Lessons from GEICO and Progressive on Winning the Critical Buying Stage
Tim Attia | April 03, 2014
Both Progressive and GEICO have mastered the skill of understanding the consumer thought process and their insurance buying behavior. They’ve figured out how to use the Internet and all its ancillary channels such as mobile, social media, and e-commerce to respond to the drastically changed consumer expectations to give the customer what they want, when they want it, and how they want it.
They are in an enviable market position and other insurers might be well served by taking a lesson or two from the Progressive and GEICO playbooks as they also look to more effectively capture the attention and influence the customer at the critical buying stage.
March 2014 marked the 25th birthday of the World Wide Web and in that quarter century the Internet has reshaped our world of communications, our shopping, decision making, and buying habits. Yet most insurers are still stuck in their traditional approaches to selling insurance and remain puzzled by how to use all that the Internet has to offer to effectively support today’s consumer-preferred omni-channel sales cycle.
While insurers have been busy integrating the Internet, social media, mobile technologies, and the rest into the sales process, for the most part, they have done so without fully understanding and effectively responding to the consumers’ transformed insurance-buying preferences.
While Progressive and GEICO may represent doing it right when it comes to direct online insurance selling and understanding consumer behavior, there are far more insurers who have lost market share due to outdated sales processes that missed the opportunity to give the consumer exactly what they need, through an online process, and at the point when they made their final purchase decision. In truth, while there is a lot of talk about providing the consumer the ultimate buying process, few insurers have caught up with this rapidly changing buying behavior.
In McKinsey’s report, The Customer Decision Journey, they found that the traditional sales funnel, as we know it, has vanished. In a buying process where consumers have almost unlimited access to information and connect with a myriad of touch points using multiple devices and channels to shop and research, it’s impossible to gauge where they’ll enter the sales cycle and what path they’ll take to get to the buying decision point.
Rather than a funnel, McKinsey suggests today’s shopping cycle is now a circular journey with four phases that include all the touch points that a consumer may engage with when they shop for insurance, and possibly, when they renew: initial consideration; active evaluation, or the process of researching potential purchases; closure, when consumers buy brands; and post-purchase, when consumers experience them.
The drastic changes in the insurance shopping and buying cycle require a similar degree of change to the sales cycle. McKinsey’s active evaluation and closure phases can be viewed as today’s insurance buyer’s selection and buying stages—the Critical Buying Stage—the do or die moment for insurers to capture the buyer’s attention and influence their decision.
So what is it that Progressive and GEICO do so effectively that consistently wins over consumers at this stage?
Progressive understands that when consumers are researching and evaluating their choices during the Critical Buying Stage, it’s unproductive to push messaging or drown them in information. Instead, the consumer will find the information they need, as they need it, to make choices. Consumers actively seek two kinds of information at this stage: information comparing products and information that will give them insight on the experience of others with the product.
Progressive responds by providing competitors’ quotes alongside their own, even if their competitors’ products are less expensive or offer more coverage. By making the consumer’s research process quick and convenient, and offering consumers choice, Progressive becomes the consumer’s preferred go-to resource for expertise.
Not only is Progressive’s approach good at winning customers at the Critical Buying Stage, it’s highly effective in moving consumers through the Critical Buying Stage much faster. Progressive effectively gives the consumer everything they need or want to make a decision and they make it simple.
The takeaway from Progressive is to offer consumers any information that will be helpful during their research and evaluation process—quotes, product features, and buyers’ opinions of the product regardless of whether they’re positive or negative. Transparency is key here, insurers should not attempt to hide any information from the consumer; they’ll find it and when they do, they’ll be frustrated that their time was wasted and trust will be lost.
GEICO has also been highly successful in capturing the buyer and influencing the decision, although they have taken a slightly different approach than Progressive. GEICO seems to understand that an important goal of the Critical Buying Stage is to find a way to always say ‘yes’ to a consumer when they’re ready to buy. Where Progressive offers comparisons with competitor products, GEICO actually will sell competitors’ products to enable GEICO to effectively meet all the consumer’s needs.
GEICO may believe it’s more important to win the sale and own the customer than to underwrite the risk. Giving the buyer what they want allows GEICO the opportunity to establish, maintain, and develop the relationship to earn the role as the consumer’s trusted advisor, rather than just another insurer selling product. In that regard, it’s the GEICO brand the customer recognizes and they effectively own the customer relationship.
GEICO is good at leveraging a lead; making sure a lead doesn’t go to waste by doing what it takes to turn it into a sale more times than not. After all, once the consumer goes to a GEICO competitor, they probably won’t be coming back anytime soon.
Consumer preference for control in the one-stop shopping experience that offers choice, price, and convenience is the new normal. Technology will continue to offer opportunities to innovate to best serve this need and some insurers are going to continue to take the market lead in offering new channels and methods of reaching the consumer.
