COVID-19 Forces Advisors, Insurers To Step Up Their Digital Game

By Wei Ke and Stefanie zur Horst

The insurance industry’s traditional face-to-face consultative sales approach has proven to be remarkably resilient against digitalization - especially compared to the travel, entertainment and retail sectors.

The COVID-19 pandemic has thrown a wrench into this distribution model. Measures to contain the spread of the virus through flight restrictions, stay-at-home orders and social distancing, have grounded the industry’s face-to-face sales consultants. To make matters worse, insurance companies are realizing they are not able to fall back on their online sales channels to make up for the loss.

However, the pandemic presents opportunities for innovation. Amid the COVID-19 lockdowns, consumer online behaviors have shifted dramatically. Consulting with doctors via Skype, attending classes online and doing business through Zoom meetings have become the new normal.

People are accepting digital transactions in lieu of face-to-face interactions, and are experiencing the advantages – as well as the disadvantages – of the medium. The crisis has already prompted families who urgently need estate planning to turn to digital sites and apps to buy life insurance.

The insurance industry must take steps now to adapt to the new landscape, or risk losing market share and access to young customers. No one knows how long the current crisis will last, and it is unlikely that online sales will be able to generate sufficient demand in the coming months. Many of consumers’ digital behaviors may also persist in the post COVID-19 world.

Working With Video Technology

Personal consultation via video conference will be an essential first step. Compared to telephone conversations, video supported discussions make participants feel more satisfied and better integrated. However, video consultations must be developed appropriately as this medium can make it harder to retain new information.

One study found that retention rates are 20% lower in online courses compared to face-to-face courses. This means successful consultations via video conferencing requires well-structured sales processes, with active discussions and ways to involve the customer.

Extra care must be given to not get lost in the details, and to present information for greater accessibility. More personalization and tailored recommendations will be a critical support. Attention must be paid to remove cognitive barriers such as replacing text with images, highlighting differences using symbols and so on.

Lost In Translation

We must recognize that traditional approaches to insurance sales are unsuitable for digital channels and increasingly incongruous in the digital age. Despite efforts in the industry to improve it, the traditional insurance buying experience remains a tedious one for customers.

The “needs analysis” portion takes too long. After a laborious cataloging of the customer, it is not unusual to end up with a ho-hum product recommendation. Sales discussions also focus too much on price, and not enough on customer value. Another major shortcoming: not providing supporting structures to address consumers’ psychological barriers such as decision anxiety, needs validation and inertia during the purchasing experience.

Using traditional sales approaches on a digital channel will only magnify some of these issues. In face-to-face meetings, the advisor has certain advantages - including a chance to understand the prospect’s body language to develop trust and transparency, and to help prospects focus on the information presented. All this is lost on digital channels.

Virtual Client Engagement

Clients want great digital experiences as much as they want great human experiences. Advisors will have to be re-trained as they should not try to replicate every aspect of a face-to-face sales discussion on a video conference.

We must also take advantage of digital tools to engage the client. For example, advisors can play a short film featuring relevant testimonials from customers who have benefited from having similar products the company offers. Product explanations can be supported visually with dynamic diagrams and alternating explanatory videos.

The advisor and the prospect should have a shared working window so that both are looking at a common screen. For example, screen-sharing and collaborative technologies can give prospects the ability to interact and customize offers presented to them. Advisors can prompt interactions by asking prospects to select or adjust product features to suit their personal situations.

Rapport-Building Tools

In a remote exchange, we are constrained from using body language and gestures such as offering a cup of coffee to build rapport. It is therefore important to double down on the effort to be sincere and show real interest in the client. Consulting via video conferencing requires well-structured sales processes with active discussions, but it also needs a personal touch.

Advisors should always start the conversation with a suitable, positive message to the prospect. It is also important to make eye contact with the camera, and not to look down at the material that is being shared. Visibility and manner of appearance are as equally important in a remote video conversation as in a face-to-face exchange.

The insurance industry must take steps now to build digital sales processes worthy of the digital age if they want to emerge from the crisis, stronger and more relevant. They must be resourceful to win broad support - particularly from their sales operations - and muster up the courage to take bold actions now. They must address their sales force’s digital skills gap through training, introduce new tools for remote-selling, refine their value-selling arguments, reimagine the digital purchasing experience, and adapt sales governance structures. They also must be flexible and nimble, to turn themselves into learning organizations skilled at modifying sales cultures and processes to reflect new knowledge. Inaction will be costly.

We have seen companies outperform in a downturn, even outgrow their competition. Examples include Hyundai, which introduced a new program following the 2008 financial crisis to take back a car that is financed or leased by a worker who subsequently loses their job, and Starbucks, which launched an aggressive franchise licensing strategy in 2013 to expand their footprint internationally. Important opportunities for exponential growth are similarly emerging for insurance companies.

Wei Ke is a managing partner and Stefanie zur Horst is a senior director at global consulting firm Simon-Kucher & Partners. Contact them at [email protected] and [email protected].