30] of the insurance customer base.
Insurers should strategically position themselves as ones with a superior brand with niche product offerings that will appeal most to the optimizers.
Price Sensitive Individuals: Unlike the product optimizers, price sensitive individuals require standardized products and go to extremes to get the best value for their money. They use the Internet exhaustively to shop around for the lowest price. However, it is possible that these customers are not fully aware of the variety of life insurance products and the benefits each has to offer; hence they settle for one that is low priced and standardized. Price-sensitive analyzers make up 17.6%[31] of the insurance customers in Europe.
Given an opportunity to discuss with price-sensitive customers and presenting them with the right options, without putting any pressure on them to buy, insurers may be able to up-sell from a standardized to a specialized insurance product.
Uninterested Minimalists: These individuals seek a quick entry and exit when buying an insurance product. Their interaction with the insurer is limited to the extent of the sale and they prefer not to be contacted in the future. Minimalists rely on the power of the Internet to give them the lowest price and policy and thus know exactly what they want. Because these individuals are so dependent on technology they expect complete transparency and quick and infrequent touch-points with the insurer. Uninterested minimalists make up 8.2%[32] of the insurance customers in Europe.
Insurers seeking to target this customer segment must have a strong online presence and an extremely powerful and use-friendly web portal.
Progressive Insurance was the pioneer in comparative analysis whereby potential customers seeking quotes were also able to see how Progressive's quote was positioned to that of its competitors. A spot on price comparison gave the minimalist assurance that they were paying the lowest price for a policy from Progressive. Segmentation Based on Customer Value
On the basis of the segments identified in the section “Two Sides of Customer Value”, the above customer mentioned customers can be bucketed under the four categories namely: Star Customer, Vulnerable Customer, Lost Cause and Free Riders. Distribution of customers segments in the four buckets is depicted in Figure 16.
The insurer should focus on creating strategies to improve profitability from support seeking individuals by providing them better customer service and product offerings. The goal should be to transform support seeking individuals to star customers.
Like-wise price sensitive customers should also be transformed to star customers. This can be done by reducing the services they offer to this segment of the customers or should increase the price of the product offering to improve their profit margins.
Insurers should also try to improve profitability from uninterested minimalists by economies of scale and at the same time generating efficiency in operations. If economies of scale do not exist, then the insurer should try to reduce this customer segment.
Table 1 is a summary of the five customer segments along with the key drivers and the strategies that can be adopted by an insurer to acquire and retain them.
Cluster
Relationship Seeking Indi
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