5 Keys to Customer Growth for the Life Insurance Industry
Life insurance sales have been declining. The U.S. life insurance industry’s average annual growth over the past 10 years has been less than 2%. In the last 30 years, the number of life policies sold annually has fallen by almost half, from 17 million to fewer than 10 million.
A new report by McKinsey called The Key to Growth In U.S. Life Insurance: Focus on the Consumer claims that this is, at least partly, the insurers’ fault for not properly informing the public. Consumers are often not aware of the importance of having life insurance and how it can provide for their loved ones. According to McKinsey mass affluent research in 2015, only 65% of Americans who are married with dependents have a life or an annuity policy. While one may argue that it is the consumer’s responsibility to become educated and not wait around for an agent to contact them, insurance companies who take the initiative to educate and target consumers will reap the rewards in more policies sold and greater company growth.
In a report by Deloitte, Life Insurance Consumer Purchase Behavior, the study indicated some common challenges that carriers should work on overcoming:
- Generational divide: carriers should look to new generations for growth as the baby boomer generation – historically the most reliable customer base – continues to wane
- Evolving customer expectations: Consumers of all generations, but particularly the younger demographics, want to research and buy through multiple channels, with emphasis on easy access to real-time information through digital channels
- Diminishing effectiveness of traditional distribution: As customer expectations and behaviors shift, the way in which carriers have typically partnered with producers is becoming less effective
- Ineffective sales and marketing strategies: Underserved markets are not being reached due to outdated and ineffective marketing strategies traditionally targeted at demographics/socioeconomic levels
The life insurance industry represents an area ripe for growth as the economy is beginning to bounce back and consumer confidence increases. The winners in the life insurance industry will be those who implement more customer-focused strategies across a broader range of digital channels to meet evolving expectations. Here’s a look at 5 key strategies life insurers should be implementing to drive growth.
Targeting consumers based on life changes increases chances of engagement with insurance marketing.
- Educate through multiple channels at every opportunity possible.One of the reasons customers cite for not buying life insurance is that it’s complex, difficult to understand, and expensive. Cost tops the list as the number one reason Americans give for not owning life insurance, according to the 2015 Insurance Barometer Study by LIMRA and Life Happens. However, 80% of consumers misjudge the price for term life insurance, with Millennials overestimating the cost by 213%, and Gen Xers overestimating the cost by 119%.
According to a press release by LIMRA, “The study found that nearly one third (30%) of Americans believe they need more life insurance and more than 2 in 5 (43%) say they would feel a financial impact within 6 months if the primary wage-earner died. However, the majority of Americans (54%) say it is unlikely they will purchase life insurance within the next 12 months.”
Because of so many misperceptions about the complexity and perceived cost barrier, life insurers must be extra diligent to educate consumers. Content marketing should be an insurer’s go-to-strategy in this regard. Numerous types of content can be created and shared across different channels – online calculators, explanatory videos, blogs, worksheets, and online or offline workshops. Lifehappens.org shares great content, including blogs about “6 Reasons Single People May Need Life Insurance” or “5 Steps to Make Sure Your Family Is Protected Financially.” Their site also features online calculators, infographics, and some terrific videos to educate consumers on why they need life insurance and how to go about getting it.
- Develop deep customer insights to create more meaningful engagement.Few life insurers have effective consumer marketing. To connect more deeply with consumers, insurers need to invest in capabilities to better understand their customer and prospect base. With the proliferation of so many new sources of customer data and more advanced analytical capabilities, insurers can enrich their customer and prospect databases to update policyholder and household demographics to gain valuable insights into the messages to which consumers will be most likely to respond. For example third-party data sources can give insights into a consumer’s occupation, marital status, presence of children, lifestyle, or estimated income.
McKinsey’s research on more than 10,000 mass affluent consumers in 2015 also explored a wide range of behavioral and attitudinal dimensions in addition to demographics. The research showed that segmenting based on attitudes and behaviors in addition to demographics is far more effective in tailoring value propositions and customer decision journeys than purely demographic variables alone.
- Integrate Mobile Strategies to Target Today’s Connected Consumer
If you haven’t heard it often enough, mobile marketing can no longer be ignored. According to Google’s report, The New Multi-screen World: Understanding Cross-platform Consumer Behavior, 65% of consumers start their research on a smartphone. What’s more, consumers often continue their research on another device. 67% of consumers move from one device to another. Websites and email must be optimized for mobile, as consumers will quickly leave a site or delete an email if it is not mobile friendly.
Insurance companies are also increasingly releasing apps to benefit their current customers and to attract new consumers looking for flexibility. According to recent research from EY, there are three key reasons that insurers are turning towards mobile tech:
- To offer services through the mobile channel
- To broaden their customer base with clients who demand self-service options
- To boost satisfaction among agents and policyholders with modern customer service tools
For insurance companies looking to broaden their mobile strategies, EY also recommends that insurers develop a better understanding of their target audience and which features will contribute to a positive customer experience. A variety of analytics can be applied to a marketing database to gain rich insights into what customers would value most in mobile applications.
- Provide a seamless experience across channels
Today’s consumers are in the driver’s seat and are in charge of how and when they choose to contact an agent. Research by CEB TowerGroup Insurance found that consumers use multiple channels when researching insurance-related products, with online being the channel of choice.This means that as consumers are researching, you need to have a multi-channel presence by engaging in online marketing, including social sites, email deployments, paid advertising, and digital display advertising. By limiting yourself to a website or a call center, you may be losing out on the chance to engage with potential new prospects.
Just as importantly, the research also showed that consumers prefer to speak with an online agent before making a purchase. For those consumers doing research, you need to have plenty of information available online to help with the decision process, however when a consumer makes the actual decision to complete the purchase, be sure your phone number is prominently displayed and your customer service representatives are well trained to provide the most optimal experience.
- Target Based on Life Events
Identifying consumers experiencing life changes and asset changes significantly increases the likelihood of consideration of an insurance marketing message. These may be events such as newly married, expecting a baby, or a change in one’s financial situation.
According to a report by Deloitte, the most impactful events where a high percent of surveyed buyers indicate importance include:
- Having children (43%)
- Buying a home (35%)
- Change in financial situation (33%)
- Marriage (28%)
Image Source: Deloitte
Those carriers that make their customers and prospects the center of their business, who use targeted outreach and education across channels and who can interact with consumers at the right time will be the front runners to capture the nearly $15 trillion in unmet life insurance.
To learn more about implementing marketing strategies to target today’s insurance consumers across channels, download the Insurance Data-Driven Marketing Solutions Guide.