By Stuart Hyman January 9, 2020
The
“experience economy” is here. It’s fundamentally changing how companies go to
market, influence their buyers and engage people throughout the customer
journeys.
In this
brave new world, experience trumps all else — consumers’ loyalty and dollars go
to experiences, not products. Indeed, a recent survey conducted by Momentum
Worldwide found that 76% of customers prefer to
spend their money on experiences rather than products.
This
holds especially true among Generation Z – those born after 1995 – a
digital-native cohort that expects businesses of all stripes to engage them
with relevant, personalized and instantaneous digital content.
For
insurers seeking to win over Gen Z consumers, that means seizing on innovation
to differentiate themselves, and embracing the latest in technology to put
their customers at the center of everything they do.
Here’s
how insurers can get the formula right and gain the essential insights they
need to provide Gen Z consumers what they want. By taking this focused
approach, insurers can not only boost their success with younger customers, but
enhance their understanding of and appeal with customers of all ages.
Gen
Z’s Uniqueness
Members
of Gen Z want to buy what they want, when they want and how they want. This
group is totally online, mostly mobile. Immediacy is much more important than
the price point for Gen Z. Car ownership is less important to them than it is
to older generations, and many are renters instead of homeowners. Life without
a mobile phone is virtually impossible for them – in no small part because they
came of age well after the first iPhones hit the market.
Understanding
and accepting these new behavioral traits is a critical ingredient to being
successful in terms of customer retention, customer attraction and becoming an
organization that each cohort trusts and feels valued by.
The
Impact On Insurers
Will
Gen Z change the paradigm of the insurance industry? The evidence seems to
suggest that Gen Z will only engage in experiences that are simple, digital and
real-time, and offer the personalized touch. It’s difficult to envision Gen Z
not insisting on buying items when they want and how they want, like the
overwhelming majority of their peer group.
Don’t
be surprised to see new insurance “hubs” for Gen Z that are meaningfully
branded, allowing customers to buy how and when they want.
The car
industry is starting to adapt to evolving expectations. Leasing companies and
manufacturers are happy to sell the same car 1,000 times, via car-sharing
schemes, rather than selling 1,000 cars as rentals. Personal contract purchase,
a type of hire purchase vehicle finance for individual purchasers, is
quickly becoming the norm. Will we see the same for protection, where a policy
is live for a period and then dormant until the need arises to make it live
again, with risk assessment wholly digitally-enabled?
The technology
exists and insurers have enough streams of data to mine to adjust to Gen Z.
Tomorrow’s insurance leaders will leverage both to deliver a truly
personalized, meaningful and valued customer experience and engagement strategy
for each cohort, using customer insights.
It goes
without saying that adjusting for Gen Z does not mean leaving the other
generations behind. Smart insurers will be able to offer the right experience
for all customers, as opposed to forcing Grandpa to navigate through a complex online
experience.
This
approach will necessitate channel diversification – insurers require products
tailored to each cohort, but also the agility and insights to adapt to
customers as they age and adapt (and as technology evolves).
Here
are three other approaches that will help insurers.
1. Insurers
should view this new generation as an opportunity to better empower all of
their customers, making them better informed and helping them achieve better
outcomes.
2. Companies
can offer simple and transparent products that can be modified to reflect the
basic reality that people’s needs can and do change throughout their lives.
3. Insurers
must use better customer data to inform and develop more flexible solutions
that allow customers to flex across multiple covers throughout their lives.
Insurers
who use these strategies can zoom toward Gen Z.
Stuart
Hyman is director of insurance practice at Sapiens. Stuart may be contacted
at stuart.hyman@innfeedback.com.
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