By Suzanne Stevens, Executive Director for Marketing at BrightRock
A lot has been said and written about the impact of the Millennial generation on business.
Evidently, we are seeing this impact on a daily basis, with the increasing popularity of app- and geolocation-driven services, the rise of Blockchain technology and, of course, the surge of social media.
Many financial services providers are following the trends and utilising technology associated with digitally-astute Millennials, but are our marketing strategies really connecting with this generation?
The tide has turned
Since Millennials were born between 1980 and 1995, the digital insurance marketing service, Agency Nation, has been warning marketers from older generations that they cannot, any longer, picture 17-year-olds when approaching Millennials[i].
Current and potential policyholders between the ages of 23 and 38 have long finished school, and in most cases their tertiary studies. They have increasing spending power, which in turn, increases their insurable risk – something the South African insurance industry has not yet fully tapped into.
In a short 2017 survey KPMG conducted to gauge the traction of South African Millennials in the insurance industry[ii], and they found that 89.47% of their sample has life cover and about 50% have disability cover and funeral cover. Lower on the scale in terms of long term insurance, is dread disease cover, followed by credit card cover – which has the lowest penetration of 10.53%. Considering that 80% of their sample also has car insurance, it is very likely that KPMG’s sample is representative of a higher income group that has access to- and can afford life cover. With that said, the lower penetration of dread disease cover in this sample is indicative of the fact that not all their insurance needs are met.
Win the trust of Millennials
An important step towards signing up more Millennial policyholders, according to KPMG, is to meet their expectations by engaging with them on a breadth, scale and level of detail that will allow insurers to become more responsive to their needs.
In order to resonate more strongly with the Millennial customer base, KPMG recommends that insurers base their marketing strategies on six pillars: personalisation; managing, meeting or exceeding customer expectations; minimising time and effort; integrity and engendering trust; positive resolution and empathy.
Another mechanism to win the trust of Millennials is through User Generated Content (UGC), as Millennials – made cynical by the fall-out of the financial crisis – tend to trust people over brands. According to a report by Bazaarvoice[iii], Millennials have a much higher propensity to sign up for products or services when they are exposed to UGC recommending it. In fact, 84% of the Millennials who participated in this study, indicated that UGC influences their buying decisions, versus 70% of the Baby Boomers the researchers consulted. A further breakdown of these statistics found that 29% of the Millennials in the study will not complete their insurance purchases without UGC.
It is also interesting to note that more Millennials favour the opinions and recommendations of likeminded consumers (51%), rather than family and friends (49%). In other words, connecting with Millennials is about relatability and relationships.
The impact of significant life changes
Industry research has shown that consumers’ propensity to initiate an insurance purchase is far higher when they experience life-changing events, such as marriage or the birth of a child.
A 2012 study in the Journal of Risk and Insurance found that new parents were 40% more likely to buy life insurance cover. It also showed an increase in self-initiated life insurance purchases when starting a new job. These significant life changes not only impact consumers’ finances, but also their health, lifestyle and sense of identity.
Building personal connections
Financial advisers have long understood the importance of building personal connections with their clients. However, product providers tend to limit their messaging to the functional and financial aspects of their products, and the interaction between provider and consumer tends towards the factual and rational.
However, it is important to bear in mind that these are deeply personal moments that reshape the way we look at the world, and the way the world looks at us. The emerging field of behavioural economics has shown that people are far more driven by emotions and unconscious biases when making financial decisions than previously thought.
That is why insurers and financial advisers need to embrace marketing mechanisms that focus on personal experiences and even enable consumers to share their experiences with others like them.
- This article was first published in FA News on 1 February, 2018.
[i] How to sell insurance to Millennials – 7 tactics for the next ten years. By Ryan Hanley for Agency Nation. Published in 2016. Available at https://www.agencynation.com/how-to-sell-insurance-to-millennials/
[ii] Will the surge of Millennials challenge traditional insurance? A customer insights piece. By Tanja Ferreira for KPMG. Published in 2017. Available at https://assets.kpmg.com/content/dam/kpmg/za/pdf/2017/08/millennials.pdf
[iii] Talking to Strangers: Millennials Trust People over Brands. Published by Bazaarvoice.com in January 2012. Available at http://media2.bazaarvoice.com/documents/Bazaarvoice_WP_Talking-to-Strangers.pdf.