The Consumer Decision is More Complex than Ever

According to McKinsey Research, consumers are changing the way they buy – from the traditional metaphor of a “funnel”of narrowing brand choices to a “consumer decision journey” with increasing touchpoints and key buying factors resulting from the explosion of product choices and digital channels, coupled with the emergence of an increasingly discerning, well-informed consumer. 

But Are We Ready for Prime Time?

The Supreme Court’s decision to uphold the Affordable Care Act creates new market opportunities for healthcare insurers. However, this means that they will now have to meet retail market challenges they have not previously focused on, including competition, price and margin pressure, and consumer education.

Already, group insurance carriers were in a quandary about how to differentiate their brand in a crowded market space in which consumers find it difficult to evaluate competing carriers. This considerably raises the bar for all insurance providers.

The Consumer Dilemma is the Marketer’s Dilemma

The problem is that the array of coverage choices and similarities of the underlying product offerings make it difficult for the average consumer to make informed decisions. A fundamental principle of consumer product marketing – the primacy of the end user in the purchase decision – has yet to penetrate the financial services industry.I was reminded of this when I recently met with a 30-odd-year veteran of insurance product marketing who asked me the rhetorical question of which is the easier customer to market to: the agent/provider/broker or the end user. His answer was that the end user is the easiest customer to market to.  This is the old marketing paradigm that is out of touch with a brave new world of increased product commoditization and peer-to-peer connectivity.

The Brave New World of Consumer-Driven Marketing

The old paradigm that the end user was the easiest to market to – is symptomatic of the essential disconnect that the financial services industry faces today. What this veteran didn’t yet understand is that, while the business owner providing insurance to his employees and the individual insurance consumers will continue to rely on sales intermediaries for financial advice, in today’s connected world, the producer’s recommendations are just another input in a more complex multi-variable decision process.

Research highlighted on this blog shows that consumers increasingly turn to peers, elders, social networks and their own online research for input. Add to this the viral nature of information on the internet, and you now have so many consumer touch points that it has become increasingly difficult to quantify what works and what does not. This creates a real dilemma for marketers attempting to measure the effectiveness of marketing efforts. In today’s environment, the consumer is the most important, and most complex customer to serve. 

Consider the business of financial services. We deal in intangibles that promise value. Regardless of whether the product is tangible or intangible, informed marketers have long known this essential marketing principle: you must create differentiation around consumer values.

Develop a Retail-Style Customer Service Capability or Die

To implement this strategic vision through tactics in an increasingly complex social marketing environment, you must create a symphony of consumer touchpoints that reinforce the value of the brand in the consumer’s mind, making it relevant and personal.Ashu Roy, Co-founder, Chairman and CEO, eGain recently guest posted an insightful article in Forbes titled Why Customer Service Matters in the New Healthcare Insurance Landscape.  He pouts it this way:

“Cost-effective, yet, reliable direct-to-consumer customer service before, during and after the initial “sale” will be a critical competence for success. Insurers need to develop this retail-style customer service capability not only within their business but also in their ecosystem of providers, exchanges, brokers and other distribution channels.”

3 Strategic Principles to Implement

 1. Replicate The Best Contact Center Agents through Knowledge Management Systems

Since insurance products have historically been sold through human-assisted channels like brokers, many potential insurance buyers are likely to want to speak to a contact center agent even when purchasing online.

With the prospect of increasing numbers of customers upon implementation of the ACA, to scale customer service across millions of consumers and guide them through the initial purchase, on-boarding and ongoing service, this means that insurers need to make all their agents as good as their best ones so that they could all become effective advisors and brand ambassadors.

Even if your customer base is not expected to grow, creating an experience in which all consumer touch points reinforce the basic values of the brand is key to purchase consideration is key in today’s market.

The knowledge and know-how of star agents can be captured and disseminated at the point of customer engagement to all agents by modern knowledge management (KM) systems. This knowledge can be extended to any customer touch-point as well as to your ecosystem selectively so that your entire network is well-informed and empowered to sell to and serve the consumer.

 2. Make it Easy to Buy and Enroll

Consumers go through three distinct phases when they buy insurance:

  1. Find options.
  2. Compare.
  3. Buy.
When they find obstacles along the way, they simply go elsewhere. In retail, this is called “shopping abandonment,” but the phenomenon is equally rampant in other industries, including insurance. Carriers that make it easy for the consumer to go through these steps will be able to grab and expand market share.
Considering each of the purchase phases, how can insurers make it easier for consumers to buy from them?

Find: Insurers can help consumers find things easily by going beyond basic keyword search, which famously lacks in intelligence, by leveraging technologies like natural language search, chatbots and GPS-style guided help, based on sophisticated AI (Artificial Intelligence) technologies like CBR (Case-Based Reasoning).

Compare: Insurers can also make it easy for the consumer to compare by aggregating results from their search not only from what’s on their own website but also from third-party sources like review sites and online forums.

Buy: Insurance companies are investing in more seamless enrollment platforms. They can make it easy for the consumer to buy and enroll through technologies such as collaborative form-filling, where agents can talk to a customer on the phone, while simultaneously helping the customer fill enrollment forms online. With modern collaborative browsing technology, the insurer can preclude the agent from seeing confidential customer information or taking actions that only the consumer should be able to.

