As any chief marketing officer will admit, developing and executing effective marketing programs has become almost ridiculously complex. While digital channels open up the traditional marketing "funnel," creating new opportunities to influence customer choice, it is extraordinarily difficult to identify the right approaches; to provide appropriate resources to the right channels; and to measure the success of specific initiatives.
Executing such programs in the insurance industry, particularly for life insurance, has always been different. Insurance has always been "sold" rather than "bought," with insurers traditionally relying upon a large force of agents and brokers to seek out individual and business customers. Growth is slow and typically comes at the expense of one's closest competitor. And customer loyalty is fleeting, leading to battles for policy renewals every six months.
Insurers have not always had an easy time adapting to a new open marketing structure, which provides numerous opportunities for dialogue and touching consumers. In this new structure, consumers tend to educate themselves first. They search the Web for information about specific insurance product categories; they use social media to see what peers think about companies, their products, and their follow-through; and they initiate contact with companies through multiple avenues, using everything from call centers to Web sites to mobile applications. Indeed, consumers have nearly limitless options to interact with a business, its brand and offerings.
Unfortunately, many insurers are not fully prepared to make the most of this new environment. They haven't adapted to a retail landscape in which channel alignment and the personalization of customers through digital technologies are in wide use.
Some insurers are competing in a digital framework using traditional approaches, with incremental improvements bolted onto a first generation Web 1.0 environment. In the broader marketing landscape of digital solution and service providers, there are numerous individual, specialized point solutions. Some are extremely effective, but they create a huge challenge in terms of integration and optimization within the larger marketing infrastructure. And no one service provider is able to bridge strategy, marketing, technology, and operations, at least at present.
We see, however, a tremendous marketing opportunity for an insurer willing to take an integrated approach to digital services and interactive marketing. This approach can result in a much higher percentage of pre-qualified and pre-conditioned consumers entering the marketing funnel at one end and emerging as loyal customers at the other. Insurers who create and implement a strategy to attract, educate, and connect with consumers will realize a much greater impact from their marketing expenditures.
An effective interactive digital strategy can be built upon three major components:
1) Analytics. Advanced marketing analytics–sophisticated quantitative and statistical analysis and predictive modeling, supported by powerful IT and trained specialists–can generate insights into customer behavior and preferences that can, in turn, create points of competitive differentiation and support better decision-making.
2) Integration. The insights derived from advanced analytics must be integrated into an end-to-end platform that incorporates the full range of interactive marketing, including paid search and display; at the same time, the strategy must link to offline marketing activities for mutual support.
3) Creativity. As interactive marketing matures, decisions on analytics and digital service have evolved. Effectiveness and impact on the consumer, not technological considerations, are now the driving forces, and the CMO rather than the CIO is the key decision-maker. Similarly, truly integrated solutions reflect advertising and marketing agency input and provide the technological capability to execute strong creative planning.
We believe that good data and advanced analytics will be central to an effective digital strategy and will, ultimately, have a significant impact all the way through insurers' operating models. For instance, product, pricing, and customer profiles can be combined to provide a custom product and buying experience for the customer.
Predictive data analytics will be used to discover new products, new market segments and to shape marketing tools. Increasingly, data will be used to drive the behavior of systems and users, enhance sales and customer service, reduce time to serve for claims, and accurately price risk.
Data analytics also has a key role to play in capitalizing on the inevitable rise of insurance aggregators, which are already a hugely influential channel in the Anglo-Saxon market and are starting to make an impact in other regions. The ability to gain new business through aggregators, especially from the emerging Generation Y consumers, will demand a more sophisticated and responsive pricing capability, to ensure not only that insurers can process requests rapidly but also that pricing is more accurate. When dealing with a channel whose purpose is to exert pressure on premiums, advanced analytics is essential to protecting margins.
The digital channel is arguably the most flexible, efficient, and scalable channel for customer acquisition, growth, servicing, and retention. Insurers are sharpening their marketing focus and increasing their expenditures on digital initiatives, but many insurers are still struggling with both their current solutions and with their overall digital approach. Developing and managing data and assembling disparate elements into a cohesive strategy will not be easy, but insurers that do so will enjoy the benefits of high performance in an increasingly competitive marketplace.
Michael A. Costonis is executive director and head of Accenture's North American insurance practice.