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In our connected age, companies recognize the importance of engaging with their customers. An engaged customer will buy more products, provide positive reviews, and give that coveted word-of-mouth recommendation. Companies have successfully used that strategy to see significant growth without spending a lot of money on marketing or advertising.
But the insurance industry has struggled to build engagement with its customers. That is also true among financial advisors, who can apply the same tactics to grow their business.
The irony is that several of the largest insurers in the United States are mutuals, meaning that most policyholders are considered "members" of that carrier. However, judging by the metrics, the vast majority of insurers struggle to build any engagement with their members. They might contact them once a year to provide an update on their policy, maybe send a birthday or Christmas card.
But that doesn't create an engaged, loyal customer.
Most insurers don’t get glowing online reviews from their customers, don't generate organic referrals and usually have anemically low net-promoter scores (NPSs). Word-of-mouth referrals are non-existent. All of that makes things more challenging for an insurance or financial advisor trying to recommend a carrier.
But it isn't surprising.
How often do you need to interact with your insurer? You receive the policy details, pay your premiums and don't think about them again unless you need to use it or make changes to your coverage. There are single-digit cross-sales, even for mutuals that offer both life and P&C coverages.
Some insurers try to talk to their customers with varying levels of success, but that is not where the game is won. The magic starts when, and if, they get their customers talking to each other and build a community. When policyholders begin to see the value of belonging to that community, the odds are they will become loyal members and possibly become brand boosters.
The insurance industry can learn a lot about engagement and community building from other retailers and brands. A prime example in the financial industry is H&R Block. The company has been helping people prepare tax returns since the mid-1905s and now has operations in the United States, Canada, and Australia. H&R Block has worked hard to build an online community for customers and potential customers for over a decade. It engages people in a variety of ways. The company's popular YouTube channel provides tax advice and financial literacy lessons throughout the year. H&R Block has several Facebook portals and Twitter accounts that allow people to ask tax questions and get a quick response from a tax professional or community member. Since this community launched, it has answered more than a million questions, and H&R Block has seen a 15% increase in business.
How to win the engagement game
Many insurers and advisors are looking for ways to build this type of engagement, and the ones who can achieve it will see more substantial business. Some mutuals and fraternals have started this process by offering their customers access to smartphone apps that allow them to connect with others, like family, friends, or other members. But the platform best designed to benefit the member will be the one that wins. Some apps promote overall wellness and, when combined with wearable fitness trackers or smartphones, these platforms can encourage improvements to not just someone's physical health but their mental, social, and financial well-being.
Apps can nudge users to be more active, such as doing micro exercises like stretches or running on the spot when they have a free moment. They can help a user set and achieve a step goal for the day, week, or month. For mental health, they can guide users through meditation or breathing exercises to calm the mind and attain focus. These apps can provide quizzes to promote better nutrition and financial literacy. The best platforms use gamification and socialization to build repetition in usage or have a person compete against family, friends, or co-workers to see who took the most steps in a week or got the most correct answers in a quiz. Users can be awarded points to redeem for things like gift cards to major retailers or discounts on hotels, air travel, or gas.
These apps generate a lot of data, which can give underwriters more detailed mortality and morbidity risk assessments for life and health insurers. For example, researchers at the University of Massachusetts found a 50–70% drop in mortality for adults who took more than 7,000 steps per day. That could translate into a discount for users who can maintain that pace.
Carriers can subtly promote their other products and services with branded content throughout the app. For example, quizzes can be tailored to highlight a special product or service the company offers. There’s a better chance an advisor can cross-sell these other products with heightened awareness.
Having an engaged customer base is the goal for every business. It promotes loyalty, increases word-of-mouth referrals, and brings in more business. Having a platform that fosters a cultural affinity between members while building a community is a challenge, but it will change the insurance industry forever when successfully applied. The first carrier that can accomplish this could become the dominant player. Many are reaching for engagement, but who will be the first to grasp it?
Jane J. Wang is the CEO of Optimity, a leading insurtech and engagement tool that powers a mobile-1st Engagement Engine with embedded distribution funnels. The Optimity app offers members support beyond physical health, including mental, nutritional, social, and financial wellness. The 2.1B data points collected power their health, financial score, and other subscores to create innovations in live underwriting and next-best-action prompting. The Optimity (or white-labeled) health rewards apps have been adopted by top multi-line insurance carriers, employers, and aligned health partners to adopt a data-driven approach and build a healthy relationship with their policyholder or member.
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
