Season 3 Episode 10
Iain Steeves of Farmers Insurance on Customer Acquisition in a Digital World

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RESOURCES   ❯   The Marketing Rapport Podcast

Episode Summary

In this episode of The Marketing Rapport, Tim Finnigan speaks with Iain Steeves, Senior Managing Director at Farmers Insurance, about the evolving landscape of insurance marketing. Iain discusses the challenges of customer acquisition in the digital age, emphasizing the need to balance profitability with data-driven growth strategies. He highlights the increasing importance of meeting customers where they are, particularly in the digital realm.

Iain explains how data insights provide a competitive edge by enabling insurers to understand customer profiles and preferences early in the shopping process. This understanding allows carriers to target ideal consumers and personalize marketing efforts effectively. He also shares how Farmers Insurance has successfully leveraged data and technology to improve conversion rates and reduce acquisition costs.

The conversation also touches upon the importance of compliance in a rapidly changing regulatory environment. Iain emphasizes the need for vigilance and proactive measures to protect consumers and businesses. He concludes by discussing emerging trends in the insurance industry, such as the growing impact of weather patterns on homeowner’s insurance and the increasing sophistication of consumers.

Guest-at-a-Glance

Key Insights

• Data’s Power in Insurance Marketing
  The insurance industry is undergoing a significant transformation, driven by the abundance of available data. Leveraging this data effectively is no longer a luxury, but a necessity for survival and growth. Insurance companies can use data insights to understand customer profiles, preferences, and behaviors, enabling them to target ideal consumers and personalize marketing efforts. This data-driven approach can significantly improve conversion rates, reduce acquisition costs, and ultimately drive profitability in a competitive market. By understanding data points like how consumers interact with online forms and the speed at which they receive information, insurers can optimize their strategies and gain a competitive edge.

• Meeting Customers in the Digital Realm
  The digital revolution has fundamentally changed how consumers interact with businesses, including insurance providers. Consumers now expect to be met where they are, which is increasingly online. This shift requires insurance companies to adapt their distribution strategies and embrace digital channels. While traditional channels like exclusive agents remain important, a strong direct-to-consumer online presence is crucial for success. This includes providing online quotes, facilitating online purchases, and offering seamless digital experiences that cater to today’s tech-savvy consumers.

• The Evolving Insurance Consumer
  Today’s insurance consumers are more informed and discerning than ever before. They are actively researching options, comparing prices, and seeking value beyond just the premium. They are also becoming more aware of factors like deductibles, optional coverages, and the overall value proposition offered by different carriers. This shift requires insurers to move beyond simply competing on price and focus on building trust, providing personalized experiences, and demonstrating the value they bring.

• Compliance as a Strategic Imperative
  In an increasingly regulated environment, compliance is not just a checkbox but a strategic imperative for insurance companies. Regulations like the Telephone Consumer Protection Act (TCPA) require strict adherence to consumer consent rules. Implementing robust compliance measures, such as using technology solutions to track and manage consent, is essential to avoid costly penalties and protect brand reputation. By prioritizing compliance, insurance companies can build trust with consumers and demonstrate their commitment to ethical and responsible business practices.

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Episode Highlights

The Importance of Brand Differentiation
[00:07:00 – 00:09:00]

In the initial stages of the insurance buying journey, consumers often prioritize price and coverage over brand. However, as they progress through the funnel, brand differentiation becomes increasingly important. Iain emphasizes that insurers need to demonstrate their unique value proposition and build trust with potential customers. This involves crafting compelling narratives, showcasing expertise, and integrating into the fabric of the consumer’s life. A strong brand identity helps insurers stand out from the competition and establish meaningful connections with customers.

“That’s where you separate yourself, that’s where you build value, that’s where you tell your story. That’s where I think you start to become more of a fabric of that household. These are all the things that I can do for you.”

The Impact of Digital Acquisition on Traditional Agents
[00:06:00 – 00:07:00]

The rise of digital acquisition channels has presented both challenges and opportunities for traditional insurance agents. While some agents may have been hesitant to embrace digital, it has become essential for survival and growth. Iain notes the shift in mindset among agents who now recognize the importance of incorporating digital strategies into their business models. This integration allows agents to reach a wider audience, scale their operations, and better serve the needs of today’s digital-first consumers.

“And I can tell you that has been the single biggest change because we have distribution partners, agents, district managers, those who have been in this industry for decades and never would have thought that they would’ve entered into an agreement to scale their business through digital acquisition.”

Balancing Quality and Quantity in Customer Acquisition
[00:10:00 – 00:12:00]

While acquiring a large volume of leads is important, insurers must prioritize quality over quantity. Not every customer is a good fit, and focusing solely on volume can lead to unprofitable growth. Iain emphasizes the importance of utilizing data and analytics to identify and target ideal customers. This involves setting clear customer profiles, segmenting audiences, and implementing rigorous underwriting practices. By focusing on acquiring the right customers, insurers can improve profitability and long-term sustainability.

“Every customer can be a good one, assuming that you have your pricing and your segmentation and your territory work, your rating factors all dialed in. Every carrier is going to have some blind spots. You need to have some serious checks and balances on the front end.”

The Shifting Landscape of Homeowners Insurance
[00:23:00 – 00:26:00]

The homeowners insurance market is experiencing significant change due to factors such as extreme weather events, rising costs, and evolving consumer expectations. Iain highlights the need for insurers to diversify their portfolios and adapt to the changing risk landscape. This includes carefully evaluating market share concentrations, adjusting pricing strategies, and educating consumers about the factors that influence premiums. The increasing frequency and severity of catastrophic events require a proactive approach to risk management and pricing.

“The changes coming in the homeowners line of business. The weather patterns and sort of the extreme storm environment and sort of the catastrophe environment are actually changing the way we’re thinking about homeowners insurance.”

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Top Quotes

[00:06:00] Iain Steeves: “We always say we want to meet the customer where they want to be met. Five years ago, we thought that meeting the customer was literally meeting them face-to-face at a trade show, or sponsoring some sort of event. Now, in order to win in the insurance industry, you truly have to meet customers where they want to be met, which is often through a digital acquisition channel.”

[00:07:00] Iain Steeves: “And I can tell you that has been the single biggest change because we have distribution partners, agents, district managers — those who have been in this industry for decades — and they never would’ve thought that they would’ve entered into an agreement to scale their business through digital acquisition. It’s table stakes for survival now.”

[00:21:00] Iain Steeves: “And when you’re new at [digital marketing], you’re going to suffer a little bit at the outset, and then your economics are way out of whack. We’re asking our agents to invest; we’re investing from the enterprise side as well. That investment is not returning the best.”

[00:09:00] Iain Steeves: “That’s where you separate yourself. That’s where you build value. That’s where you tell your story. That’s where you become more of a fabric of that household.”

[00:11:00] Iain Steeves: “Every customer can be a good one, assuming you have your pricing, segmentation, territory work, and rating factors dialed in.”

[00:26:00] Iain Steeves: “But what I would say is the carrier’s need for rate is outpacing the consumer’s expectations. Consumers are getting way savvier in understanding what separates the carriers.”

[00:27:00] Iain Steeves: “So, savvy consumers… and the frequency with which we need to protect against exposure on the home side will be something we’ll have to look out for in the next half-decade or so.”

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