03 Aug Insuring Millennials: From Transactional to Relational Engagement
Long gone are the days of Lloyd’s Coffee House, where the risk was assessed and coverage granted based on the best available information, carried indirectly from the high seas. In those days, all available information was conveyed in a matter of minutes over a mug of rum. Relationships were built and maintained through face-to-face interactions and competition was non-existent. Customers were uninformed and without options, so they kept coming back.
Today’s environment is very different.
An insurer now gathers their data from thousands of sources. Insurance companies engage with and manage millions of customers online rather than dozens of them face-to-face. As a result, the strong relationships of the past have been displaced in favor of sporadic, burdensome written communications. These are often wrapped in a shroud of legalese jargon, leaving the customer unengaged and with little appetite for further interactions.
To make things worse, today’s customers are also very different. They engage with vast amounts of information in real time. They compare offers from different insurers online with little effort and increasingly opt for the cheapest option at any given point in time without understanding the actual value behind the offer.
For insurers, commoditization is already a reality. Last year, Accenture estimated the annual effects of customer churn in the insurance industry at $470 Billion and growing fast. In reality, this was inevitable given the dissonance between the traditional way insurers have been managing their customer interactions and the rapidly changing profile of the customers those insurers are interacting with.
In order to understand how to avoid this growing commoditization, we must first understand today’s customer. Millennials are a diverse group, currently aged 19 – 35. They are a key demographic and also the most challenging one insurers have interacted with in recent history. According to a recent Gallup poll, millennials are the least likely to actively engage with their insurers (31% of respondents) and the most likely to actively disengage from them (27% of respondents).
While many millennials now have families of their own and often defy traditional characterizations of their demographic, there are some key observations that generally hold true and that impact how they interact with insurers:
- Empowered: Millennials are an empowered generation; some would even say an entitled generation. They are well-informed, embrace change, and often broadcast their actions (or their dissatisfaction) over social media. They feel in control and often are. This empowerment makes them a very fickle demographic and heightens the need to engage with them on their own terms.
- Mobile: An average millennial has access to 7 devices. They are accustomed to consuming content on their platform of choice, often on more than one platform at once. But at the heart of it all is their incredibly high usage of mobile phones for anything other than actually placing phone calls. In fact, 87% of them always have their phones on them, day or night.
- On-Demand: Be it products, content or services, today’s consumer wants everything, now. Amazon is spending large sums in support of its Amazon Now product, with the sole differentiator of ever shorter fulfillment times. Netflix delivers entire TV seasons in a day since their viewers just can’t wait. Being in real-time or near real-time is a key to success.
- Personal: Empowerment also implies personalization. Millennials expect the products and services they use to be tailored to them. They expect the companies they interact with to engage with them personally. They like to feel valued and react negatively to generic communications. In another Gallup study, only 36% of millennials indicated they felt valued by their insurer, and this was the single biggest driver of churn in the industry.
- Personality: Maybe unsurprisingly, they also expect the brands they interact with to have a personality, to be authentic, and ideally to have an inspiring mission. After all, where’s the fun in having personalized communications with a brand that lacks personality? Millennials are flooded with information, content, and communications. Brands need to engage with their customer differently in order to stand out from the crowd.
- Video: Millennials are without a doubt the video generation. 55% of millennials watch videos several times a day. Both Facebook and Snapchat are serving around 10 billion videos a day on their platforms. Communicating with millennials on their terms invariably includes the usage of video to drive engagement.
- Fauxsumerism: Many complaints are heard about fake consumerism or the enjoyment of the shopping experience without actually making a purchase. Another way to look at it, however, is that millennials favor experiences over transactions. Remember, even a transaction can be an engaging experience if done right. Pop into any Apple flagship store if you don’t believe it.
At Idomoo we have found that personalized videos are a highly effective way to engage with millennials in the insurance space. As it turns out, the “effort” of watching a 60-second personalized video is acceptable even to millennials. This shouldn’t be surprising, as personalized videos tick off virtually all of the above characteristics of this generation: They are engaging videos that are personalized to each and every recipient, reflecting what the insurer already knows about her. They are delivered on demand and in real-time, never burdening her with obsolete or unnecessary information. They deliver a new and engaging experience on any platform and help her relate to her insurer. This relationship is the closest thing today’s insurer can get to Lloyd’s Coffee House, albeit on a far greater scale. This engaging experience makes her feel valued as a customer, while also helping the insurer avoid commoditization.
Metlife reported a 12 point NPS increase as a result of their Policy Renewal personalized video. Zurich reported an 85% renewal rate on theirs (and also won the ICEA Innovation Award for the campaign on the way).
See the video for yourself!
According to Gallup, when a customer is actively engaged, they purchase 22% more insurance products from their primary carrier, stay on as customers 4 years longer, are 3 times more likely to sign up for other financial products and are 4 times more likely to recommend the carrier to an acquaintance. Keeping in mind that 69% of millennials are not actively engaged with their insurer, the potential upside in figuring out how to engage with them is massive. The key to that engagement is to communicate with them on their own terms: using on-demand, real-time, omnichannel, personalized video communications.