Consultants' Corner

Gaining Consumer Trust

Terry Golesworthy
Insurance Experts' Forum, October 24, 2011

Recently I have spoken at a number of insurance conferences and with industry executives about social media, and the most common question I get is: “What can we do with social media?” Executives admit that it could be big but are struggling to work out what problem it solves, if any. As a result, the action plan is to host a company Facebook page, approve a minimal staff budget and secretly hope that it all blows over.

Social media might prove to be a fad, but if so, it would be a loss for the industry. Consumers are now inclined to seek advice from family, friends and even complete strangers rather than insurance companies, but social media can address this fundamental problem of trust – or lack thereof.

According to a recent study commissioned by Pitney Bowes Business Insight and conducted by the ESCP Europe Business School, only 48 percent of consumers in the United States and UK trust their insurance provider. One interesting conclusion, however, is how easy it might be to address the problem; according to the study, respondents believed that improving customer communications would have the greatest impact in terms of developing trust.

"One of the major struggles for the insurance industry is commoditization and customer churn," notes Bill Sinn, strategic marketing director, Pitney Bowes Business Insight. "The key to addressing these issues is creating a dialogue with customers that is consistent, reliable and creates a relationship that extends beyond the policy-renewal date."

Insurers typically have a distant relationship with customers, with interaction often restricted to a handful of stressful occasions—a claim or policy renewal—but social media has the ability to change that. It provides the means and opportunity for developing ongoing dialogue and providing information, thereby creating multiple touch-points during the period.

Insurers struggle with how and what to communicate using social media, but that illustrates the lack of a clear strategy and vision. If the objective is to improve customer retention, then recruitment of Facebook fans and Twitter followers would focus on customers. Content strategy would be to deliver information that your existing customers would find useful. As an example, we know content regarding natural disasters is highly appreciated, especially if it is timely and helpful. Community involvement programs resonate as well as dialogue with specific groups of customers. State Farm has a program to engage with Hispanic customers, MassMutual with GenYs and Sentry with Motorcycle customers. Content should not try to sell policies, but rather, it should deepen the relationship with those that already have policies.

The strategic objective should be to build brand awareness, develop a sense of trust and customer loyalty. Consumers want that interaction, but due to the increase of online research and self-service, the personal interaction with an agent has been severed. Developing greater trust and loyalty is a critical stage to get to the second, and arguably the biggest, benefit of social media. As previously stated, consumers seek advice from family, friends and even complete strangers. Social media is a series of interconnected networks of people that know and trust each other. To generate referrals and recommendations, you need to enter the networks and the easier point of entry is your existing customer. Unfortunately, this goes both ways, if they do not trust you, this knowledge might flow even more quickly as a recommendation.

Terry Golesworthy, president of The Customer Respect Group, has covered technology issues and innovations in the insurance industry for many years.

Readers are encouraged to respond to Terry using the “Add Your Comments” box below. He also can be reached at terry@customerrespect.com.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

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