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How smart insurers convert digital customers at six times the rate of their peers

by Mila Adamova, Ido Segev

It’s not just about the demographics. Insurers often point to the age and income of their customer base to explain their struggles with digital marketing, especially their generally low rate of success in converting online visits into actual policy sales. Most of the visitors to their websites are older, they say, and older visitors just don’t want to purchase insurance online. They’re much more likely to visit one or more websites to explore their options, then see an agent to get a quote and complete the transaction.

Sounds reasonable, but the digital-marketing success of a handful of savvy insurers suggests that demographics alone can’t account for the industry’s generally low rate of online conversions. (Online conversions are those that take place entirely online, from initial website visit to completing a quote.) We recently conducted an outside-in analysis, dubbed the Digital Opportunity Scan, of major property-and-casualty carriers operating in the US. The analysis revealed that one online-only carrier converts prospects at six times the rate of a much better-known rival and beats every other insurer’s online conversion rate by a wide margin, even after adjusting for demographic differences among user bases.

A higher online conversion rate translates into real money. We found that an auto insurer with $10 billion in annual premium income can generate $400 million in additional premiums by boosting its online conversion rate by 20 percent. That kind of value at stake gives insurers a powerful incentive to close the digital capabilities gap that separates them from the top performers.

But how? Well, it comes down to the fundamentals. By personalizing web content, targeting the customer segments mostly likely to buy online, and offering them a better digital experience, insurers have an opportunity to claim a bigger share of the value that digital marketing can generate. The digital tools to make that happen are readily available. Here are some specifics:

Personalization pays. We found that 18- to 24-year-olds are the segment most likely to convert online, even though most site visits come from 55- to 64-year-olds. So it makes sense to personalize website content for that younger cohort. Insurers can do that by linking data gathered from visitors’ clickstreams and cookies to third-party data on demographics, attitudes, and user personas. That information enables insurance marketers to dynamically tailor website content to their target audience, using carefully structured personalization logic trees and machine learning to optimize the offers and visuals on their landing pages to reflect the brand’s design esthetics and align with email offers.

A handful of segments are the most promising. Using segment-specific marketing tactics, companies can attract the shoppers most likely to buy. Many of these shoppers are women, who are increasingly taking the lead in financial decision making, according to numerous studies. We found that women are twice as likely as men to visit an insurance website and marginally more likely than men to start or complete the purchase process online. In addition, millennials and people who live in households with children are more likely to start or finish a quote online than childless households. Insurers can use personalization technology to appeal to those segments. Everything from website graphics to marketing copy can be tailored to their documented needs, preferences, and shopping behavior.

To assess whether insurers are successfully reaching the right digital customers, they can conduct automated multivariate testing of advertising, landing pages, and other content using random test groups. There are several automation platforms on the market that can rigorously track the results of those tests.

Constantly improve the customer experience. The most effective online marketers use digital tools to learn what prospective customers want from a site, what they dislike, what discourages them from completing the conversion journey, and what convinces them to complete a quote. They use that information to constantly improve the website, simplify the customer’s journey, and eliminate pain points. They can also make the experience easier for their customers. For example, at least one online-only insurer uses the customer data it collects to partially fill out application forms and minimize the need for manual entry by the shopper. That might sound like a small thing, but such small things can make all the difference when it comes to the buying decision.

Our Digital Opportunity Scan analysis reveals that a few insurers are executing the digital fundamentals better than their peers. Now those peers have an opportunity to dramatically improve their execution—and claim a share of the value that effective digital marketing can generate.

Mila Adamova is a consultant in our Washington, D.C. office and Ido Segev is a partner in our Boston office.