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The impact of digital as a medium is no longer confined to the affluent pockets of major cities. The explosion in smartphone sales and broadband access has led to the internet being adopted as a lifestyle accessory, a source of knowledge and a viable (in many cases preferred) mode of shopping. This change can be traced back to the big boom in online travel, a sector that was once dependent on agents. The shift has revolutionised the entire online buying experience - bringing in convenience, promptness and in many cases, better value. Although this experience is yet to replicate itself across other industries, the internet serves as a serious alternative to the traditional purchase modes in many other sectors - electronics, books, BFSI products, apparels, utilities etc.
The pace of shift can be gauged from the nature of the goods/services being offered. When the difference between online and offline in terms of the product offering is lower - or when there is commoditisation - price and convenience dictates the ultimate buying decision. This is usually where online wins. Most customers enjoy their first online purchase experience because they "get what they see". Insurance is one such product category that can benefit from this trend.
Insurance companies are exploring cost-effective modes of distribution. Though the online channel does not contribute significantly to the total sales pie at this point, this mode of distribution is expected to gain solid momentum in the coming years.
According to Digital@Insurance-20X By 2020, a Google-BCG report, by 2020, six per cent of all insurance sales in India will occur online. At this point, life insurance sales contribute about Rs 300 crore, motor insurance another Rs 250 crore, while other insurance lines such as health and travel make up approximately Rs 150 crore of the total insurance pie. The more interesting figure pertains to the influence of digital on sales. Another simple signal that can be relied upon is the number of search queries: Life insurance related queries have grown by over 450 per cent over the last five years. It is estimated that 75 per cent of the business will be attributed to insurance's digital footprint in 2020.
This is in line with what we are seeing in some developed markets. In a UK consumer research (BCG analysis, Datamonitor), 51 per cent of the consumers surveyed said they bought their most recent policy through the internet. In a Customer Sentiment Survey by BCG in eight countries (the US, Japan, Germany, France, the UK, Italy, Spain and Australia), we see that 70 per cent of insurance owners either prefer remote, mostly digital, or a hybrid model of interaction.
I will go as far as to say that social media engagement and quality content can subsidise your marketing effort and can become the lead nurturing outlet that a 'push' industry like insurance needs. To help your customers shift from the agent-assisted model to your most profitable channel, you need to be present where the customer is and handhold her when she needs you. This means companies have to move beyond a focus on pure sales to developing an ecosystem, which starts from capturing an unaware prospect's attention, convincing her to buy and ends with recommending others.
This will not happen overnight. It involves a gradual coming together of the traditional and the electronic across the value chain. Ultimately, the organisation that is able to offer the best experience to the customer is likely to survive and win.
By Sanjay Tripathy, senior executive VP & head, marketing, products, and digital & e-commerce, HDFC Life
