Actions have consequences
FAnews attended an RGA Client Seminar, at The Venue at the Houghton Hotel, where key industry issues in the life insurance sector were discussed.
Matt Battersby, Chief Behavioural Scientist, at RGA UK, explained why more people don’t buy life insurance, how we can use persuasion techniques to tackle this problem and whether consumer access to new information, such as genetics tests, will change purchasing behaviour.
Cutting the middleman
“Life insurance was sold by agents, but advisers are getting older and the market is shrinking. There are mis-selling issues, annoying sales techniques etc. And now that we have gone digital, we are cutting the middleman and going straight to the client,” emphasized Battersby.
“Buying life insurance is not natural human behavior. It is, however, not a new concept and has been around for decades. It is hard to sell because it goes against human nature. Not everyone gets up and thinks about death and disability. Its not really something we want to think of,” said Battersby.
“The digital world, in this instance, is misleading. Digital transformation is at the top of most carriers’ agendas. But as life insurance sales move from the adviser to online channels, are we forgetting the science of persuasion?” Questioned Battersby.
Role of persuasion
“It is easy, for example, to sell candy. Candy tastes nice. It is full of sugar that our body craves, and we have to use our willpower to stop ourselves from overindulging. If you want to sell me more candy, you just need to make it easy to buy and hard to avoid. You can ensure the packaging is bright, bold and colorful so that it grabs my attention and makes it hard to ignore my cravings. You can place the candy by the supermarket checkout so that it tempts me while I’m waiting to be served. It is much harder to sell sprouts. Although they are good for you, sprouts just do not taste good to many people. We will not sell many more sprouts just by making it easier to buy sprouts. Wrapping them in beautifully colored packaging and placing them by the supermarket checkout is unlikely to lead to a dramatic increase in sales. Few people would find themselves unable to resist impulse-buying a pack of sprouts,” said Battersby.
“It is both fortunate and unfortunate that selling life insurance is much more like selling sprouts than selling candy. Fortunately, like sprouts, life insurance is good for you. It protects families from losing their homes and livelihoods and enables people to leave a legacy to future generations. Unfortunately, for most people, life insurance does not taste good. We do not crave it, and we do not have to fight an impulse to stop buying more of it,” added Battersby.
“So why, when we are creating digital distribution channels, do we assume that selling life insurance has suddenly become like selling candy? All the focus is on making it as easy as possible to buy life insurance by reducing friction. This is undoubtedly important, but it is not the whole picture,” he continued.
Part of the reason, Battersby said, is that we are looking to the wrong industries for inspiration. I have heard countless speakers at industry events talking about what we need to learn from businesses such as Amazon and Netflix. But Amazon and Netflix sell very different products than we do.
Persuasion is not reducing friction
“People who build digital systems are very good at reducing an activity to its core. They can identify waste and unnecessary steps to such an extent that experiences become so simple they are almost frictionless. But there is a danger to this approach: What digital designers see as friction may actually be persuasion. What might seem unnecessary may actually be core,” said Battersby.
“A technologist might look at a server in a restaurant and think: “We don’t need a person to do that job; we can automate that.” It is only a few months later when sales, return visits and customer reviews are down that they realize the server does more than take your order and deliver your meal – the server welcomes you, makes you feel at home and signals the status of the establishment. In automating the insurance purchase journey, we have forgotten that financial advisers and life insurance salespeople do more than facilitate a purchase – they persuade the customer to make the purchase,” he added.
“We all know the oft-repeated adage that “life insurance is sold not bought.” But we seem to forget that when creating digital insurance platforms. So how do we sell more life insurance online? What does persuasion mean? What is clear is that while many people have a problem that life insurance can solve, most do not realize they have this problem. To sell life insurance online, we must awaken the need for it – just as advisers and salespeople do,” he continued.
Awakening the need for insurance
Prompting awareness of a person’s mortality and morbidity can awaken a need. Traditionally, we have accomplished this by asking difficult and even disturbing questions: “Your family depends on you. Who would they depend on if you were no longer here?” “If you had died this year, would your family have been able to afford to keep living in your house?”
These questions, Battersby said, provoke an instinctive emotional response. For some, the answers will be comforting: “I have R1 million in the bank, so my family will be fine.” But for many the answers are worrying: “I don’t know how they’d cope.” The questions awaken a need people did not realize they had. They become anxious and determined to solve the problem they are now very much aware of.
“The challenge is to effectively replicate this approach online. Can a Facebook or Google ad grab someone’s attention and make a strong enough connection for these types of questions to work? Or will people react negatively to being asked such questions in this context? It may be that digital channels need a different approach, one that matches the context and the mood of people as they interact online. Carriers and startups are focusing on using more positive messages and storytelling techniques to engage customers. But too often these approaches lack real emotional punch – to awaken the need, we might need to shout rather than whisper,” he said.
“In the persuasion journey to buying life insurance, we need to identify a problem and need, awaken a need, present ideas and solutions. We have to provide simple illustrations, tell the price and remind the client of the problem. We need to start creating products, platforms and communications based on how people really think and behave rather than how we think they should. If we continue to design our digital journeys for the ideal person, in effect we are designing them for no one,” concluded Battersby.
Writer’s Thoughts:
The era of consumer engagement in insurance is well underway, and now is the time to seize this exciting growth opportunity. The winners will be those who best connect products and services with the needs of consumers and make the insurance buying experience as natural and smooth as possible. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts myra@fanews.co.za.
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