“Customers decide—in a matter of seconds—whether they like your marketing message. Provide something relevant and you’ve got a satisfied customer. Miss the mark, however, and they’re gone,” notes research and consultancy McKinsey in a new report, “Marketing’s Holy Grail: Digital personalization at scale.”
Thanks to our digital present and future, however, insurers have never been in a better position to be able to tailor messages or offers to prospects based on their behavior. In fact, a select group of larger insurers are already predicting customer behavior and using it to improve everything from marketing and customer acquisition to proactive education around loss mitigation.
Yet for the rest of the industry, it seems the more technology we have at our disposal, the harder it is to get it right. Which message, which channel, which audience and when? According to a report authored by research and consulting firm Accenture, “Satisfy the Craving for Insurance Personalization,” only 22 percent of insurers have launched personalized, real-time digital or mobile services to date such as:
• Offers based on customer needs and products that they already own; • Messages that customers find relevant and that build on their relationship and previous interactions with the insurer; • Pricing that dynamically considers customers’ behaviors, usage and loss-prevention measures taken; • Recommendations and incentives to prevent losses or reduce loss severity.
The demand for personalization is hard to ignore. More than three quarters (80 percent) of insurance customers surveyed by Accenture said they are looking for personalized offers, messages, pricing and recommendations from their auto, home, or life insurance providers.
And the data required to fuel behavior analytics is there for the taking: Nearly as many customers (77 percent) are willing to provide usage and behavior data in exchange for lower premiums, quicker claims settlement or insurance coverage recommendations, notes Accenture.
“Personalization can reduce acquisition costs by as much as 50 percent, lift revenues by 5 to 15 percent, and increase the efficiency of marketing spend by 10 to 30 percent,” notes McKinsey.
So, if the formula for success is there, why aren’t all insurers capitalizing on it?
“Marketers often view personalization at scale as a daunting undertaking, requiring millions in IT investments,” says McKinsey. “Although technology has an important role to play, in our experience, most companies already have plenty of tools,” notes McKinsey. “The real challenge is to transform the marketing organization’s processes and practices to achieve the full potential of personalization.”
McKinsey recommends companies start small, generating top-line impact quickly, and self-funding the initiative after that. This includes getting executive buy-in, building a “war room” that comprises a team of marketers that can perform careful advance planning of scope and objectives, and then focus on the processes and technologies that help the team work in the most efficient way possible.
“Done right, personalization enhances customers’ lives and increases engagement and loyalty by delivering messages that are tuned to and even anticipate what customers really want,” note the report’s authors.
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