Survey Shows Which Buyers To Target For Non-Traditional Products
Life insurers looking to sell non-traditional products would do best directing their efforts to affluent singles, both young and old, and empty nesters in their 50s and 60s, according to a new survey unveiled here at the annual meeting of the American Council of Life Insurers.
Conducted by the ACLI and KPMG LLP, the survey, titled the 21st Century Financial Services Consumer, chose not to divide consumers into traditional demographic groups but into six “psychographic” segments instead.
These six segments each have their own characteristics regarding tolerance for risk, willingness to try new financial products and motivation to build wealth.
The six segments are: successful innovators, naive innovators, carefree spirits, cautious investors, pessimistic conformists and laggards. The survey concluded that the segment that presents the greatest opportunity for insurers is the successful innovators.
Among the characteristics of successful innovators are that they:
–are eager to learn and discover new things;
–are most likely to use the Internet for information;
–are usually the first to buy new financial products and services;
–have a lot of wealth and a big stake in the market;
–are up to date with all the changes in the market, and review their financial situation regularly.
The survey detailed the characteristics of the other segments.
–are risk takers and are willing to try new products, often as soon as they come out in the market;
–believe it is important to be in a leadership role;
–say making money is important to them and are wealthier than average;
–are least likely to believe that spiritual values take precedence over material things;
A large percentage of naive innovators are in their late 30s or early 40s and are singles or double income with no kids.
–feel they have a lot at stake in the market, are up to date on financial news, and review their financial situations on a regular basis;
–do a lot of research;
–do not like to try new and different things;
–are least likely to go bargain hunting.
Cautious investors, the survey says, tend to be affluent empty nester men in their 50s and 60s.
–are spiritual and believe less in material things;
–say that making money is not high on their agenda;
–are optimistic and believe they will be OK no matter what shape the economy is in;
–love bargain hunting and are not brand loyal.
A higher percentage of women with families comprise the carefree spirits.
–are socially conscious and believe that respect and social etiquette are important;
–are willing to try new things, but are not necessarily risk takers;
–tend not to be the first buyers of new financial products;
–do not have a lot at stake in the stock market, do not feel financially secure and are not confident of their economic future.
A higher percentage of younger working mothers tend to be pessimistic conformists.
Finally, the laggards:
–say they cant keep up with things;
–do not like risks and like to stick with familiar things;
–tend to be brand loyal and only shop when they have to;
–feel trustworthiness is very important in people and in financial institutions.
The laggards are more likely to be in lower to middle income families with a higher percentage of women.
So, which segment presents the best prospect for insurers offering non-traditional services such as checking or savings accounts or stocks and bonds? Successful innovators had the highest likelihood (15%) here followed by pessimistic conformists (10%).
Successful innovators also have the highest likelihood (24%) of using financial services provided by non-traditional institutions. Cautious investors came next at 18%.
The survey said that successful innovators ranked highest in being aware that insurance companies provide services such as IRAs, 401(k)s, annuities, mutual funds, personal loans and education accounts.
All six segments said they most often get information for financial services from family and friends. Successful innovators were the only segment that indicated the Internet was a significant source of information.
Another finding that carried across all six segments was that personal representatives at banks, brokerage firms and insurance companies were the most preferred way to access financial services.
The survey concluded that there is an opportunity for insurers to expand product and service offerings beyond traditional product lines.
In this respect, Chris Swift, national industry director of KPMGs insurance practice, who presented the survey, said, “Insurers will increasingly need to step up targeted marketing in attempting to attract non-traditional customers.”
The survey also said that banks are the number one competitor for expanding product or service offerings, but that alliances with banks or brokerage firms could be an effective strategy for insurers.
Reproduced from National Underwriter Life & Health/Financial Services Edition, November 19, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.