Marketing Strategy and Opportunities for Insurance Companies

At Buyapowa we have the privilege of working with brilliant marketers across industries far and wide and across 27 countries, but by far some of the best marketers we get to work with are in insurance companies.

So here we’ve set out some of the challenges and opportunities facing insurance marketers and the different marketing strategies they can adopt. Of course, any discussion of what’s possible in insurance marketing needs to take into account that it’s a regulated industry and regulations can and do differ country by country, and in some cases, state by state. Obviously, it’s too difficult to list what’s and what’s not possible in each case and we’ll leave it to you and your lawyers to decide. And also, we’ve written this from the basis of a B2C insurer rather than B2B, although some of what we’ve written could apply in B2B.

Three main challenges

When you think of it, a marketer at an insurance company faces three main challenges:

• First to convince the public that they need insurance, that it really is worth the investment and that burying your head in the sand is not an option;
• Then to get noticed amid all the hundreds or thousands of other insurers out there; and
• Finally to convince customers that they are the best insurer, with the best cover, the best price etc.

Convincing people that they need to buy insurance

The first challenge should not be underestimated because, in reality, no one enjoys paying for insurance. It’s at best a begrudging expense, where you pay for cover against an event you hope never happens and, even if it does happen, you fear that you won’t recover everything, due to deductibles, small print and debatable valuations. And then there is the fact that money can’t repair all losses, like family photographs lost in a fire. Of course, outside of compulsory insurance like motor or occupiers’ liability, the average Joe (or Josephine), given the choice, would prefer to spend his (or her) money on fun things like clothes, holidays, restaurants etc. And so it’s no surprise that demand for insurance typically rises after a catastrophe is covered in the press and television, and then falls as the event becomes a distant memory, and people convince themselves that it won’t happen to them.

When a catastrophe or other high profile event raises the demand for insurance, insurers can use public relations or newsjacking to get their brand associated with cover against this kind of thing by providing journalists with relevant information about the event or previous events:  like the average loss, the average deductible, the percentage of people that were likely uninsured during the flood etc. Of course, we’ve all read newspaper reports or listened to the news with statements like ‘according to Acme insurance, the average loss from the [event] was…’. It’s a great way to get across the message that these events can and do happen, that the potential losses can be as much as [x] and that [brand] can cover you against this.

Of course, you don’t have to wait until a catastrophic event happens and, as explained by esure at a conference a few years ago, a clever use of content marketing with evergreen and valuable advice can help get the insurer in the news and associate it with cover against the risks identified. If there’s a heatwave on the way, dust off the advice about how to prevent pets suffocating in cars, or if there’s a cold snap remind people how to avoid the risk of burst pipes, if it’s holiday season bring out an article about the strangest animals that bit tourists last year etc. All this is perfect for journalists.

Getting noticed among the crowd

So assuming your potential customer realizes that he or she needs to be insured, how do you stand out from the myriad of other insurers out there?

Basically, you have a few strategies:

a) Build a memorable brand so that people think of you when they need insurance

• • • Above-the-Line marketing – if you can afford it, whereby you can create catchy ads for television, radio, streaming platforms and YouTube. By mixing eye-catching colours, a memorable slogan, a catchy jingle and aim to associate your brand with values such as being trustworthy, human, fair etc. By repeating these messages, an insurer hopes to remain top of mind when a potential customer thinks about insurance.Insurers can also look to create a brand personality with mascots and personalities like Progressive’s Flo, Allstate’s Mayhem, Geico’s gecko and cavemen, Aflac’s duck. Examples of video content include USAA, American Family Insurance, GEICO, and State Farm in the USA and NFU Mutual, Churchill and LV= in the UK.The main disadvantages of these tactics, apart from the high cost, is that you typically target all potential customers and not only those currently in the market. Unless your product has a high seasonality, such as travel insurance before the holiday season or boiler cover at the start of winter, you’ll reach a lot of people not currently in the market for insurance, which means that you may need to run campaigns all year round, The other main disadvantage is the difficulty, outside of statistical modelling, of attributing ATL spend to actions. But one of the best ways to do this, where regulations permit, is to offer rewards in your advertising such as a gift card for each person who signs up and quotes the ‘Summer23’ code before X date.

• • • Sponsorship – many of the largest insurance brands sponsor sports teams or venues like Nationwide in the United States, AXA and AIA in Premier League soccer, Allianz in the Bundesliga, Aviva in rugby etc. And while these are huge investments, insurers with a more local focus can often sponsor local teams or events.
    • Guerrilla marketing – often for those whose budgets don’t stretch to, or don’t stretch very far when it comes to, ATL marketing. A great example includes the Dutch insurer VrijVerzekerd Insurance, whose agency created stickers that looked like scratches and placed them on cars and motorbikes and then filmed the reactions of the owners and placed these on YouTube generating virality and lots of brand exposure.

b) Be found when people are looking for insurance

As a complement to or alternative from building a brand, an insurer can look to be found by people when they are looking for insurance. Here the strategies are well known including:

• SEO or optimizing your website (or app) – to be found in search results by people searching for the type of insurance you offer. Of course, the search engines do have huge search volumes from people looking for something, often with a high intent to buy and you should definitely invest in SEO. But good luck if you’re a new player trying to rank for general search terms like ‘home insurance’ or ‘travel insurance’. A quick search for the word ‘insurance’ returns about 4,420,000,000 results. ‘Home insurance’ brings up 3,240,000,000 results and ‘travel insurance’ 1,270,000,000 each. That’s a lot of competition!
  
