Lately, more service-based companies have jumped aboard the subscription economy, proving to industry leaders and consumers alike that subscriptions can be used to sell more than a monthly box of beauty products or razors. With its ability to customize, low upfront cost and predictability of revenue, offering a subscription service has clear benefits for both customers and businesses.
Service-based brands, including Xbox Live, Adobe’s Creative Cloud and AppleCare, have already successfully implemented subscriptions, and it’s only a matter of time until the health care industry also adopts what could be a revolutionary commerce model. For consumers and employees, subscriptions within health insurance would remove many of the frustrating barriers of traditional policies, forever changing the way people think about their coverage.
Benefits to brokers and advisors
Companies that have adapted service subscriptions have already cited quite a few benefits, such as:
Predictable revenue: With a subscription model, customers pay upfront for the service and will continue to pay that monthly or yearly rate for a specified period of time. Just keep providing coverage for whatever policy a customer subscribed to, and you will typically know within 3 percent what next month’s revenue will be.
Customizable add-ons: Insurance policy subscription models would give customers the ability to add additional services to their policy. These add-ons add up, giving customers a larger policy package than they previously would have purchased. Companies that have already implemented subscription services have seen as much as a 74 percent increase in average order value from “add-ons” to its subscription offers.
Increase in conversions: Because subscription services offer the convenience and savings that customers expect today, insurance providers that offer subscriptions stand to see a positive impact at the top of their purchase funnel. By simply offering the option to subscribe, one health and beauty retailer noted a 20 percent increase in overall site conversion.
Benefits to customers
What frustrates consumers most about health insurance is a benefits package that doesn’t fit their needs. A subscription-based plan would counter that with these three benefits:
- Convenience: Subscription models bundle all coverage and benefits into one central location, which would allow customers to essentially “shop” for the policy benefits and add-ons right for them. These custom plans can include benefits consumers didn’t consider before, such as childcare and identity protection;
- Personalized policies: Instead of getting a bunch of “benefits” they don’t need or buying supplemental coverage to make up for what their policy lacks, consumers could shop for policies built to fit their lifestyle;
- Savings: By only paying for the benefits they need, consumers would maximize their coverage while saving money with a subscription policy.
Benefits to employers
Employers often feel stuck with expensive one-size-fits-all group plans. Here’s how a subscription insurance plan would fix that:
- Meets the needs of any size business: Many small- to medium-sized businesses have been bogged down by insurance issues for years. With the subscription model, companies of all sizes could be treated to scalable technology stacks that streamline the process of getting a company up and running in the new platform.
- Gives the company an appealing recruitment tool: A subscription insurance plan that meets the needs of different lifestyles is an enticing prospect to offer a potential hire. An easy-to-manage, competitive benefits package could be the deciding factor for many job candidates.
How to make the transition
The subscription model would disrupt the health-care industry by offering the type of benefits consumers have come to expect from their services. If insurance providers choose to implement policy subscriptions, below are three steps to follow.
- Embrace something new: First, insurance brokers must explore this new model of insurance. Rather than selling a specific product, brokers will be selling an experience — creating an opportunity to grow revenue by building a larger benefit portfolio for clients.
- Educate employers: Brokers must take a decisive role in educating employers on this new insurance model, highlighting its benefits to businesses of every size, including the expansion of employee benefits and the program’s appeal to job applicants.
- Educate consumers/employees: To sell customers on the change, they need to see exactly how they will benefit from a needs-based system. Highlight the choices of personalized plans, money-saving features, and the convenience of the program as a whole.
Today’s already-thriving subscription economy has caused consumers to expect products and services that are attuned to their specific needs, and a health insurance policy is no exception. Subscription insurance plans would allow consumers and employers to be treated to the personalized insurance plans they want, revolutionizing the industry overall.