Stories and Customer Engagement Should be the Focus for 2016

The 7 Families initiative proves that stories work.

Often better than slick advertising campaigns. Stories resonate with people. The campaign shows that combined with social media it’s a great way to engage with potential customers.

Stories and Customer Engagement

I’ve been saying, with my tongue slightly in my cheek, that what the protection industry needs are 7000 families. Every product provider, reinsurer and financial adviser could be pushing out stories on the printed page, in video and in audio. There’s little evidence that this will happen.

As the 7th Family takes centre stage, discussions will turn to whether the campaign should continue. Who will fund it and by how much? Strong leadership from the team ensured the success of round one of the campaign but will that be enough to guarantee more?

Making a dent

We need to do more because, although a well-conceived campaign, 7 Families hasn’t made much of a dent in the true perception people have of protection product providers.

Recently the Daily Mail ran an article about a declined critical illness claim. The client developed a cancer in situ the policy didn’t cover, even under a partial payment. The journalist took a neutral stance. The piece was quite balanced and made the point people should read the small print or ask their adviser to explain it to them.

The comments beneath the article, however, betrayed the true feelings of the readers and their perceptions. “Product providers always try and decline claims,” they raged. “All protection insurance is a rip off.” “Financial advisers are conmen.” “Critical Illness is a scam.” “Don’t touch any of these policies with a barge pole.”

A huge task and a long game face the industry to change these views. But companies are cutting marketing budgets or channelling them elsewhere. Product development meetings focus on adding a few more critical illness conditions. Or knocking a few pennies off the premium rate. New entrants to the market launch high quality and complex products but have to play the same price and condition games to grab their share of a flat market.

People before profit?

Actuarial minds focus on how to make the existing cake more profitable. They’ll ask questions. Should they stop taking business from those advisers they feel have “persistency issues”? Should they use postcode pricing to squeeze a little more off the headline rate to appear cheap. Then they go on to load the premiums of more applicants?

None of these actions engage customers. They don’t help change perceptions of a maligned industry.

True and sustained customer engagement is what we need. 7 Families points the way ahead but it’s only a tiny first step. Postcode pricing might make you more profitable in the short term. But once everyone catches up we’re all back to where we started and customers are still writing nasty comments under Daily Mail articles.

Let’s follow the path indicated by 7 Families, but let’s ramp up the customer engagement to unheard of levels. Looking outward is the only way to grow the market.

Now it’s your turn:

What do you think Protection Provider’s should do to increase customer engagement in 2016? Are stories and customer engagement the way forward? Please leave a comment or share your thoughts on Social Media.

Money Marketing Magazine originally published this article on 10 December 2015.

Could Commission Review Provide a Much Needed Protection Shake Up?

Apart from the scribbling of journalists’ pens, the room descended into shocked silence.

Speaking at the Protection Review Conference in July, Mike Ward from payingtoomuch.com had just made a controversial statement.

Could commission review provide much-needed protection shake-up?

He said he thought protection providers should pay much more commission on life assurance, critical illness and income protection products.

I do not think anyone was expecting his angle. As part of a panel of speakers talking about ways of growing the market, Ward’s comment stood out among the usual calls for product innovation, simplification and more marketing spend. Needless to say, before the morning session was over, his remarks were all over the online editions of the trade publications.

Just days later Money Marketing ran an article pointing to legislation in Australia calling for capping of protection product commission. It opened a debate as to whether this would be a route worth travelling in UK financial services. Replying to the article, most advisers, product providers and independent commentators were against the idea. Indeed, a few questioned the wisdom of reopening such a contentious subject.

Since then we have learned of the new Conservative Government’s plans for yet another review of financial advice. Like it or not, that discussion is bound to reopen the subject of commission on protection products once again.

Do I agree with Ward?

Yes, because as an industry we have made the propositions so complex and the underwriting process so long and tedious that advisers spend excessive time on protection compared to what they receive in compensation.

Do I think we should follow Australia’s lead and put a cap on commission or, indeed, ban it altogether?