3.  Serve Consumers Where They “Live”

The rapid adoption of social networks and new consumer devices means that to reach and serve them, insurers need to go where they are. Consumers hop across these touchpoints, and expect these interactions to be connected so that they don’t need to repeat information and provide context again and again. They want consistent answers and service through each touch-point. Insurers that take an integrated approach to member engagement across touchpoints can deliver on this expectation, while others will lose market share.

Where Brand Meets Customer Service

Recent McKinsey research provides two important findings:

  1. Consumers have changed the way they make decisions, but we haven’t changed the way we engage them. Or not enough.
  2. Consumer decision process in nonlinear and dynamic.

According to McKinsey:

Marketing has always sought those moments, or touch points,

 when consumers are open to influence. For years, touch points have been understood through the metaphor of a “funnel”—consumers start with a number of potential brands in mind (the wide end of the funnel), marketing is then directed at them as they methodically reduce that number and move through the funnel, and at the end they emerge with the one brand they chose to purchase. But today, the funnel concept fails to capture all the touch points and key buying factors resulting from the explosion of product choices and digital channels, coupled with the emergence of an increasingly discerning, well-informed consumer. A more sophisticated approach is required to help marketers navigate this environment, which is less linear and more complicated than the funnel suggests. We call this approach the consumer decision journey. Our thinking is applicable to any geographic market that has different kinds of media, Internet access, and wide product choice, including big cities in emerging markets such as China and India.
While the funnel metaphor does help by providing a way to understand the strength of a brand compared with its competitors at different stages, highlighting the bottlenecks that stall adoption, and making it possible to focus on different aspects of the marketing challenge, McKinsey points out that the decision-making process is a more circular journey, with four primary phases (as illustrated in the graphic at the top of this article) representing potential battlegrounds where marketers can win or lose:
  1. Initial consideration.
  2. Active evaluation, or the process of researching potential purchases.
  3. Closure, when consumers buy brands.
  4. Postpurchase, when consumers experience them.
Some key points:
Deal With Empowered Consumers: Traditional marketing remains important, but the change in the way consumers make decisions means that marketers must move aggressively beyond purely push-style communication and learn to influence consumer-driven touch points, such as word-of-mouth and Internet information sites.
Focus on The New Loyalty Touchpoints: 60% of consumers of facial skin care products go online to conduct further research after the purchase — creating a touch point.When consumers reach a decision at the moment of purchase, the marketer’s work has just begun: the postpurchase experience shapes their opinion for every subsequent decision in the category, so the journey is an ongoing cycle.
Of consumers who profess loyalty to a brand, some are active loyalists, who stick with it and recommend it. Others are passive loyalists who stay with a brand but are open to messages from competitors who give them a reason to switch.  McKinsey’s research found as much as a sixfold difference in the ratio of active to passive loyalists among major brands, so companies have opportunities to interrupt the loyalty loop. The US insurers GEICO and Progressive are doing just that, snaring the passively loyal customers of other companies by making comparison shopping and switching easy.

All marketers should make expanding the base of active loyalists a priority, and to do so they must focus their spending on the new touch points. That will require entirely new marketing efforts, not just investments in Internet sites and efforts to drive word-of-mouth or a renewed commitment to customer satisfaction.

Tailor messaging:  New messaging may be required to win in whatever part of the consumer journey offers the greatest revenue opportunity. Evaluation may show that a general message cutting across all stages may need changing. Instead, you may need to address key weaknesses at a specific point, such as initial consideration or active evaluation.

Invest in consumer-driven marketing: To look beyond funnel-inspired push marketing, companies must invest in vehicles that let marketers interact with consumers as they learn about brands. The Internet is crucial during the active-evaluation phase as consumers seek information, reviews, and recommendations. Strong performance at this point in the decision journey requires a mind-set shift from buying media to developing properties that attract consumers: digital assets such as Web sites about products, programs to foster word-of-mouth, and systems that customize advertising by viewing the context and the consumer. Connectivity lets marketers provide rich applications to consumers learning about products. Marketers can influence online word-of-mouth by using tools that spot online conversations about brands, analyze what’s being said, and allow marketers to post their own comments. Content-management systems and online targeting engines let marketers create hundreds of variations on an advertisement, taking into account the context where it appears, the past behavior of viewers, and a real-time inventory of what an organization needs to promote.

Integrate All Customer-Facing Activities

Today, different parts of the organization undertake specific customer-facing activities—including informational Web sites, PR, and loyalty programs. But these activities are seldom integrated sufficiently with appropriate leadership.

The full scope of the consumer decision journey goes beyond the traditional role of CMOs focusing on brand building, advertisements, and market research. What’s now required of CMOs is a broader role that realigns marketing with the current realities of consumer decision making, intensifies efforts to shape the public profiles of companies, and builds new marketing capabilities.

Companies need an integrated, organization-wide “voice of the customer,” with skills from advertising to public relations, product development, market research, and data management. McKinsey argues that to unify these activities, the CMO is the natural candidate to do so.

Snap! principle of consumerization of financial services:

Creating a symphony of touchpoints begins with a consistent vision and communication throughout the organization.

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