Driving the Online Experience for Auto Insurance
Leaders and Lessons in a Highly Competitive Industry
While the rest of the economy may be languishing or worse, the auto insurance industry is holding its own, and more and more of its sales are coming directly or indirectly from the online channel. While perhaps surprisingly, the majority of auto insurance policies were still bought through a local agent in the six months ending March 2009, that number is down from nearly three-quarters of purchasers who bought five years ago. Conversely, those purchasing online have grown more than six-fold, from just 4 percent five years ago to 30 percent in the six months ending March 2009. 1comScore, “comScore releases 2009 Online Auto Insurance Report,” April 28, 2009
The online channel accounts for a large minority of auto insurance sales, but a resounding majority of buyers are researching and shopping for policies online. The Insurance Information Institute cites a forecast by Celent that “Web influenced” purchases are likely to grow from 70 percent in 2007 to 90 percent by 2011. 2The Insurance Information Institute, “Buying Insurance: Evolving Distribution Channels,” July 2009 Already, nearly two out of three auto insurance shoppers go online to get policy quotes. 3op cit
As the economy has worsened — or perhaps as the hordes of new car buyers who took advantage of the “Cash for Clunkers” program shop for new insurance — traffic to the insurance sites has significantly increased. Page views at Progressive jumped 48.2 percent, and GEICO jumped 40.4 percent in the three months ending August 31, according to Alexa. Reach for these two sites grew 31 percent and 12.3 percent, respectively, in the same period. Of the ten providers studied by Keynote in June 2009, eight experienced a double-digit spike in page views. 4Alexa.com, The Web Information Company, “Site Info”
How effectively are insurance companies competing for online customers? How well do those companies more closely associated with traditional channels fare against those who’ve pushed their brands toward the Internet? What are the key drivers that convert shoppers into buyers? In June, Keynote fielded a panel of 2,000 active online adults — ones who would consider purchasing a new policy — to actively shop and evaluate ten major provider sites. The results of this significant customer experience study provide a current portrait of the online auto insurance industry from the consumer’s point of view.
New Media vs. Traditional Values
The two companies that work the hardest to promote their online channel are also the two that finished at the top of the Keynote Customer Experience rankings. GEICO and Progressive virtually tied for the number one spot for overall customer experience, taking the top two slots for the second year in a row, and locking up the top spots for each of the indices that make up the overall CE index. Nationwide, Farmers, and Liberty Mutual make up a solid second tier in the rankings.
The big gainers in the Keynote study were Nationwide, which moved up from sixth to third place, and Liberty Mutual, which jumped from ninth to fifth place. (Farmers was not included in the 2008 study.) Allstate and State Farm experienced parallel down slides, with Allstate dropping from third to seventh place, and State Farm from fourth to eighth.
It is interesting to note that the biggest advertisers in the industry are GEICO, Progressive, Allstate and State Farm, which together account for more than 70 percent of the category’s nearly US $2 billion ad spend. Messaging for GEICO and Progressive heavily emphasizes direct purchase through the online channel. Allstate and State Farm, on the other hand, take a softer, brand image approach. These differences in approaches could be coming through in their Web sites as well, and possibly influencing Keynote panelists’ perceptions.
While it is not one of the heavyweight spenders, Liberty Mutual started a major play to gain share for its auto line in 2005, stepping up spending to support its carefully researched “Responsibility” campaign. This old-line company — it has been writing auto coverage since 1918 — in 2008 doubled its budget and morphed its ad campaign into a social media effort called “The Responsibility Project,” with its own Web site driven by user-generated content. In nine months of 2008, the site attracted nearly a million and a half unique visitors, and its films were viewed nearly a million times; in July of this year, it was selected as an Adweek magazine media plan of the year. 5Adweek, “The Adweek Media Plan of the Year,” June 14, 2009 Liberty Mutual’s unique synergy of old-line values, traditional advertising, and new media — and corresponding execution on its marketing site — apparently make a difference in brand perception for online insurance shoppers.
Nationwide, too, has refocused its advertising back to its traditional values-based roots, emphasizing comfort and security in these stressful economic times. It moved its $185 million ad account to a new agency this year, and returned to its tried-and-true “on your side” theme. 6Advertising Age, “Nationwide revives classic tagline in bid to show its comforting side; Insurer joins ranks of advertisers seeking to soothe amid recession,” April 13, 2009 At the same time, it is pushing its Web site toward the forward edge; of the ten sites studied by Keynote, only Nationwide and State Farm feature custom iPhone apps on their home pages.
Successfully Supporting Brand Image
Nationwide and Liberty Mutual aren’t just supporting their brand image in advertising; their Web sites are having a significant impact. In the Keynote study, Nationwide enjoyed a 30 percent jump in positive brand perception after panelists explored the site, the highest gain in the study. Liberty Mutual enjoyed the second-highest brand boost, with a 27 percent gain. Progressive was right behind with a 26 percent increase.