  And the simple fact is that hundreds of competitors with aged domains, solid backlinks and good content are already ranking for those terms, and you won’t get a lot of clicks if you’re not on page 1 of SERPs. Yes, you can look for niche search terms, or local search terms, if relevant, but all of your competitors, assuming that they have an SEO agency will be doing the same.
• Paid search– if you can’t appear at the top of Organic Search results, then you can pay for ads on Google or Bing. But while you may be able to get searchers with high intent to purchase, even if you bid on the right terms, you’ll be paying handsomely for every click. And with Wordstream reporting average costs per click in paid search for insurance at US$54.91 in 2022, it’s no wonder that a leading UK car insurer confided to us that it paid so much in paid search that it made no profit until the customer renewed twice. Similarly, a leading Italian auto insurer told us that they were ‘underwater’ most years due to high paid search marketing costs.
• Paid social – given the death of organic social, paid social is the only game in town. Wordstream reported average CPCs for Facebook Ads for the Finance category of US$3.89 in 2019. At first blush, this might look cheap compared to Google Ads, but then when you consider that, while Paid Search tends to bring you people looking for your product with potentially high purchase intent, that’s often not the case for paid social ads. All the same, Wordstream reported average cost per action on Facebook for the Finance category of US$41.28 in the same year – although ‘action’ was not defined.
• Affiliates – if you can’t generate enough of your own traffic at acceptable prices, an established strategy is to look for affiliates who do have that traffic often via Affiliate Networks like AWIN and CJ. This can be an effective strategy, particularly if you only pay for performance, for example for each demand for a quote or for each policy taken out. While affiliates can often drive a decent amount of new business, the disadvantages are mostly:
  • The high costs with Authority Hacker reporting these commissions:
    • AllState: US$28 a lead
    • Gerber Life: US$25 per sale
    • Lemonade: US$25.50 per sale
    • Petplan: US$25 a lead
  • The fact that your affiliates are often competing directly with you in Paid Search, Paid Social and Organic Social and to that extent by paying for leads from them, you are feeding your competitor’s ad budget.
  • You don’t own this traffic and your affiliates can be targeted by competitors offering higher commissions, which can mean you could lose a large part of your business unless you match the competitor’s offer.
• Comparison sites – a feature in many markets in the last couple of decades has been the growth of price switching sites targeting the insurance industry. Examples include Insurify, Ratehub, Rates.ca, Go Compare, Compare the Market, Money Supermarket, Les Furets, Le Lynx, Assurland, Rastreator etc. Many of these have huge ATL marketing budgets and highly effective SEO.Effectively these are similar to affiliates, although due to their size, insurers often deal with them directly rather than via an affiliate network.

  The advantages are clearly the volume of traffic and the fact that much of it will have a high purchase intent.

  The disadvantages are similar to affiliates, given that insurers pay for every click or conversion, the traffic belongs to the price comparison engine and a competitor can bid more for that traffic at any time.

  Many of these comparison sites also use rewards as part of their marketing strategy to encourage visitors to submit a quote request from their sites.

• Retargeting – given the high costs of getting traffic to the insurers websites and mobile sites, it makes sense to retarget that traffic with banners, paid search ads and emails, where possible. This is particularly important where a potential policyholder has dropped out while half way through a quote application.

Hear Jacob Tice, Senior Marketing Strategist at Trupanion explain how a recommendation from a friend is as compelling as anything you’ll see from other marketing messages:

See the full interview here.
 

c) Get your existing policyholders to bring you new ones

Clearly one of the best ways to get new customers, as we explained here, is to get your existing policyholders to bring you new ones. You do this by setting up a referral program that makes it easy and safe for your happy customers to refer you to friends, family and colleagues and provides enticing rewards and incentives to get them referring not once, but again and again.

Buyapowa’s own Reward Revolution research showed that 95% of respondents had referred a friend to a brand in the last year. And our Referral Codebreakers research showed that eight out of ten respondents said that they expected to be able to refer their favorite brands. Add to that research shows that referred-in customers are more valuable than those acquired from other channels and the power of referral marketing  is evident for all to see.

