Mkt4eC: Insurance is a highly rational purchase. What are the main challenges when it comes to selling these types of products online?
“Price simulation, human contact and the user experience are some of the key challenges.”
O.G.: There are several challenges. Some are purely technological and therefore solvable. The main one is price simulation: since the price depends on a set of variables, it’s calculated based on the information provided by the user. The challenge isn’t just about setting that price, but about how prices are modeled during the quoting process, based on rate tables and discounts. Online insurance pricing is a key moment of truth, where the customer “strips down” by handing over a significant amount of information—even if anonymously. Companies need to be agile enough to adapt and personalize pricing based on the segments they want to target, since they rarely operate under an undifferentiated strategy.
That said, while it’s a significant hurdle, pricing hasn’t been the biggest one. Even though the major insurance companies now offer fully online purchasing for certain policies (car insurance, for example), customers still feel the need to speak to a person. There are purchase blockers that need to be “broken” with a human voice—whether over the phone, through video chat, or in person—such as doubts around coverage. A poor insurance decision can have serious, delayed consequences for both the company and the customer.
Lastly, one of the challenges is the overall user experience. Lengthy application processes or sector-specific jargon that’s not very user-friendly don’t exactly make it a highlight of anyone’s day. It’s telling that, when starting a quote process (whether or not it ends in an online purchase), the first thing you’re told is how quick it will be (“get your quote in under two minutes,” for instance). Usually, the only thing we want to be over quickly is a trip to the dentist.
And this is a challenge that will never be fully solved—it’s a constant effort of ongoing optimization.
Mkt4eC: In your presentation, you mentioned that only 5% of policies are sold online. What’s holding back the insurance sector when it comes to eCommerce?
O.G.: First of all, that 5% figure (which some studies stretch to nearly 10%) isn’t inherently good or bad. It all depends on each company’s distribution strategy. Naturally, for a direct-to-consumer insurer, the goal is to grow that percentage, while also maximizing conversion with a controlled acquisition cost and aligned renewal rates—these last two are common goals across the board. Other insurers, meanwhile, have alternate sales channels in place to absorb the demand that doesn’t convert online. These companies often have higher structural costs (branches, salesforces, etc.) that inevitably get reflected in their pricing.
Some companies estimate that in ten years, this 5–10% figure in Spain could climb to 50%. Time will tell, but if that projection does come true, many insurers will need to undergo a deep restructuring, since divesting from legacy structures is a complex and high-stakes operation.
Another reason behind this low percentage is purely behavioral: users approaching their renewal date often want to compare prices, and many times, the quotes from competing companies are used as leverage with their current provider. If we’re happy with our insurer, we try to stay with them—but in a climate where consumers are rethinking all their expenses and looking to cut back, insurance isn’t immune.
In short, challenges and barriers go hand in hand, so offering multiple channels is essential. Still, these channels need to be capable of serving the three key dimensions of interaction: information, relationship, and transaction, along with the experiential layer. These four layers represent the T.I.E.R Digital Framework, a universal model I developed to analyze any website or app.
Mkt4eC: Purchasing insurance also requires a fair amount of user data. How do you avoid losing users who land on your registration page?
“Each company constantly optimizes its pricing journey to minimize drop-off.”
O.G.: A user who starts an online quote has a clear objective: get a price simulation for their policy. They understand there’s a “cost” to getting that quote—in time and effort, by filling in forms. So there’s an upside: this user is already somewhat committed to completing the process. From there, each company works to constantly optimize its quoting flow to minimize drop-off—or, if that’s unavoidable, to redirect the user to another channel. To reduce drop-offs, there are several factors to consider:
- Wording of questions: Without losing the precision required, it’s important to phrase questions simply and in a way that’s familiar to the user. For example, don’t say “automobile” if people say “car.”
- Input method: If the answer can be clicked rather than typed, even better.
- Relevance: Don’t ask for anything that isn’t absolutely necessary to calculate the price.
- Help tooltips: Use selectively to clarify doubts, but avoid overloading the interface.
- Accelerators: Promotional incentives or discounts can help, especially if you’re trying to drive lead generation or close a sale.
Mkt4eC: The Spanish market has many insurance comparison sites. What sets your own eCommerce offering apart?