Interestingly, those companies with a longstanding, traditional image — Allstate, State Farm, Nationwide, Liberty Mutual, Farmers — were most highly associated with the brand adjectives “trustworthy” and “reliable,” and along with MetLife, “ethical.” Those companies that, based on their marketing, would be considered most Web savvy — GEICO and Progressive — were most closely associated with “friendly” and “high value,” and along with Esurance, “innovative.” Virtually across the board, these companies were able to successfully port their general market positioning, whether it’s tried-and-true or new and improved, to their online customer experience.
Farmers in the Market
They don’t have a cave man, or Flo, or good hands, but Farmers Insurance Group has something in its formula that made a positive impression on Keynote panelists. Farmers finished fourth overall in the customer experience index, and enjoyed a 20 percent gain in positive brand perception after panelists visited the site. It placed third overall in brand impact, behind online market leaders GEICO and Progressive. Farmers.com does not feature any television commercials, and it gives equal weight on the home page to “Get a Quote” and “Find an Agent,” a hedging of bets that does not seem to work against it. It holds its own with the market leaders in overall site satisfaction, and places with the leaders in the brand adjectives most associated with more traditional companies, including trustworthy, reliable, helpful, and ethical. The auto section of its site is among the simplest and most straightforward of the studied group. While there is no shortage of information, it is tightly organized. Consequently, panelists spent less time browsing to accomplish their assigned tasks than almost all the other sites.
Farmers would do well to port some of its best practices to the site of 21st Century Insurance, which it bought from the nearly failed American International Group in July. The acquisition made Farmers the third largest U.S. auto insurance provider. 7Los Angeles Times, “Farmers Insurance to slash workforce at 21st Century unit in Woodland Hills,” by Marc Lifsher, August 28, 2009 But in the process, Farmers also acquired a Web property that could qualify for a bailout. 21st Century finished dead last in the overall Customer Experience index, and in all the component indices that make it up.
Product Satisfaction Drives Success
Product satisfaction — policy and pricing — is the number one driver for both brand impact and conversion in online auto insurance marketing. Then, assuming the policy and pricing are right, the research and quote process becomes paramount to driving conversion. Visual design is next in importance for both brand and conversion; contact information is also a tertiary driver for brand impact.
While GEICO and Progressive still keep their lock on the top spots for product satisfaction in the Keynote study, behind them the field shuffles compared to the overall customer experience rankings. Esurance, State Farm, and Allstate move up into the top five, displacing Nationwide, Farmers, and Liberty Mutual. Good value seems to be the key to product satisfaction — the perception that the policy offers good coverage at a competitive price from a reputable company. Panelists called out lower pricing and discounts for the companies they ranked at the top; conversely, the lower-finishing companies were dinged for pricing that was perceived as clearly non-competitive. When the prices are there in plain view, it’s hard to disguise the difference, which is significant: the spread between top-ranked Progressive at 59.5 percent and bottom-ranked Met Life at 25 percent is nearly 35 points, for those who highly agree that the site offers competitive prices and discounts.
Zero to Policy Quote in How Many Minutes?
For the all-important quote and research process, Progressive, Esurance and GEICO finished one-two-three, as they did in last year’s study. Shoppers are very clear in what they want in the quote process, basically listing fundamental best practices:
1. Make the questions easy to answer, with appropriate use of drop-downs.
2. Organize the process in a logical, step-by-step fashion.
3. Offer easily accessible, contextual help, typically in the form of a question mark that activates a pop-out on rollover, adjacent to each item.
4. Offer options to tailor the coverage.
5. Make the page-loads fast.
Progressive’s quote-assist tool — a slider that lets visitors quickly change coverage or name their own price — is unique among the sites, and may contribute to Progressive’s strong performance in this driver.
Old Roots, New Directions
If current trends continue, and there is little reason to believe they will not, in just a few years the majority of auto insurance sales will take place in the online channel. Still, many auto insurance customers are holding onto the old ways. Even as they shop for and buy policies online, two-thirds still consider it highly or extremely important to have an agent in their area, and more than 96 percent consider it of highest importance to deal with an established and reputable company. But the bottom line is the bottom line: nearly 100 percent give high or extreme importance to competitive pricing.
GEICO and Progressive have demonstrated that an aggressive marketing campaign that carries through to a Web site that matches it in character, and that offers an easy-to-use quote process and competitive pricing, is a winning formula for direct online sales. Nationwide, Farmers, and Liberty Mutual are increasing their success using similar formulas, albeit with different messaging — and it is perhaps that softer, less price-driven messaging that keeps them from more aggressively competing for the top spots.