By Ismail Pishori
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Selling by Cellphone? | Canadian Insurance
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Selling by Cellphone?

The Canadian insurance industry needs to develop and pursue customer segmentization strategies based on technological preferences, not demographic data.

It’s a competitive market out there for Canadian insurance firms–and it would be stating the obvious to note that the way today’s customers interact with businesses is changing. The rise of the Internet, wireless technology and the resulting use of laptops, webcams and mobile devices have forever altered how consumers interact and communicate. This naturally presents unique business challenges for insurers.

As instant messaging (IM), text messaging, blogs and the use of social networking sites have grown in popularity and maturity, these forms of interaction have come to represent preferred methods of personal and business communication.

According to research from the TELUS/IDC Financial Services Insights study, the rapid adoption of these sites and services has changed the face of consumption. Future consumers are looking for new ways to interact and communicate with their broker, agent or insurance firm. Overall, 60% of Canadian respondents noted that they would like to see more convenient and intuitive services provided in the transaction channel they choose.

In addition, more than one-third of Canadians conduct online research before considering the purchase of products and services. Combine changing consumer communication preferences with a highly competitive industry facing significant price pressures, and what’s the result? Insurers need to update their customer experience practices to differentiate themselves and retain their customer base.

Insurance products have the lowest loyalty scores and generate the least amount of customer interactions.

Age is Not a Factor

The Future Consumer report also found that age doesn’t necessarily determine how the future customer prefers to communicate.

Instead, all consumers, regardless of age, are looking to experience consistent customer service–regardless of the communication mode used.

As a result, the study uncovered seven key market segmentations that brokers, agents and carriers can focus on when developing communication strategies. These market segments are: Traditionalists; Strugglers; The Internet Savvy; Integrated; Social Networkers; Urban Established; and On the Move.

Of these, the majority of future consumers fall into four categories:

  •  Integrated: Generally males who are comfortable with new forms of communication technologies in daily life. This customer segment tends to adopt new communication methods first and use the Internet for information and advice.
  •  Social Networkers: Majority are females who enthusiastically adopt new forms of Internet-based communication tools. They are the highest users of social networking, blogs, IM and e-mail and are more apt to use these tools to share their experience, good or bad, with a particular financial product or service with their online friends.
  •  On the Move: Generally male students who are distinguished by their strong adoption of new communication forms based in mobile devices, including text and IM.
  •  Urban Established: The group is tech-savvy, but adopts new channels slowly into their lifestyle. They respond to multiple-channel approaches to enhance their customer experience, including e-mail promotions and notifications.

What this data means for the Canadian P&C industry is that recognizing and responding to these trends and segments can represent an initial step to meeting the needs of today’s customer. This includes understanding how to enhance customer interactions and develop products and services more closely aligned with customer needs.

The Future Consumer study reveals that improving the customer experience depends on the trust generated through fair pricing, excellent service and advice and a strong corporate reputation.

Yet, this same report found that insurance products have the lowest loyalty scores and generate the least amount of customer interactions. Brokers, agents and insurers should be focused on finding solutions that help them increase positive experiences for customers to help drive satisfaction and loyalty.

This starts with strategic marketing and customer service plans that address each customer segment, since these respective segments have unique requirements and experiences. For example, the study revealed that less than half of those with a cellphone cannot live without it. For the half that can live without a cellphone, it may not make sense to contact them through this form of communication.

Overall, tech-inspired customer segmentization offers the insurance industry an opportunity to update their customer experience strategy–focusing on facilitating greater two-way dialogue and open communications.

Ismail Pishori, vice president, Financial Services Sector, TELUS Business Solutions.

© Copyright 2010 Rogers Publishing Ltd. This article first appeared in the February 2010 edition of Canadian Insurance magazine.