This report is written in the form of a Press Release
29 April 1997
Today, Managing Change publishes a major report into the application of the new interactive mediums within the insurance industry. The mediums include kiosks, the telephone, personal data assistants (PDAs), interactive and web TV, e-mail, and others.
The report is the culmination of many months of research involving interviews with marketing manager in major UK insurers and bancassurers, together with reviews of the media, academic papers and books. Circulation is initially restricted to contributors and supporters.
Riding the Whirlwind looks at the visions of Don Peppers and Martha Rogers (1-to-1 Marketing) and Joseph Pine (Mass Customisation). It reports on the changing social and political scene that is leading to new business models, and on the views of the interviewees to these two concepts. In addition to describing the application of these new mediums to realising these visions, the report also provides practical suggestions for their implementation.
Society is changing rapidly, with people having to adopt new patterns of behaviours. Whilst technology is an agent of change, it also provides enabling solutions, and there are business opportunities in helping customers. Customer's use of the new mediums is increasing their expectations from businesses.
For insurers, the current battle ground is direct sales, especially telesales. Consumer confidence in these direct mediums will see them go on to embrace home shopping and entertainment on-demand, and then home banking and other financial services.
Relationship Marketing is still an objective but one that is getting more difficult to achieve. Companies saw 1-to-1 Marketing as an ideal, but thought it too difficult and non profitable. They appear to be locked into the mass market paradigm.
Mass Customisation seeks to provide cost effective 1-to-1 Marketing within mass markets, and these new interactive technologies are an important enabler. Insurers feel it will become more relevant as customers focus on added value.
Despite concerns about embracing the new delivery mediums too quickly, larger companies are making substantial investments in pilots. Favourite mediums are telesales (well underway), followed by kiosks, Interactive TV, and the Internet. Smaller companies are more cautious, believing they can catch-up should consumers enthusiastically accept the new mediums.
One concern of interviewees is their customers' financial skills and knowledge. Many insurers are in the mass market. On a Market Segmentation model they place most of their customers between Financially Unaware / Unsure and Financially Aware / Unsure. They agree the general trend is towards Financially Astute / Sure (where some would prefer to be now!).
The World Wide Web has caught the imagination of many people. The attractions for businesses include the professional standing of many of the users, and the extremely low transaction costs. Never-the-less, many interviewees were sceptical as to consumer take-up in the mass market. Many also find their own companies' Web offering disappointing.
Those distributing via brokers were sensitive to communicating direct to customers but never-the-less, they thought it important to use and understand these new mediums.
Serious pilots are costing in the order of £0.25m to £0.5m with most seeing their pilots as a learning exercise. Some are "dabbling" in case it becomes big.
Insurance companies are ill placed to handle these new mediums but most see them as complementary to the way they do business, rather than changing fundamentals.
The report's comprehensive Implementation section provides practical ideas for strategic interactive marketing. It includes the SIM framework based on 3 cycles: the Relationship Cycle, the Purchasing Cycle, and the Communications Cycle.
The 150 page report is initially restricted to those companies who contributed to the study. In due course the report may be made available on the World Wide Web.
Abbey National, Friends Provident Life, Nationwide Building Society, Norwich Union, Prudential Corporation, Royal Sun Alliance, Sun Life Assurance, Sun Life of Canada, TSB General Insurance, TSB Life & Pensions, Woolwich Building Society, Zurich Insurance.
IBM Insurance Europe, Interactive Financial Services (IFS), M&G Reinsurance (now part of Swiss Re), NCR Financial Systems and NCR Knowledge Lab.
South Bank University, TriReme International, Talmage Consultancy Services.
1-to-1 Marketing is accredited to Don
Peppers and Martha Rogers. Their two main books are:
Mass Customisation is accredited to B. Joseph Pine II. His main book is:
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