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Habits, Hits, Tails & Tweets:
Some challenges for personal lines?
Presented By Colin BrigstockFinity Niche Insurer Conference11 November 2009
Today’s Presentation
CustomerBehaviour
Brand(Reputation)
ExpandingChoice Internet
Future Business Model
CustomerBehaviour
Brand(Reputation)
ExpandingChoice Internet
Future Business Model
What has driven Modern Marketing?
Customers are aware of what they are doing
They know why they do what they do
They make conscious decisions
BuyerBehaviour
ConsumerChoice
CustomerSatisfaction
Latest Brain Research
Executive Mind
(Conscious)
You are of two minds (at least)
Habitual Mind
(Unconscious)
Executive Vs Habitual Mind
Executive mind - Conscious cognitive processingWhere we consciously store & retrieve memoriesCreate intentional thought Logically solve problemsCan only think about one thing at a timeCan think about both the past and future
Habitual mind - Unconscious processingRegulating your heartbeat and body temperatureHandling the routine decisionsCan process and react to hundreds of sensory inputs simultaneously without bothering the executive mindGuided by the past but lives in the present
Executive Mind
(Conscious)
You are of two minds (at least)
Habitual Mind
(Unconscious)
Habitual mind controls 95% of human behaviour
Take Out #1
Understanding Customers
Focus on customer behaviour, not attitudes or beliefs
Beware of customer satisfaction surveys
They may reflect the executive mind’s interpretation of the worldNot necessarily the mind that made the buying decision
Take Out #2
Retaining Your Customers
Keep them away from consciously thinking about you!
Make re-purchase a habit
Become the unconscious, habitualchoice of your customers
Acquiring Competitors’Customers
Get them to consciously think about the product
Stronger the habit the harder it will be
How to do at same time?
Motor Insurance New Business“Typical” Age Distribution
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
16-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65 >66
Insured Age
Quotes
New Policies
About 40% below Age 30
Finity Staff Under 30New Policy – How Purchased
Quote Online 11 (100%)No. of quotes obtained before purchasing
• 2/3/4/5 Purchase
Online 9via Call Centre 1Related Bank Transaction 1
% Of Quotes Via Internet
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
16-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65 >66
Insured Age
Understatement?
Finity Staff Under 30Renewals
100% renewed on lineRe-quote experience
“If price not changed much, just pay”“Always get one quote. If within $15 just pay. Over $20 probably switch”“Check every few years”
1st Year Renewal RetentionDeviation from Portfolio Average
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
16-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65 >66
Insured Age
Propensity to shop?
Planning for the future
CustomerBehaviour
Brand(Reputation)
ExpandingChoice Internet
Future Business Model
Are purchasing habits changing?Retention more difficult?How to combat?
CustomerBehaviour
Brand(Reputation)
ExpandingChoice Internet
Future Business Model
“As our world is transformed by the Internet and the near-infinite choice it
offers consumers, so traditional business models are being overturned
and new truths revealed about what consumers want and how they
want to get it”
Back Cover The Long Tail
The Long Tail
The tail of available variety is far longer than we realise
It’s now within reach economically
All those niches, when aggregated, can make up a significant market
Mainstream Niche
Milk
Holden – Model Choices in 1964
Holden: Model Choices in 2009 (1)
Holden: Model Choices in 2009 (2)
Car Insurance - Many Online Choices Today
Brand UnderwriterGIO SUNCORPNRMA IAGAAMI SUNCORPBudget Direct Auto & General InsuranceAllianz AllianzYoui Youi Pty LtdING QBEPay As You Drive Car Insurance Hollard Insurance CompanyReal Insurance Hollard Insurance CompanyCommInsure Commonwealth Insurance LimitedFASTR Fortron Insurance Group1300 Insurance Auto & General Insurancee Car Insurance Calliden Group LimitedBingle SUNCORPJust Car Insurance SUNCORPVirgin Car Insurance Auto & General InsuranceApia SUNCORP1st for Women Auto & General InsuranceAustralian Seniors Insurance Agency Hollard Insurance CompanyBeaurepaires Insurance Auto & General InsuranceAustralia Post Insurance Auto & General Insurance1Cover Direct Insurance AllianzQBE QBEANZ Insurance QBEAussie Car Insurance Auto & General InsuranceCGU Insurance IAGOzicare Insurance Agency Auto & General InsuranceHBA Mutual Community General InsuranceThe Buzz Car Insurance IAGShannons SUNCORP
Selection of Car Insurers Quoting in NSW
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
NRMAAAMI
GIOAllia
nzQBECGURea
lBud
getSha
nnonsYOUIAPIA
Just
CarBingle
Comminsu
rePAYDVirg
inAus
Post1C
over
Which brands are registering interest?
Source: Google Insights for SearchCar Insurance related searches in 2005 & October 2009
Oct 2009
2005
Nil Result for 2005
Share of Google Search Activity
Young people –Still a bias towards established brands?
Finity Staff Under 30Which insurers?
Note biased sample – all work in insurance and know brands“Ones we’ve heard of”
AdvertisingWord of mouth
“Less known – must be much cheaper”
The Long Tail Age
In virtually all markets there are far more niche goods than mainstream products
The cost of reaching those niches is falling dramaticallyConsumers are being given ways to find these niches
Demand flattenssmaller mainstream, fatter tailNiches (collectively) rival the mainstream
Result: the natural shape of demand is revealed
Planning for the future
CustomerBehaviour
Brand(Reputation)
ExpandingChoice Internet
Future Business Model
Is consideration set really expanding?Problem or opportunity?How do you play in a market of niches?
CustomerBehaviour
Brand(Reputation)
ExpandingChoice Internet
Future Business Model
Managing Your Brand ImageTraditional World
“Promoting”Brand advertising
TVRadioPress
PR
Word of mouth‘good’ service experiences
“Defending”Current affairs
TVTalkback radio
PR responses
Word of Mouth‘poor’ service experiences
Largely, an environment where you could control the messages about your brand and deflect most criticism
Important but not really
visible
Managing Your Brand ImageTraditional World
“Promoting”Brand advertising
TVRadioPress
PR
Word of mouth‘good’ service experiences
“Defending”Current affairs
TVTalkback radio
PR responses
Word of Mouth‘poor’ service experiences
A whole new world is
emerging
Still very relevant.
As effective?
www.canstar.com.au
www.productreview.com.au
http://forums.whirlpool.net.au
http://forums.whirlpool.net.au
Today’s Presentation
CustomerBehaviour
Brand(Reputation)
ExpandingChoice Internet
Future Business Model
Much less control over brand image?Problem or opportunity?
The Web
Forget it as a marketplace of products. Instead think of it as a marketplace of opinion
Most products will continue to be sold offline. But in the years to come, more and more products will be marketed online
Not all industries lend themselves to an infinite variety of products, but all industries have an infinite variety of customers
Finally we can treat them like the individuals they are
From Chris Anderson The Longer Long Tail
Final Comments
Internet has already begun to affect the way personal lines is transacted
New habits are being formed. Will they persist?
Change will continue. How fast? How far?
CustomerBehaviour
Brand(Reputation)
ExpandingChoice
Internet
Future Business Model
Are your people, planning and processes ready for the challenges?
This presentation has been prepared for the Finity Niche Insurer Conference held on 11 November 2009. Finity Consulting Pty Limited (ABN 89 111 470 270) wishes it to be understood that opinions put forward herein are not necessarily those of Finity and Finity is not responsible for those opinions. The information presented at the conference was of a general nature and a reader of this presentation must seek their own independent advice before using it for any purpose.
