As life insurers know, customers have changed considerably over the past few years. They are more empowered, have higher expectations, are more prone to switching providers, are more connected — to companies and to each other — and are more diverse, both regionally and globally.
Yet, many life insurers still operate within a “one size fits all” sales and service model that prevents them from responding effectively to this rapid evolution in customer needs and behaviors.
Through the annual large-scale Accenture Consumer Pulse study, we have developed a portrait of what we call the Nonstop Customer. This individual finds it frustrating to be unable to use their channels of choice when researching a purchase. Only 25 percent of respondents consider themselves loyal to their providers, and a third said they would shop around for alternative providers. There is a premium on authenticity, with 63 percent of respondents saying they are extremely frustrated when a company does not deliver on its promises. And 78 percent say broken promises would cause them to consider switching providers.
The non-stop customer does not progress through the established consumer life cycle (awareness, consideration, evaluation, purchase and use) via a single channel in a linear fashion. Rather he or she is continuously “in the channel,” demonstrating radically changed behavior.
Our term for this new type of consumer is the Nonstop Customer. When compared to the traditional customer, it is clear that the Nonstop Customer’s journey or life cycle has fundamentally changed in three significant dimensions:
- The customer’s journey is now dynamic. Enabled by technology, customers expect to control and vary the channels they use and the steps of the process. The days of linear progression down a “sales funnel” are over.
- The journey is more open to influences. With free access to content from the company and beyond, customers are influenced by multiple sources.
- The journey is continuous. Because the touch points to which customers are exposed are always on, evaluation and not the purchase is now the focal point of the process.
The new rule of thumb is that companies should clearly excel in at least one of these dimensions, and be proficient in the remainder. Anything less and the chance to achieve differentiation from competitors will evaporate.
The evolution of the Nonstop Customer will, we believe, have a particularly strong impact on the life insurance industry. For example, while a majority of respondents (54 percent) have done business with only one life insurance provider over the last two years, 36 percent are using more than one provider.
Complete switching is on the rise, as is partial switching. In fact, 18 percent of respondents said they would consider doing business with other providers, and 67 percent feel more inclined to re-evaluate their current providers. Life insurance customers have relatively low involvement with their providers. And, among industries surveyed, satisfaction, intention to buy and advocacy are lowest in life insurance.
Life insurers seeking to outperform their competition in the age of the Nonstop Customer should develop the digital capabilities needed to engage these individuals and provide the experience they seek. Accomplishing this calls for four key actions: 1. Transforming the upfront “discover” process. Insurers should play to their strengths by making available the advice and education that customers need to make an informed decision about a complex product. This information must be easy to obtain and continuously available, and the customer must feel in control. To do this, insurers will need to adopt strategies and techniques used in consumer product marketing, such as segmentation and propensity-to-buy models, as well as a strong presence on social media, to which consumers are increasingly turning for advice.
2. Shifting from a product-based to a solution-based sale. Carriers should shift their focus from selling products to providing solutions to customers’ problems. This approach – combining product, service and experience – enables carriers to position themselves as approachable experts, valued by customers struggling to make a complex purchasing decision. This also helps neutralize the trend to commoditize life insurance and treat price as the key determinant for choosing a provider.
3. Using analytics to obtain deep customer insight and build sustainable long-term relationships. To move from a product-based to a solution-based sale, life insurers need to build an ongoing relationship with customers. Throughout the customer life cycle, a growing body of information can help the insurer make subsequent sales by making the right offer at the right time, based on the customer’s life stage. This customer insight should be used, as well, to develop products that are attractive to new market segments, such as converged products that contain elements of life, health and retirement benefits.
4. Simplifying the underwriting process. The current closing process for a life insurance sale is typically time-consuming and complex. The process has to be made more customer-friendly, as it is largely responsible for the close rate for life insurance sales being so low. A key lever for solving this issue is to focus on accelerating the integration of publicly available and private medical information into insurers’ customer acquisition processes. Customers should be able to use self-service tools, and advisors should have access to mobility solutions. Carriers should also continue to automate the integration of medical information from pharmaceutical databases, doctors and laboratories. The more comprehensive customer-data view will enable carriers to use analytics to speed the risk assessment and pricing process.