Insurers may not be able to moderate the speed of technological innovation to keep up, but they can learn the approach to the new insurance buying and selling model that both GEICO and Progressive understand so well—the sales cycle is no longer about how to master the art of selling, it’s about mastering the art of responding to the way a customer wants to buy.
Tim Attia is executive vice president, sales and marketing, for Bolt Inc. He can be reached at email@example.com. Attia has over 20 years of experience in the IT and the insurance industry. Prior to joining Bolt, Attia was the worldwide vice president of sales for Exigen Insurance Solutions. Attia has an electrical engineering degree from McGill University in Montreal, Canada.
- Race to the Finish Line
- New Tools, New Opportunities in Claims
- ITA LIVE: Reaching Insurance Industry Crossroads
- Advice to Insurance IT Leaders: Keep Your Eye on the Ball
- New Date, Venue for ITA LIVE 2017
- Guidewire Makes Major Push to Small and Midtier Market by Acquiring ISCS
- Insurance Disruption is Happening Right Now
- Insurity Adds Strategic Investment Partner, General Atlantic
- Beyond Transformation: The Convergence of Finance, Risk, and Actuarial Functions
- The Rapid Evolution of Consumer Protection Regulation
- Talent Hunt: Finding, Attracting, Retaining Top People
- Insurers Flexing Their Distribution Models
- Technology Driving Disruption in Insurance
- Fear of ‘Next Bubble’ Challenges Life, Annuity Carriers
- Technology Allows Commercial Lines Insurers to Stand Out
- Single Sign-on Viewed as Biggest Tech Challenge for Agencies
- ISCS Observes 20th Anniversary; Scurto Predicts Major Changes Ahead
- Policyholders and Their First Impressions
- Progressive Making Progress on the UBI Front
- High and Dry: Insurers Search for Disaster Recovery Plans
- Insurers Sign The (Un)Dotted Line
- Reflections of a Retired Insurance CIO
- Mobile Device Management Just One Answer to BYOD Issue
- Lessons from GEICO and Progressive on Winning the Critical Buying Stage
- You Are a Target for a Cyber Attack
- Web-based Systems are the Next Evolution in Claims Technology
- Gaining a “Wow” Experience from Web Users
- Time to Shift from Business/IT Alignment to Business/IT Alliance
- Healthcare Insurers Changing to Consumer Model
- Organization is the Key for Selecting Software Vendors
- Analysts Expound on the Needs of the Mid-tier Insurance Market
- Finding the Cure for Obamacare’s Website
- New Software Solutions Benefit Insurers on the Inside and Outside
- Products, Market Impede Investment in Systems for Life Insurers
- Combatting Cyber Threats: Predict, Prevent, Persist
- The Future of Telematics Heads Beyond Insurance
- The Shame in Cyber Security Lapses
- Building Policy Administration Systems for the Future
- Insurers Look Into The Eyes of Their Policyholders
- It’s a New Dawn for the ITA
INSURANCE IT NEWS
- Canadian Insurer Deploys Guidewire’s Digital Claims Portal
- UCT Adds Moroz as Sales Director
- National Lloyds Modernizes Distribution with VUE Software
- SE2 and NTT DATA Expand Partnership in Life & Annuity Market
- Sapiens to Leverage Microsoft’s Data Centers for Cloud-Based Services in South Africa
- Alaska National Implements Cincom’s Customer Communications Software
- CIG Successfully Deploys Guidewire Policy, Billing Solutions
- Patriot National Replaces Mariano with Rearer as CEO
The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
ITA is pleased to present the 2014 Webinar Series. We have many topics for you to choose from and attendance is open to all ITA members. The webinar topics are current and exciting — ranging from predictive analytics to telematics and will focus on the direction insurance carriers need to follow for the future. All webinars are presented by insurance IT professionals along with some of the leading analysts and consultants in the field. There is no cost to attend an ITA webinar. For more information and to register for the webinar, click the “title” of the webinar below.
BLOGS AND COLUMNS
The insurance industry is on the brink of major technology-driven change. IoT, mobile computing, big data, and blockchain ecosystems will bring even... READ MORE
Robert Regis Hyle
Insurance will always be about fulfilling the promise to policyholders when something happens, but in recent years there has been a subtle switch in... READ MORE
You have surely heard it said that small businesses are the growth engine for America. Today, the phrase has a special ring to it for benefits... READ MORE
With stagnant growth and lingering low interest rates, the life insurance industry faces a challenging future... READ MORE
Finding insurance carriers willing to write commercial lines risks has always been a challenge for producers... READ MORE
As Guidewire Software prepares for the start of Connections, its 11th annual user conference that begins on Nov. 2, Brian Desmond, chief marketing... READ MORE
The core systems replacement cycle is speeding up. Twenty years ago, even if you spent your entire career working at the same insurance company, you... READ MORE
- Partner News