Social Media's Influence on Insurance Products
Preliminary research shows that Social media can play an important role in creation of new products. Below are few data points in this regard.
1. Pepsi's Mountain Dew DEWmocracy initiative involved giving consumers the power to lead product innovation. Through a video game, consumers were encouraged to create the next Mountain Dew product. The campaign resulted in the creation of Mountain Dew Voltage which, says Cooper, was "one of the most successful product launches in PepsiCo beverage history.
2. Procter & Gamble (P&G) has created a community of 600,000 mothers who help cocreate new products and become word of mouth advocates
3. As far back as 2008, over 60% of online US adults used the internet to research financial products such as student loans, brokerage accounts and credit cards. Of those, over 35% of them applied for these products online
4. 10% of individuals making between $75,000 and $100,000 a year, 9% of those aged 25 to 34, and 6% of men researched insurance policies on social media Web sites
5. When shopping for insurance, 35% of 25 to 34 year olds, and 30% of those earning more than $100,000, said they prefer the Internet to an agent.
On similar lines, social media should be able to influence creation of insurance products by involving the consumers as well as reducing the time to market and cost of launching a new product.
Let us see how this can be done. Take a look at the insurance product creation process. The process involves the following steps
· Product planning - Getting the new idea for the product.
· Business Analysis - Conducting feasibility study, market analysis, product proposal, test marketing etc.
· Technical Design -Marketing and actuarial activities, investment and accounting activities, IT activities, legal and Compliance.
· Product Implementation - Obtaining regulatory approvals, Designing promotion materials, Establishing IT systems for new products, Enabling sales force, Conduct activities and promotion for product creation.
· Sales Monitoring -Monitor the performance of the insurance product.
Social media can play a role in the following
· Getting the new idea for the product - New idea is usually obtained from
o Customers - Create dedicated community for your customers. Ask them what should be an ideal product. Solicit feedback about the insurance product they have bought
o Product development team, Company management, Home office staff - Communities, Discussion forums.
o Market research - Social media can be one of the source of market research.
o Competitors' products and activities- Social Listening.
o Consumer advocacy groups- Social listening.
o Business/insurance periodicals/Social sites.
· Test Marketing
o Use the community created during the idea generation to roll out the new product and listen to their feedback.
o Invite other consumers to join the community and get their feedback.
· Product introduction and Promotion
o Conduct advertising using social media.
o Conduct a contest about creating advertisement for this product.
o Ask the community members to write blogs /opinion about the new products at different forums.
o Encourage them to recommend them to their friends.
As an outcome, I can see that the use of social media probably will reduce time for new idea generation (reducing time to market) and achieve cost reduction. but more importantly it will create a product closer to consumer needs and also help in increasing the trust and transparency between consumers and insurance company.
Did you know that India's largest Life insurer (Life Insurance Corporation of India (LIC) has on average 18% first premium lapse ratio and one of the major reasons for this is the forced selling of policies without caring for matching of products with requirements of the policy holders.
This can be reduced if the product is closer to consumer needs and that is where social media can play an important role
What is your opinion?