Long before the phrase “attention economy” entered the corporate vernacular, a customer’s attention was a valuable commodity. Providers from all industries compete for attention wherever customers are online. Staying visible is the name of the game, but it’s getting more difficult as digitalization develops, bringing with it an onslaught of firms from every field fighting for consumers’ limited attention.
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Every year towards the end of the year, the conflict becomes more intense. Customers were enticed to take advantage of promotions and offers over the Christmas season by special events such as Black Friday, Cyber Monday, and Singles’ Day. Meanwhile, rising power and gas rates have caused many consumers to consider switching utility suppliers. In Europe, the insurance stand renewal season heated up in November, with radically varying rate hikes in different parts of the market, providing an unclear foundation for 2022.
As a result, the attention economy’s importance continues to grow—and insurers will continue to compete for clients’ wandering gazes.
Auto insurance in the spotlight: Tough competition in a crowded industry
The car insurance business, in particular, is suffering from a lack of client focus. While many other insurance goods continue to profit from the pandemic’s digitization drive, internet search rates for vehicle insurance products have dropped by double digits. According to Google search patterns, German interest in car insurance in November 2021 was barely 30 to 40% of that in November 2019, despite the fact that 80% of Germans continue to use their automobiles at least once a week, just as they did before the COVID-19 epidemic.
Parallel to this, the market is shrinking—and not merely as a result of the mobility change. New car registrations are down 25%, thanks in part to the continuing semiconductor problem, and auto insurance prices are down as much as 8%. Reduced claims during the COVID-19 epidemic helped the company’s bottom line, but it also made price hikes harder to achieve. As a consequence, vehicle insurers will lose around €250 million in premium volume during the 2020 changeover season.
The level of competition is increasing.
Traditional players are increasingly establishing their internet presence. According to a McKinsey investigation, just five conventional multichannel car insurers were among the top 20 internet search hits in 2017. The total number of insurers today stands at 12. Meanwhile, new digitally savvy businesses have joined the market. Some automakers have already adopted “embedded insurance” in other markets, while major software firms and merchants have started to investigate entering the insurance market.
In particular, the vehicle insurance market is getting more congested and politicized. According to a McKinsey research, five underwriting providers accounted for roughly half of the entire profit in 2020, with another 70 contributing for the remainder. Despite significant marketing efforts, ten underwriting players made no money.
How can businesses attract and keep customers?
More marketing spending isn’t the solution. This is especially essential since increased sales expenses have an impact on the price in the medium term, which is the key reason consumers switch insurance in 67% of instances. Due to law, so-called price walking (low-cost beginning offers that grow in price over time) has become more difficult for businesses to undertake. This is true in Germany for energy businesses, and it is also true in the extremely competitive British insurance sector.
What can businesses do? There are various possibilities:
- Budgets should be managed more wisely. Every dollar spent should be allocated as effectively as possible to the most appealing customer profiles (those with the greatest lifetime value, for example), as well as the most effective tactics. Smart bidding and seeking to talk with clients early in the process may be beneficial, and in our experience, they may create a 30% and 10% increase in efficiency and growth, respectively, with the same amount of expenditure.
- Make changes to the goods. Intrayear main due dates and extended periods have long been tried by several providers. In reality, the German Insurance Association (GDV) estimates that 16 percent of all motor insurance is already done on a year-to-year basis. When it comes to comparison websites, who bundle their marketing expenses throughout the year-end renewal season, this technique might be lucrative. Those year-end expenses have also risen dramatically in recent years. Modern telemetry methods also allow for the creation of new client categories.
- Take advantage of leads on a regular basis. Visibility is only beneficial if it results in more clients signing contracts. According to a study by Similarweb, digital pioneers’ websites attract more visitors, who remain three to four times longer and click away from the home page just half as frequently as visits to non-pioneer sites. After that, omnichannel providers may follow up offline, which requires strong lead management in terms of technology and operations.
- Make use of novel ecosystem techniques. In the long run, providers may promote awareness in novel ways, such as targeting motorists when they buy a vehicle, change a tire, fill up at the gas station, or park. Ecosystem services improve customer loyalty as well, and the influence of this strategy will go far beyond 2022.
Visibility will continue to be a key factor for success in the future, and not only for European car insurers stand. In the digital environment, companies who can put themselves in front of consumers’ eyes and provide extra value will succeed.