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Attention Economy
Long before the term “attention economy” entered the corporate vernacular, a customer’s attention was a precious commodity. Online service companies from all industries compete for customers wherever consumers are. The key to success is staying visible, yet as digitalization develops and every conceivable industry engages in a constant battle for consumers’ limited attention, staying visible is getting harder and harder.
Every year, the conflict gets worse near the end of the year. With special occasions like Black Friday, Cyber Monday, and Singles’ Day luring people to take advantage of promotions and offers, retail sales increased throughout the Christmas season. At the same time, rising gas and power costs led many customers to consider changing utility providers. The insurance renewal season in Europe picked up steam in November, with radically varying rate hikes in several market segments leaving an ambiguous foundation for 2022.
As a result, the relevance of the attention economy is still strong and insurers will continue to compete for their clients’ roving eyes.
Auto insurance spotlight: fierce competition in a tight market
Particularly affected by customer attention wandering is the vehicle insurance sector. Internet search rates for auto insurance goods are decreasing by double digits, but many other insurance products continue to profit from the pandemic-driven push toward digitalization. According to Google search patterns, Germans still use their cars at least once a week, just as they did before the COVID-19 pandemic, but their interest in auto insurance was only 30 to 40% of that of November 2019 in Germany.
In parallel, the market is contracting—and not merely as a result of the change in mobility. Due in part to the ongoing chip problem, new-vehicle registrations are down 25%, and auto insurance rates have decreased by as much as 8%. Financial results have benefited from fewer claims during the COVID-19 epidemic, but this has also made price hikes challenging to achieve. The 2020 switchover season consequently cost vehicle insurers some €250 million in premium volume.
Competition is picking up
Nowadays, an increasing number of traditional players are building their online presence. According to a McKinsey investigation, only five traditional multichannel auto insurers were among the top 20 internet search results in 2017. There are now 12 insurers in that group. Young, digitally focused businesses have additionally entered the market. Leading internet firms and merchants have started to investigate entering the insurance market, while certain vehicle companies have already adopted “embedded insurance” elsewhere.
Particularly, the vehicle insurance market is getting more competitive and divisive. According to McKinsey research, five underwriting providers will account for around half of the overall profit in 2020, with another 70 providers covering the remainder. Despite significant marketing expenditures, ten players in the underwriting industry did not make any money.
How can companies bring in and retain customers?
The solution is not to increase marketing spending. This is crucial since, in 67 percent of situations, customers change insurance due to price increases, which have a medium-term impact on costs. Legislation has made it harder for businesses to perform “price walking,” which refers to initial offers with low prices that rise in price over time.
1. Smarter budget management is essential
The best client profiles (those with the highest lifetime value, for instance), as well as strategies with the highest conversion rates, must be used to the fullest extent possible with each euro invested. Smart bidding and attempting to connect with clients earlier in the process are two strategies that may be helpful.
2. Modify the merchandise
Longer terms and intrayear primary due dates have been tested by several providers. In fact, 16 percent of all motor insurance now operates on an intrayear basis, according to the German Insurance Association (GDV). Comparative portals that bundle their marketing expenses throughout the year-end renewal season may find this strategy profitable. However, those year-end expenses have recently grown dramatically.
3. Capitalizing on leads continously
Only when increased visibility results in more clients signing more contracts, it is beneficial. Digital pioneers are successful at keeping their websites visible because, according to Similar web analysis, their pages draw more people who remain three to four times longer and click away from the home page less frequently than visits to non-pioneer sites. To follow up offline, omnichannel providers must have great lead management in terms of both technology and procedures.
4. Using cutting-edge ecosystem strategies
Use cutting-edge ecosystem strategies. Longer term, providers can create new strategies to increase awareness by, for instance, focusing on drivers who are buying a car, replacing a tire, filling up at the gas station, or parking. Ecosystem services also increase customer loyalty, and the effects of this strategy will last well past 2022.
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