Other parts of this series:
- Insurers need to respond quickly to win and retain customers in a market hugely disrupted by Google and Co.
- Insurers are equipped to meet rising consumer demands, but their advantage could be eroded
- Insurers can learn from Google and Co how to disrupt and dominate a target market
- Insurers must become constantly relevant to their customers or they will lose revenue opportunities
- Digital enablers help insurers nurture innovation and develop products to fuel revenue growth
- Insurers should align their market roles with key digital enablers to drive up revenues and curb costs
Consumers are exerting increasing influence on their suppliers. Insurers should use their traditional strengths to meet the changing needs of their customers. But they must move quickly, because these advantages may soon be eroded.
The rise of the digital economy has triggered a revolution. And insurers need to react quickly.
It’s a revolution that’s empowering consumers around the world. They’ve grown accustomed to the highly personalized and responsive service they receive from digital innovators such as Google, Apple, Facebook, Amazon and Alibaba (GAFAA). And now they’re demanding the same quality of service from all their suppliers.
Moreover, consumers are realizing the power of their opinions in the digital world. Blogs, product reviews, online ratings, Facebook posts, and tweets about products and services are becoming increasingly influential among purchasers. Our research found that 80 percent of customers prefer online ratings and reviews to advice from store employees. Consumers are seeking out comments from other shoppers before buying goods and services. Around 25 percent of the search results for the world’s top 20 brands are links to user-generated content. And this is sure to climb.
Smart vendors are recognizing the power of consumer comment. They’ve found that marketing campaigns that incorporate user-generated content have 20 percent more influence on purchasing decisions than any other form of promotion.
The GAFAAs are well aware of the rising power of the consumer. And they’re positioning themselves to capitalize on the new consumer-to-business (C2B) era, in which consumers take control of their engagement with suppliers. By further increasing the quality of their services and leveraging their access to masses of consumer data, they’re extending their businesses into an array of different industries. The GAFAAs have already edged into the insurance market and further forays are on the horizon.
How should insurers respond? How can they revamp their businesses and ensure they remain relevant to increasingly fickle digitally-empowered customers?
First of all, stop and take a step back. Carriers need to take a good look at their core strengths before they devise a strategy for the C2B era. What advantages do they have that they can maximize? Three key strengths spring to mind:
Trust: A recent Accenture survey found that 86 percent of respondents trusted financial institutions, more than other service providers, to securely manage their data.
Data: Regulatory requirements, as well as business needs, have prompted insurers to gather substantial volumes of high-quality data about their customers.
Engagement: Insurers and other financial institutions engage their customers frequently through a variety of payment and communications mechanisms.
These are strong pillars on which to build a digital strategy. But insurers will have to move quickly.
As you can see from the illustration above, the GAFAAs, and other digital specialists, are winning the trust of the Millennial generation. We found that 40 percent of consumers aged 18 to 34 are likely to use Google if it offered banking services. Interest in Google insurance offerings among Millennials is likely to be similar. Moreover, the GAFAA companies already enjoy high levels of engagement with these customers and are rapidly gathering vast pools of data about them.
Millennials will become an increasingly important segment of the insurance market. Carriers need to swiftly build on their strengths if they’re to satisfy the demands of these customers and succeed in the C2B era.
In my next blog post I’ll discuss how carriers can best design their C2B strategies.
In the meanwhile, have a look at some of these reports. I think you’ll find them helpful.
- The insurance customer of tomorrow: three questions to guide success
- Satisfy the craving for insurance personalization
- Customer experience is at the heart of digital transformation
- Reimagining Insurance Distribution