Amazon.com pioneered a big data strategy and business model that defined the universe of selling direct, establishing it as a leader in online commerce and one of the world's most trusted brands. Surrounded by dot-com companies racing to score gold on the Internet, Amazon distinguished itself by committing to customer satisfaction and patiently investing time to collect vast amounts of data to enable data-driven intelligence and decision making. Similarly, insurers that are moving into direct distribution can benefit from a big data strategy that incorporates an Amazon-like approach to selling and servicing customers.
Through mobile, web, social media, the Internet of Things, devices, and sensor networks, the volume and variety of big data are growing at an unprecedented rate. In 2016, according to Cisco, an amount of data equivalent of every movie ever made will cross the Internet every three minutes. The tools to analyze this overwhelming amount of information are getting faster and more efficient, creating new opportunities for insurers, which will no longer have to rely on information from the past to assess the future. With the right data and analysis, insurers can more accurately predict the future based on the present and make decisions in real-time. So what can insurers learn from Amazon?
1. Build the big data repository through a market of shoppers with multiple needs.
In order to gather larger quantities of data, Amazon's strategy was to sell books close to cost in high volumes as a gateway to attract shoppers with a wide variety of interests. Bookselling was a means to building a wide customer base and finding out more about their needs and preferences. For P&C insurers, an example of a similar strategy might be found in the small commercial market, where there's a large population of one- and two-person businesses that have diverse needs and often shop for personal and business insurance products simultaneously.
2. Use big data to simplify the process of getting information.
Amazon's one-click buy button eliminated one of the biggest obstacles to completing an online purchase: the checkout process. We've seen that, in direct insurance sales, customers will fill in forms, but most of them do not have the patience for answering countless questions. They expect insurers to understand the value of using big data, including driving records and credit scores, to pre-fill their forms. Based on how people shop, today insurers will sell more if the process takes less time and meets the customer's expectation of simplicity.
[Previously from Attia: Going Direct: More Than a Portal]
Real-time data feeds are emerging that can pre-fill application details ranging from the age and square footage of a building to the likelihood of a flood or crime. Insurers can leverage these information sources to decrease the amount of information they request and speed up transactions.
3. Customize the experience.
One of Amazon's hallmarks is its product recommendation engine, which enables it to target a customer's varied interests to create a tailored shopping experience. The power of suggestion would work equally well in insurance. Using customer click-stream data and historical purchase data, insurers can offer recommendations on relevant products based on the consumer's or others' searches. For example, some insurance distribution platforms allow for recommendations of other products during the process based on data provided by the consumer, data that is pre-filled, or even data from the search itself.
4. Build trust through transparency.
When Amazon introduced its review program in 1995, businesses believed that the negative feedback from customers would deter sales and trust in the brand. Product reviews have since become the research tool of choice for consumers. Products with a few bad reviews seem more credible, and companies willing to share feedback seem more honest. Direct insurers should use big data tools to share feedback through their own channel, so consumers have one-stop access to the information. This demonstrates transparency while decreasing time spent hunting down reviews on social networks and websites.
5. Offer relevant information to keep in touch.
Reminder emails featuring the latest discount offers, wish lists, life event reminders based on purchase history, and birthday reminders are just a few of the tools Amazon uses to keep its brand top of mind with consumers. Insurers spend billions on advertising to connect with consumers, but today's customer touch points are often limited to claim management or renewal time.
The ability to segment customer data by factors like location or profession is another powerful tool that direct insurers might consider in their big data strategy. Targeting consumer segments with real-time information like weather events or crime reports can allow the insurer to connect with communities and deliver relevant information when it's most valuable.
Thanks to established direct distributors like Amazon, insurers have some examples of how big data and direct channels can be used to meet customers' needs, increase brand visibility, create trust, generate more sales, and strengthen customer relationships. But as Amazon's founder, Jeff Bezos, warned in his first letter to shareholders, "It's all about the long term." Insurers that will outlast their competition will be willing to explore new ways of using big data to achieve the goal of consistently satisfying their customers.
Tim Attia is the Executive Vice President of Sales and Marketing for Bolt and brings over 20 years of experience in the IT and insurance industry. Prior to joining Bolt, Attia was the Worldwide Vice President of Sales for Exigen Insurance Solutions, a San Francisco-based ... View Full Bio