“When your friend come to you and says ‘This is a brand that I trust. This is a brand that’s had a real impact on my life personally’ it’s such a compelling thing to hear. It’s stronger and more from the heart than any pitch from a marketing department. You know, if your mom, if your aunt, if your best friend comes to you and says, ‘Trupanion saved my pet’s life. You should work with them. They can help.’ That is as compelling as anything you’ll see when you hear that sort of thing from a friend.
Jacob Tice, Senior Marketing Strategist – Trupanion

The main reasons referral works so well with insurance is that:

• • It’s an important decision where the consequences of making a wrong choice can be serious;
  • Where the average consumer finds it very difficult to tell one insurer from another or one insurance policy from another;
  • Where only current or past policyholders can give a credible recommendation;
  • Where the recommendation is made by a friend or family member, not only is it from a trusted source, but it’s from a person who cares about the outcome and is from someone who knows, not only the insurer well but knows their friend and what he or she needs.

Recent research from Rachel Gershon of UC San Diego and Zhenling Jiang of the University of Pennsylvania analyzed the anonymized data of 41.2 million customers of a large US mobile brand and found that referred-in customers were 32% more valuable than customers recruited through organic or paid search, affiliates or paid social. And they found that to fully appreciate their value we have to take into account that referred-in customers are themselves more likely to refer in new customers. If not, we risk underestimating their value by a third.

Hear Buyapowa’s Brand Director, Robin Bresnark, explain the communication channels insurance policyholders are likely to pay attention to:

 
So it could be the marketing nirvana of the right message to the right person at the right time from a trusted source with an incentive to act upon it. As a result, it usually drives CPAs at 53% of the cost of other channels and so it’s no surprise that so many insurers have adopted referral marketing as part of their marketing mix.

“As you can see [across all verticals] email rules the roost [for the most impactful communication channel]. But that really changes when you start drilling down a little deeper. Bills really aren’t a thing in streaming. So it’s no surprise it’s at the bottom for streaming. But bills are up near the top for insurance and telecoms and banking.”
Robin Bresnark, Brand Director – Buyapowa

d) Keep your existing customers

I’m sure you all heard that it costs between five to twenty five times as much to acquire a new customer as it does to retain an existing one. While, we might doubt the veracity of the numbers in that statement, it definitely makes sense to try and keep valuable customers by offering good service and competitive premiums. 

In many of the articles read as part of researching this article, a common theme was to invest in content marketing, emailing and email automation. However, while both have their place, I wonder just how often people want to hear from their insurers? Outside of the initial contract set up, renewal confirmation and communication around a claim process, not much I’d suggest. Probably about as much as you want to hear from your dentist?

I wonder how much interest the average policyholder would have in receiving regular newsletters with tips and advice about healthy eating, how to insulate your house etc from their insurer? And if you were looking for DIY tips for your home, would you go to your insurer’s website or to a renowned DIY expert on YouTube?

But sticking to your knitting and providing an excellent service, with transparent procedures is the best way to retain customers. That means easy to understand policies, fast and helpful customer service, with low call waiting times and help from people who really speak your language, as well as fast and fair claims management and speedy payouts. All of this should mean happy customers who stay longer and provide the basis for effective word of mouth marketing.

A key element of this is also acknowledging and rewarding policyholders for remaining with you and or reaching milestones, like X years insured, via effective and timely reward payouts.

How can you stand out from the rest?

So once you’ve got potential customers to realize that they need insurance and they’ve found you among all the other insurers out there, the next challenge is to stand out from the crowd and show that you’re different.

But the sad fact is that only 13% of people trust their insurer, and in fact it’s one of the lowest ranking of all sectors, even lower than even energy, banks and telecommunications companies. It’s perhaps due to the fact that reportedly only 45% of consumers actually understand what terms like ‘deductible’, ‘copay’ and ‘coinsurance’ actually mean and only 40% feel comfortable choosing the right plan, and younger generations are reported to have many misconceptions about insurance.

That’s why insurers can stand out from their competitors by creating trust by:

• Getting ratings and reviews from customers to show high customer satisfaction;
• Entering and winning awards for customer service and adding customer excellence badges to their websites;
• Being transparent, for example as Lemonade did by publishing a transparency review blog where it published stories of failures and negative feedback to show it took customer service seriously and was aware of its weaknesses;
• Supporting social good, like AllState which donated between $2,500—$100,000 to 185 American teachers as an acknowledgment of their role in preparing students for their own and the nation’s future;
• Create stories that connect with users and show how you’ve solved real problems. People might not understand insurance, but they understand stories like those that MetLife, Oscar, and USAA showcase customer on their YouTube channels;
• By thinking and behaving like an insurtech, so instead of offering inflexible policies that charge policyholders for cover they don’t need, you could offer flexible policies like Cuvva that let’s policyholders get coverage for a day or hour, or Root whose premiums are based on how a policyholder drives not your age or gender.

So once you’ve established your difference and created trust, then you need to get the message out there and the best way to do that is by the most trusted channel for marketing messages – word of mouth from friends and family. That’s where referral marketing comes in.

If you’d like to know more about how Reward and Referral Marketing can fit into your marketing mix, get in touch.