I just pre-ordered the new book “Think Like a Freak” by Steven Levitt and Stephen Dubner, the authors of “Freakonomics” and “Super Freakonomics.”  For those who are not familiar with the subject matter, a key component of the earlier books is the concept that behavior is driven by three core incentives: economic, social, and moral.

So how can we break this down in a simple manner as insurance marketers?

Economic:  As consumers, we may consider a purchase based on price or perceived price (and often do).  Property & Casualty insurance is typically thought of as a commodity until something goes wrong. As the key driver (no pun intended), many companies promote saving money on insurance.  There are different ways to promote cost savings, and insurers have done a good job of offering up paths to differentiate themselves - including initial cost savings, monitoring driving behavior, and deductibles that decrease over time.  Interestingly, while the three examples above all speak to different ways to save money, they will attract different types of consumers.  An example would be if you typically drive well above the speed limit, you might be reluctant to have a monitor on your driving activity for fear that your premiums will be driven up in price.  The insurer gains the benefit of knowing the device should promote less risky driving behavior and therefore a customer who is less likely to submit a claim.

Social:  This is interesting, and from a marketing perspective, refers to how consumers believe others will perceive them in their respective social circles regarding a purchase.  Brand marketing can have a big impact on the social incentive (i.e. see Nike, BMW, Apple), but what about for insurers?  It can still contribute, with some insurers doing a better job than others in carving out a position.  Personalities are often used as a means to add social incentive contribution (i.e. Progressive and Geico).  In addition, connections back to an insurer, such as consumers who work in the city where an insurer’s headquarters is located or partnerships with organizations that a consumer values (i.e. affinity relationships) can contribute to social incentives.

Moral:  The moral incentive refers to the incentive of “doing the right thing.”  If an insurer makes national news based on impropriety of some sort, then this will likely have an impact on sales.  Not everyone will care, but some consumers who might have selected that particular insurer will take themselves out of the consideration set.  The world of social media and hyper communications has had a profound effect on this incentive in terms of “making things known,” in effect making sure that consumers influenced by the perceived “morality” of a business are made aware of developments.  Keep in mind that bad news (an alleged crime committed by a well-known executive), can travel faster than good news (an insurer’s commitment to green initiatives).

After reading through the above, are there other incentives that consumers have in making a choice? Absolutely, but we can still likely categorize them into one of the three buckets above.  Examples include saving time, mobile access, calculators, etc.  These can be categorized into an economic incentive, but instead of saving money, we are talking about saving time and effort.  The same can be said about companies that have a reputation for a great claims experience.  This would also fall under economic in terms of the insured’s perception that they will be covered monetarily for different events and the ease of the claims process (saving time or effort). 

Of course consumers are going to weigh each of the above differently and will present a unique buyer's profile for insurers.  This is, of course, where multi-channel marketing comes in for enabling the presentation of the right message, through the right channel, at the right time.  In our always-on world, it comes down to relevancy in presenting the right content wherever that prospective customer is found.  What about agents you say?  Interestingly, an agent can impact all three of the above incentive types, and with relationship building, can often have more impact particularly on the social and moral incentive types.  Think about how often you have heard people say things describing advisors and agents as “good people” which implies something beyond just their role in facilitating a fair insurance transaction.

Steve has 14 years of experience building trusted relationships with clients and leading innovative marketing strategies in targeted one-to-one initiatives.  An avid Buffalo Bills fan, he hopes someday to see the team win a Super Bowl in part to alleviate the guilt of having passed this passion on to his 12 year old son.  You can reach Steve at sstreibel@sourcelink.com