A recent Perceptive study has found that over half (55%) of Australian general insurance consumers are considering moving to another provider.
“While providers risk losing market share as customers search for a better offer, there’s a major opportunity for insurers that can acquire these ‘switchers’ off their competitors,” says Duncan McIntosh, Research Director at Perceptive who ran the study.
Success, however, hinges on whether those providers successfully address the product and service issues causing the switching mindset in the first place. Providers that convert and retain these switchers will be the ones that see the biggest growth in the long term.
Related content: How to track, measure and improve your brand health
The secret to winning and retaining customers? Trust
Building a trustworthy brand is key to both customer retention and new business. Perceptive research has found that while brand reputation is a first and crucial step to winning new customers, trustworthiness ranks as one of the most important attributes consumers look for when choosing a provider. Another Perceptive study also found 85% of consumers who rated a brand as very trustworthy were extremely likely to recommend it.
The problem is, globally, financial services is one of the least trusted industries. The 2022 Edelman Trust Barometer found only 56% of consumers across 28 countries trusted financial service businesses, which was the second lowest ranked industry in the study. For comparison, trust in business overall was 61%, with the technology industry achieving the highest trust at 74%. This sentiment is echoed by the Australian Securities and Investments Commission (ASIC), which is focused on helping the industry win back consumer trust. To do this, insurers and other financial service providers must understand what is driving trust in their brand.
In other words, trust is an essential brand health metric Australian insurers need to track and grow.
How do we build trust?
Two words: Customer experience (CX). It not only enhances customer retention, but when done well, it generates positive word of mouth and brings more customers to a business. As customers experience positive interactions with a brand, the more emotionally invested they become in that brand. That emotional connection is what builds trust. But it doesn’t happen overnight. CX’s impact on trust is cumulative; it takes several positive experiences to move the dial, which is where businesses can fall down. One good experience is not enough. For brands to grow trust, customers need experiences that are consistently excellent every time and at every touchpoint.
“Today, customers expect to receive excellent service no matter how they choose to contact a brand, be it via social media, website, email, chatbot or phone,” says Sammie Parkinson, CX Team Leader at Perceptive. “Failing to provide positive customer service in one of these areas means you hamstring your brand’s ability to build trust over multiple interactions.”
In the case of insurance providers, monitoring customer experience through metrics and customer feedback is an excellent way to identify and address customer pain points that leads them to think about switching to providers. Addressing customer pain points is crucial here. Acting on customer feedback is an excellent trust builder, and it goes a long way to improving customer retention, which makes this strategy a win-win.
Omnichannel service delivery is at the heart of providing the best experience
Excellence in omnichannel service delivery goes beyond simply providing a good service at all customer touchpoints. It’s also about ensuring the experience is smooth; that customer data is shared between touchpoints so the customer has a consistent experience no matter which touchpoint they use.
But what about brands, such as insurance providers, whose customers might not have any contact with their insurer through the year? How do you build and maintain trust when customer interactions are few and far between?
Most of all, how do you build trust with people who aren’t even customers?
The short answer: brand building.
The power of brand
Building trust with non-customers begins with building familiarity in the right areas. In the insurance space, this is where brand building and activation comes into play: compelling marketing communications, reputation management, endorsements, awards, sponsorship, community support, and environmentally conscious initiatives all help grow familiarity and ultimately trust.
“Many brands ride the strong affinity consumers have with sport. From the consumer point of view, seeing insurance providers supporting their sporting code, clubs and teams can be a real trust builder,” says McIntosh. “Just recently, we have seen insurance brands active in cinematic TVC advertising and sponsored cricket wicket covers at Australian cricket games. All of this helps grow trust in a brand that stays present and relevant to consumers.”
Meanwhile, an Australian insurer is making a driver safety app available to the public and another is offering discounted premiums on low-emission vehicles.
“Such initiatives are examples of brands creating social value by encouraging behavioural change for the betterment of individuals and society. In this case, safer driving and greener transport,” says McIntosh. “Brands are viewed positively for this social contribution, which in turn builds trust. Such strategies are a win-win for insurers. Safer drivers lead to fewer car insurance claims, which also brings economic benefits to providers. Better yet, customers are also rewarded for this ‘good’ behaviour.
“We’re also seeing environmentally conscious initiatives on the rise as the industry and consumers witness the effect of severe weather events. Brands that position here will reap rewards and build trust.”
Similarly, other providers are choosing to serve a specific market segment. One of Australia’s largest insurers, for example, uses a suite of brands to service different markets.
“A few years ago, a new car insurance brand focussed on young drivers as part of their launch strategy. It championed simplicity, and more recently, rolled out a social media campaign with weekly prizes,” says McIntosh. “Our Omnibus survey has found younger consumers much more likely to switch, so it will be interesting to follow this brand’s success in driving business growth.”
That said, businesses need to understand how their activations will build trust in their brand. With large sums at stake, it is worth measuring return on brand investment in sponsorships to support these decisions and work out what other initiatives fit in the mix. While these initiatives create social and economic value, brands must also ask: How do these initiatives build trust?
You can’t grow what you don’t measure
While it is important to focus on building trust—be it through CX, service delivery or brand activations—just as important is measuring how (and if) your activities are moving the dial. Brand tracking studies work as an effective way to measure trust in your brand over time and across the wider market and gauge the impact of your trust building activities and activations.
“Providers wanting to capture these ‘insurance switchers’ need to first understand how consumers perceive their brand, where their brand sits in the market, and who its real competitors are,” says Amy Renall, Senior Research Director at Perceptive. “Brand tracking does all this; it is essential for understanding market context and who truly is your competition. Without it, you have no idea where your brand sits in consumers’ minds and what switch triggers you are most associated with. This is particularly important within the insurance industry as it has a long-term purchase cycle. You need to ensure your brand is relevant and salient for when that purchase cycle rolls around.”
Without brand tracking, providers risk pouring time, energy and funds into the wrong activities that gain them little to no ground with consumers.
Transparency and plain language go a long way
Recent reform in the insurance sector is seeking to shift providers towards a more consumer-centric approach in the design and distribution of their products. Part of that is a renewed focus on transparency and the simplification of insurance products for consumers. Both elements are increasingly important when it comes to attracting and converting new customers, as well as building trust among existing customers.
Currently, it takes consumers a high amount of effort to understand insurance and financial products. When the Perceptive Australian Omnibus survey asked consumers what made them consider a certain brand, the ease of joining and understanding plans were often mentioned.
“With 55% of general insurance customers considering a switch in provider, there is a real opportunity for insurers to capitalise on new business this year,” says McIntosh. “Providers that understand what consumers need and communicate their offerings clearly will win the day when it comes to acquisition.”
And if those providers provide powerful omnichannel customer experience to build trust and, in turn, reduce customer churn likelihood, they will be leading the industry in the long run.
Want more Australian insurance insights? Download our 2023 In Brief report on the state of Australian insurance.