Best's Review

AM BEST'S MONTHLY INSURANCE MAGAZINE



Risk Adviser
Meeting Demands

Segmentation and personas research and data show life insurers how customers want to be reached.
  • Patrick Garrett
  • May 2020
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Understanding the consumer's purchasing journey is no longer a luxury for insurers in today's market. It is a necessity. Carriers need to step out of the box when it comes to the ways they engage with consumers, who are looking for simpler, more personalized ways to find and buy insurance products. These changes are creating a novel life and health insurance ecosystem where effective personalization and segmentation are becoming vital to success.

Customer segmentation has emerged as a key differentiator for insurers. Segmentation is not new, and companies have long used it to analyze their customers by categories including age, gender, occupation and income. But today's sophisticated algorithms take segmentation to a new level. They are driven by artificial intelligence and the newest thinking in data science.

These new algorithms are increasingly granular. Specific correlations and segmentations let companies group customers by individual attitudes, shopping and buying behaviors and motivations, and existing and potential barriers to purchase. For example, the retirement market can now be segmented by age, job tenure, job satisfaction, propensity to save, and life insurance product preference. Even financial behavior and literacy can be factored in.

Harnessing Digital Data

Digital behavior—that is, how customers interact with and respond to digital marketplaces—has also become an effective way to segment customers.

Every time a customer views a product webpage, adds an item to a virtual cart, clicks through to look at product features, scrolls away, or suddenly leaves the point of purchase, they are painting a digital picture of who they are as a shopper and buyer.

Customer demand for personalization is leading insurers to offer new options tailored to buyer personas. What are buyer personas? Think of personas as composites built using existing client profiles, preferred prospect profiles and market research. Personas are used to enhance product design and give companies insight into the wants and needs of the customers they serve—or want to serve in the future.

This approach often incorporates psychographic data for more reliable insights into what makes a customer tick (and what might convince them to buy). It also enables companies to develop multidimensional profiles that provide a tailored marketing experience for each customer segment.

Rising to New Challenges

The service standards customers expect from any company continue to be high and they are rising. Customers today want more than value. They want better offerings. And they're willing to share data if it leads to products that meet their specific needs and can be bought on their preferred channels.

For insurers, the strategy of developing an omnichannel sales framework is gaining traction. The reasoning is simple: Segmentation and personas provide research and data that show exactly how today's customers want to be reached.

Additionally, as more and more businesses move toward this model, personalized experiences will become normal, not exceptional. And industries that don't embrace this fact risk being left behind.

What is evolving for life insurers today is an ecosystem of interconnected services, designed to attract customers and strengthen carrier loyalty. Building such an ecosystem is becoming a vital part of our industry's ongoing transformation into a business that adapts quickly and organically to evolving customer needs.


Best’s Review contributor Patrick Garrett is vice president of digital distributions at RGAX LLC. He can be reached at patrick.garrett@rgax.com.


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