Digital Marketing: A Potent Weapon for Insurance and Finance Industry
Insurance and Financial services companies have always been behind the curve when it comes to adoption of new media for marketing purpose owing to strict regulations on communication, reputation risk and complex target audience. But, the landscape for digital marketing in this industry is changing fast lately. The vast adoption of digital channels and exponential growth in the usage of mobile devices have redefined the way financial institutions build relation with customers and engage them. The marketers from these institutions are embracing the change by providing superb online and mobile applications for seamless and omni-channel customer experience. This is very much evident from the research finding that depicts growing digital ad spend from 2011 to 2016 in financial services industry, increasing digital spend by insurers and the fact that top 25 financial institutions in US are deploying mobile apps with advanced features. Insurers are using mobile apps that generate animations and videos visualizing common risks of everyday life, with the goal of engaging customers in a more persuasive fashion.
According to a research done by McKinsey Global Institute, “The Social Economy: Unlocking and Productivity through Social Technologies” it was found that social media adds 5.2% to companies’ top-line revenue and bolsters the productivity of marketing unit. Particularly for financial services industry, customers in United States think that digital presence is very important and the industry needs to keep up with the expectation. This essentially points that adoption of digital can lead to increased customer satisfaction and significant contribution to revenue. Now if we take the case of insurance industry, Gartner estimates that by the end of 2015, personal lines property and casualty (P&C) insurers that do not offer online and mobile transactions will lose one-quarter of their current market share. Moreover according to a research conducted by Bain & Co., in Germany consumers prefer digital communication channel over all other traditional channels in each stage of insurance buying cycle (Information Gathering, Advice, Purchase, Customer Service/Back Office, Claims). In UK, 50% of insurance policies were bought online according to a survey conducted by PwC in May, 2014.
Now that we understand the criticality of digital technology in marketing, let’s focus on the three key factors which are driving the digital bandwagon:
- Conversion cost
Irrespective of the channel used in marketing, there is always an aim to make a conversion. It can be either generating a lead or completing a sale. According to a report by McKinsey, banks spend between $70 and $300 to acquire a new customer. This acquisition cost can be reduced by 30% by using of social technology across the banking and insurance companies. Moreover when we compare website conversion rate of financial services with other industries, clearly this industry is the winner with a 10 percent conversion rate. Powered with great content, thorough application of Search Engine Optimization techniques and user experience (UX) design, it is very much possible to bolster this conversion rate.
In November 2010, American Express had started Small Business Saturday campaign to generate sales for its small business customers. They leveraged power of social media by launching Facebook advertising campaign and helped the participating small business by providing free advertising. That year small businesses saw a 28% increment in revenue in comparison to previous year and next year there was a 23% increment in transactions with respect to Amex Card Members.
- Customer Behavior Data
Actionable insights driven from deep understanding of customer behavior plays a very important role in the much sought after relationship based marketing. Social media provides huge amount of customer data based on actual interests and connections for targeting audience in a way better than traditional media. For example, customers broadcast various major life events to their social network like first vehicle (potential for auto insurer along with fuel card provider), child birth (leads to life insurance), and new home (property insurance), marriage (scope for travel related financial service for honeymoon and general loans).
There is also ample opportunity to conduct A/B test or multivariate test in social ad campaigns which gives great flexibility to find out what exactly works. Group of customers who interact significantly with each other on social platform and share similar demography generally go through same phase of their lives during a particular time period. This can be very well leveraged by financial services companies to tap into sales of various products and services across the customer connections.
- Customer Loyalty
It is an industry wide fact that every company thrives for customer loyalty by providing great customer service. Customer service becomes all the more critical in case of financial services because of the very nature of the financial products (intangible and usage over a period of time to realize the value). Social media can provide two-pronged usage when it comes to building customer loyalty.
- It can act as a medium to provide resolution of service requests for better customer experience.
- Social media can also be used as a tool to generate new product ideas and educate customers about existing products.
As per a survey, 65% of the companies using social business tools can expect a positive ROI on CRM. 43% of US customers expect companies to help to them on social platforms. One in four Facebook and Twitter users expect response to their complaint posted on social media within an hour. Thus, it is imperative that social media has become a primary tool for customer satisfaction.
While social media as a CRM tool continues to grow, financial and insurance companies can integrate this media in their service offering in order to hook the digital savvy customers to their brand. In this direction ICICI bank has taken a step to let their customers carry out various banking operations like transferring money, viewing transactions, recharging prepaid mobile via Twitter. Some insurers like Farmers, Northwestern Mutual and Thrivent have started harnessing power of customer conversion via social CRM in order to cement their relationship with customers.
Coming to engaging customers on mobile device, let’s go though some of notable examples. NTUC Income in Singapore offers a travel insurance app that enables customers to buy travel insurance all over the world, access an accident guide in case of accident, monitor flights and so on. On the latter front, life insurers, including Generali France and John Hancock have launched mobile apps on which agents can view customers’ investment portfolio details, fund performance and payment history. American Family Insurance has successfully launched a social mobile game called “I-Am-Fam” to engage, educate existing and potential customers.
In the conclusion it won’t be out of context to point out that digital media as a tool has significant impact on various stages of customer life cycle. It will be worthwhile to see how the financial services institutions will be able to use this media to generate value for the customers.