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Reaching the middle market on their (digital) terms

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Middle income Americans know they need life insurance. And they’d probably prefer to buy it online.

Exhaustive research of the middle market and its insurance buying habits identify clear trends. Here’s what we’ve learned:

  • According to LIMRA, a sizable portion of the buying public (85 percent) agree that most people need life insurance, yet just 62 percent say they have it;
  • They don’t buy it because they think it’s too expensive — three times the actual price, according to an August 2013 article in Life Insurance Selling; and
  • 61 percent of U.S. customers who recently sought information about individual life insurance products made the Internet one of their information sources.

All of this leads to the inevitable conclusion that offering simple, affordable individual life insurance products through a digital distribution channel could give the industry access to the large, underserved middle market. A Web-based channel that provides a satisfactory customer experience on a mobile device, which capitalizes on the popularity of social media, is a logical approach to this market.

The Web-mobile-social approach

Americans’ use of digital devices is not just growing, it’s mushrooming. Consider these statistics:

  • 53 percent of U.S. mobile owners over age 15 have a smartphone;
  • 66 percent of individuals age 16–24 own smartphones, according to Pew Research; and
  • Customers with annual household incomes of $75,000-$99,999 buy online more often than those in higher or lower income groups, according to LIMRA.

A digital middle market strategy targets customers who hang out on the Web, shuttling among social sites with their smartphones and tablets. They use the Internet to conduct all kinds of personal business, from ordering a pizza to shopping for a car. They are very comfortable with technology and their Web wanderings expose them to sophisticated retail and social sites that raise their expectations about the customer experience. Clearly, responsive design is a must-have because they know a website can look as good — and be as easy to use — on a cell phone or tablet as on a laptop or PC. Looking at it from the developer’s perspective, the site must be flexible and easily modified to keep pace with changing consumer needs and habits.

No approach to developing a new digital online distribution channel is simple. Buying a large system can become a maintenance nightmare of legacy code that is difficult to integrate with other systems. Building from the ground up can quickly become highly complex, stretching the development time frame far beyond original estimates.

An alternative is a hybrid approach developed through careful assessment of the environment, in-house capabilities and availability of off-the-shelf functionality. For experienced Web development teams, managing the project internally allows quick decision-making and implementation as well as branding control. Using internal staff and systems also ensures the strict data privacy and security requirements that are now commonplace.

Complementing this approach by integrating best in breed purchased systems such as identity verification or e-signature capability ensures use of the best the market has to offer.

Build in flexibility for future change

An online interface for middle market product distribution is not a one-off project. Ideally, the end result is a system that is flexible enough to market a variety of simple, affordable products well into the future and is easily modified to correspond to consumer needs. Project objectives might include:

  • Create an effective, repeatable and efficient model;
  • Design products that are relevant to the middle market customer;
  • Construct a system that is flexible and adaptable to market changes; and
  • Build reuseable services that can be leveraged across products and markets.

“Agile” development

There are two approaches to managing development of a Web-based middle market distribution channel: waterfall (linear) and agile (incremental and collaborative). Agile development is a different way of developing software with a cohesive, self-organizing team and continuously responding to change. The primary benefits of the agile approach are in the realms of enhanced productivity, business and IT alignment, speed of delivery, product quality, customer and employee satisfaction, and predictability. For a truly collaborative team, agile development techniques move the project along more quickly for a number of reasons:

  • Allocating pieces of the project to specific team members for simultaneous development results in faster progress;
  • Focused testing throughout keeps each of the sub-projects on track;
  • Daily standup meetings keep the working group aware of progress on all fronts;
  • Periodically vetting prototypes with focus groups composed of members of the target market keeps the project relevant; and
  • Ongoing stakeholder review ensures that the product evolves in alignment with the strategy.

This type of process is particularly effective with the rapidly changing web, mobile and social spaces.

Gauging the customer experience

A positive customer experience is critical to the success of the digital platform. Traditional key performance indicators such as new written premium or case count are important, but a digital enrollment strategy and corresponding customer satisfaction should also be measured in other ways. Digital systems provide a plethora of logs and activity information, yet determining the “so what” can be challenging. Early and clear definition of performance indicators sets priorities that help guide development. With a focus on marketing and enrollment, appropriate measurements might include:

  • Number of digital marketing events;
  • Number of landing page conversions;
  • Number or percent of applications submitted for coverage;
  • Digital process completion rates; and
  • Persistency of the digital business once it is on the books.

It takes some upfront work and programming to ensure the digital data is meaningful, but it helps identify changes needed to improve results. A lot of knowledge can be gleaned from digital behavior such as:

  • Which buttons did a prospective consumer click?
  • What information did the consumer search for?
  • What quotes did the consumer request?
  • On which page did the prospect abandon the site?
  • How many times did the consumer visit the site before purchasing?

Monitoring and noting changes in this behavior provides insight that can lead to modifications that improve the customer experience.

Another measure of success is consumer interest in products and capabilities, such as online policy servicing. Establishing a means for identifying and capturing this information provides a strong foundation for future channel expansion.

Meeting middle market customer expectations

Digital distribution channels reach mass markets with simple products and easy-to-use interfaces. Not only do they make it easier for customers to quickly acquire the coverage they need to protect themselves from the sudden loss of a loved one, it’s what customers expect. Companies who embrace these digital tools and build simple products and flexible solutions to meet rapidly changing needs will capture the underserved the middle market.


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