I recently attended the National Retail Federation’s Big Show in New York. With more than 35,000 retail industry experts under one roof, I heard three major topics of conversation:
- Omni-Channel retailing
- Iconic brands that are re-trenching or actually closing large blocks of stores
- Big Data: how to get it, and what to do with it
Underneath all this conversation was a fear, or even paranoia, of consumers’ shift to shopping online. While online purchases make up only 10 percent of total retail volume today1, retailers are focused on any and all strategies to stem the tide of that migration. Investors see some promise in those efforts (they value Amazon at almost $250 billion today2), and retailers are working fast to connect the popular online benefits (assortment, reviews, and prices) with new in-store technologies and services we will find irresistible.
While speaking with all of those retailers, I couldn’t help but think about the first 15 years of my career working with brick and mortar insurance agencies—the retail stores of financial services. I want to challenge my old friends in insurance to respond to the e-commerce threat with as much urgency and creativity as retailers are today.
The direct-to-consumer sales of insurance online is actually a bigger problem for insurance agents than e-commerce is for brick and mortar retailers. The Amazon’s of the insurance industry are scary and getting scarier. The two largest direct to consumer internet writers combined for over 15% of the auto insurance market in 20143. That’s bad enough, but what could be worse news is that a 2015 study showed 67 percent of Millennials purchased their policies directly from insurance carriers on-line4.
In short, as troubled as retailers are today, your local insurance agencies would be glad to trade places with them in winning the war against e-commerce. Here’s how they can catch up:
- Use big data insights for more than marketing: Insurers know a lot about you—but they primarily use that data to decide how much they should charge you. Why not share some of the benefits of all of that insight with their customers? Wouldn’t you like to know how often other people just like you have used a particular coverage or policy feature after they bought it? Or worse, what happened to them if they didn’t buy it? These types of insights are most often shared between family members or casual conversations at the office. With this data you can hear the stories and evaluate the decisions of infinitely more people than you have in your personal network: And make better decisions.
- Embrace the Omni-Channel experience: >70 percent of all insurance consumers are shopping online, but that doesn’t mean they buy there5. Insurers are great Omni-Channel marketers, but they need to become great Omni-Channel retailers. They can do this by embracing online shopping tools and offering strong advantages to coming in the store to finalize coverage and issue policies.
- Better service and in-store experiences: In my opinion most consumers are only thinking one thing when they buy insurance, “I hope I never need this, but if I do, I hope I bought the right one.” Retailers are combating a similar e-commerce mindset with more in-store services and technology, such as concierge shopping and digital displays to help you explore new fashions. There are great options to replicate these services for financial services professionals.
Retail consumers are migrating to e-commerce for better prices and faster delivery. There is too much at stake to allow a slightly lower price to drive your purchasing decision in insurance. There are too many variables, severe consequences, and a long history of consumers regretting their price-driven coverage choices.
Imagine, as an insurance agent, if you could turn data from all your channels into insights about your customers that drive them to stores. This data could be turned into action, influencing everything from developing engaging Omni-Channel shopping experiences to improving brand consistency store-to-store. Engaging shoppers both online and in-person may influence behavior and encourage them to seek out the agent experience that previously dominated the insurance agency.
Interested in how Square Root could help? Contact us today.
1. Fortune: “In 2015 Amazon Ate Even More Of WalMart’s Lunch” 12/22/15↩
2. Yahoo! Finance↩
3. Nerdwallet.com: The 10 Largest Auto Insurance Companies 1/12/16↩
4. PropertyCasualty360: 5 Reasons Millennials aren’t Buying Insurance From Local Agents ↩
5. Insurance Business America: “Industry Reps Slam Claim That Agencies Are Going Extinct” 1/21/15 ↩