No, because we know from the run up to RDR that consumers will not pay the same level of fees for protection advice as they would for investment and pensions planning. Nothing has changed since the last round of legislation. Banning or capping commission on protection is still likely to cut take up and not stimulate more.

The Australian experience is a red herring. The Trowbridge Initiative points to high commissions creating customer detriment and, therefore, calls for a cap on commissions to 60 per cent of the first year’s premiums (compared to the 150 to 200 per cent in the UK). Trowbridge cites high lapse rates on protection products and argues that advisers are encouraged to re-broke often because of high commission rates.

It is easy to see how that argument could apply in the UK but there is one fundamental difference. Australian protection products are mainly “annually costed”. Premiums go up every year just like car insurance premiums do in the UK.

Faced with such increases healthy lives look to switch to a cheaper “new” product each year. High commissions do not cause the lapses the premium structure does. Arguably, a commission cap might increase re-broking and not cut it.

Tinkering with commission levels or banning it will not increase demand for protection in the UK. Nor will it overcome the consistent poor view that consumers have of the insurance industry.

According to the Association of British Insurers, we pay out 97.7 per cent of all claims, yet consumers still think we decline more than 60 per cent. These are the perceptions we have to change. Commissions are not part of the problem.

Ward’s idea of paying more commission would indeed lead to more protection being recommended if advisers felt suitably compensated for the work they put in. Researching the market (particularly for critical illness products), the time they spend on managing the lengthy application process and having to handle their client’s expectations if they turn out to be rated all adds up.

Would paying higher commission create a revolution in the protection market? Probably not.

Those who shared the same panel as Ward at the Protection Review Conference, and advocated simplification and increased marketing (much less news-worthy approaches), still represent the best chance for long-term growth.

When we make products easy to understand, when we surround them with a mass of positive marketing messages, when we let customers apply almost instantly and design processes that do not force advisers to spend months on even the smallest cases – only then can we even begin to consider changes to commission structures.

Now it’s your turn:

Do you think a commission review would give a much-needed shake up of UK Protection? Please leave a comment or share a link to your own blog. Why not share this article using the social media buttons below?

This is my September column for Money Marketing Magazine originally published in September 2015.

Protection Providers: Please Stop Passing The Buck

Good PR raises brand awareness and is a cost-effective way of getting stories out there.

But have you noticed a recent trend for a style of news story template that effectively passes the buck?

Buck

Protection providers particularly seem to favour this approach.Here’s an example from a recent news story in the financial trade press.

Providers urge advisers to help close protection gap – FTAdviser.com

Head of marketing at Cirencester Friendly, commented that the findings should serve as a warning to the adviser community and UK population as a whole.

“Protecting earnings is an important aspect of sound financial planning; those who are unable to work due to illness or injury face a dramatic reduction in their income which in turn, results in difficulty making mortgage repayments or paying rent, buying food and paying bills.

“Responsible advisers have a duty to ensure that their clients have put adequate safeguards in place should the worst happen.”

Read full article on www.ftadviser.com

Check out any trade publication and you’ll see similar news stories. In every case the company followed a typical three stage template. They:
  • Did some research that confirms consumers don’t have (or want) a product or service.
  • Craft a story around the consequences the consumers face by not having the product or service
  • Urge the industry, or segments of the industry to take action to solve the problem – in this case, “responsible advisers have a duty to ensure……”

It’s obviously a successful template because it generates column inches. A neat little press release structure that almost guarantees take up.

But isn’t there a bit missing?

What is the company telling the story doing to help solve the problem? Where is their advertising campaign? What about a series of case studies showcasing the experiences of people affected? Where are their tools for helping “responsible” advisers to make good on their “duty”.

The three stage template passes the buck to someone else.

We need a part 4 to this often used news piece template.

Instead of passing the buck, the company promoting the story needs to say:

  • This is what we are doing to solve the problem

Or.

  • This is what we are doing to help you to solve the problem

That’s not passing the buck. That’s saying were all in this together. It’s only together that we’ll kick-start the stagnant protection market.

Now it’s Your Turn:

Do you think Protection Providers are passing the buck? Please leave a comment or share your thoughts on this article because I’d genuinely like to hear your views.