O.G.: Initially, the main value of comparison sites was to simplify the quoting process—giving users access to multiple prices with a single input. And they still do this part very well. However, comparisons rarely capture the full picture when it comes to balancing price with coverage.
These tools emphasize price and only lightly touch on coverage. To get the full picture—bearing in mind that a policy includes several elements and can come with added value—you still need to visit the insurer directly, via their website or a phone call. There are no “cheap” or “expensive” prices as such—you can’t lower a price without also reducing value.
That’s why users should understand that a comparison site is just an intermediary. The actual knowledge lies with each insurer—they’re the ones providing the service, carrying the risk, and interacting with the customer. Being listed on a comparison site—even with detailed product info—is essentially a “Full Monty” (if you’ll forgive the analogy), where everyone lines up to showcase their main asset: price. But there’s more to it than that, and it’s on the company’s own platforms (website, landing pages, etc.) where they can and should deploy the full story of their product: the reason why, testimonials, contact and sales channels, and so on.
Mkt4eC: RACC has a very active presence on social media. What’s the company’s approach to investing in social? What value do these platforms add when purchasing insurance via the RACC website?
O.G.: RACC isn’t just an insurance company—it offers services to its members, the most emblematic of which is roadside assistance (no matter the vehicle), widely considered premium in the market. Our current social media strategy focuses on strengthening our relationship with members and customers. That said, our Social Media Manager would be the best person to go into detail on this.
Mkt4eC: Have you invested in digital marketing to promote your campaigns? What works best?
“We’ve boosted our presence on comparison sites and launched acquisition campaigns.”
O.G.: It’s worth highlighting that RACC Seguros is relatively new. It launched just over three years ago; before that, RACC acted as a broker and was actually Spain’s largest insurance brokerage. A newly launched insurer spends its early years fine-tuning premiums, among other things—since there’s no claims history to draw from. That’s why our initial digital efforts focused on optimizing the quoting process and pricing adjustments. In 2013, we expanded our presence on comparison sites for major insurance products and began acquisition campaigns. In 2014, we plan to increase investment in digital marketing—both in traffic generation through content marketing and in acquisition campaigns via search, affiliates, and more.
Mkt4eC: And finally, how do you see the future of eCommerce in Spain?
“As marketers, we have to stay plugged in and keep our finger on the pulse.”
O.G.: Growth figures in Spain are clear and tangible, although there are certain product and service categories that are driving it. Personally, I don’t see a ceiling in sight—as long as technology keeps advancing and startups continue acting as incubators for ideas and projects that deliver value to the user. Combine that with changing consumer behaviors and you get a system of constant evolution.
Most of the big barriers have long since been overcome (“Will my order arrive?”, “What if the size doesn’t fit—how do I return it?”), including widespread acceptance of remote buying across all product categories—something Americans internalized long ago due to geography and population spread. It took us a while, but now it’s practically in our bloodstream.
That said, multichannel is still evolving—and must continue to do so: browse online, buy offline (or vice versa). I, as a user, decide how and when I move through the buying process.
We’re living in the age of the user, of the self, of hedonism taken to the extreme—combined with the us that defines social networks and all their facets: we connect, associate, protest, or act as lobbies depending on the moment. Users switch roles constantly, and that impacts eCommerce strategies. As marketing professionals—not just in eCommerce—we have to stay switched on and in tune with these shifts.
What adds a layer of uncertainty is the legal framework—how to regulate a market that, like any other, includes vested interests and lobbying groups (some of them quite visible). We’ll have to strike a balance between regulation and a free market, but we must remain agile and flexible because everything is in constant motion.
“In my view, the biggest challenge is for organizations themselves. They often lack the agility needed to adapt their internal structures to such a complex, changing environment.”
Does it still make sense to separate offline and online marketing teams? Is outsourcing eCommerce the right solution for everyone—and is it sustainable? Can we continue working in isolated functional silos? It’s clear that Operations, HR, Marketing, and every other area is affected by digital transformation. In this “playground” of company-customer interaction, the user has long since grabbed the joystick—and they’re now moving parts of our business we never imagined would be in their control.
Interview originally published on Marketing4eCommerce.
