Agents acting in the role of a trusted expert write the majority of insurance today. For the consumer, this requires an enormous delegation of trust, possible because the agent is not an
anonymous face of an insurance company but someone they know. Agents are people in the community and may have sold to, and trusted by, family members, friends and neighbors. This business model is now under threat, with consumers less connected to their communities and many not living in the same town as their families. The biggest threat, however, is the Internet, which has fundamentally changed the way people prefer to buy, and this applies to most products but the trend is now reaching insurance.
There are examples aplenty of companies that failed to adapt. Blockbuster failed to recognize that busy people forgetting to return videos was not a high-profit-margin piece of business but an opportunity for Netflix. Borders relied on consumers wanting to browse books and leaf through dust jackets in a comfortable environment. It did not catch on fast enough that some customers simply wanted to buy a book, a function ably supplied by Amazon.
These disruptive changes are happening all the time. Point-and-shoot cameras supplanted by cell phones, laptops by tablets, banks judged by ATM proximity. Classified ads, the lifeblood of newspapers, have moved to Craigslist.
In the insurance industry, Geico and Progressive have created the impression that auto insurance is a commodity purchased on price in a simple online transaction.
The challenge is to understand how consumers want to buy, not how you want to sell. This is not a simple problem, because not all consumers think the same way, and it will be disruptive to the industry with real winners and losers. For many consumers, making an appointment with an insurance agent in his or her office is simply not convenient or comfortable. Insurers selling exclusively through local agents may go the same way as Borders, along with the comfortable chairs. Amazon showed us that some consumers know what they want and are willing to buy in a way that is convenient to them.
All of this upheaval about buying and selling models leads us to social media. Do we really need to humanize our brand and to engage with consumers who have nothing better to do? There is something quite odd about consumers chatting to any corporate brand. Did you know that Waste Management, a company whose business is exactly what the name suggests, has over 16,000 fans on Facebook? Does that strike you as just a little bizarre?
What, then, is the role that social media really plays? Quite simply, it is all about decisions, about making choices. Instead of sitting in the leather chair in an agent’s office trusting the advice of an expert, some of us prefer to surf the Web, self-educating to become skin-deep experts. We do this for TVs, computers, hotels and coats, so why not insurance?
Once a list of criteria and options has been carefully created, we as consumers need, through a process of elimination, to make a decision, but despite all of our research, we are mostly ill-equipped to proceed. So, instead of asking for advice from the expert, we look to pretty much anyone else. To buy a TV, we do not ask the blue-shirted person in Best Buy whether we really need 1080p on a 32-inch set. Instead we read the opinion of Jane in Iowa and Billy in Arkansas. We then reach out to friends, to our family, to our colleagues, and the easiest way to do that is through social media. We are already connected, so it is easy and convenient.
We could ask them in person, or call them, but that seems too intrusive. Posting a question on Facebook and allowing our network to choose whether to participate seems preferable.
In order to sell to these people, you have to recognize and understand this buying process; do not attempt to shake them to their senses, but instead work out how to align yourself advantageously.
This could be as simple as an insurance agent becoming part of the social influence network. Provide your two cents’ worth when it seems appropriate, but not every day. Another approach is to look at the process as if it’s more like lobbying than selling. Firms that sell to government agencies put a lot of effort into lobbying lawmakers to hone the need and the selection criteria. Insurers that post product information in social media are trying to sell; insurers that provide helpful information about disaster preparedness become part of the conversation about homeowner risk. Consumers will ask advice of their social network; we know that, so the key is to have someone in that network that really does like you and will step up and recommend. This process can be long and requires that insurers rethink all customer interactions. Consumers will not recommend you if you do not provide a good overall experience and this includes sales, claims, customer service, billing, community programs and even your ads. You also need to provide advocates with information that they are happy to pass on, that they believe will be helpful to their friends; they will not pass on your product brochure before you ask them to. This, for most insurers, requires a new content marketing strategy focused on addressing consumer concerns and not on product features.
So, social media is not in itself the critical turning point, but it is a critical component of a transition that has been gaining stream for ten years. It is no longer about how you want to sell, it is now all about how the consumer wants to buy that counts.
