The idea that psychologists could help companies and agents sell more insurance seems strange. After all, everyone knows that good marketing, sales and customer service practices, backed by robust technology are what sell insurance. That is undeniably true. Yet studies, often conducted by psychologists, are what have helped to establish the best practices in marketing, sales and customer service that truly make a difference. These findings even affect IT, informing CIOs and web designers how to use technology in ways that improve customer experience. Research by Global Reviews found that, in online insurance sales, a smooth and enjoyable website experience beat superior brand recognition.
Why would a user-friendly website generate more sales than the opportunity to buy from a better known insurance company? Consumer behavior experts Jerry Olson (University of Wisconsin) and J. Paul Peter (Penn State) sum up the research: “The time necessary to learn about a product or service…as well as the time spent...can be important costs to the consumer.” In an online insurance website, the preference of buying from a company you already know and trust can be offset if it’s not easy to learn about and purchase the coverage you need.
Mental effort savings can be as important as cash
The first finding from psychology research that insurance executives and agents need to recognize, then, is that most people avoid expending more brain power than they have to. As marketing professor Min Zhao put in in Forbes, “Extensive research shows that we humans are cognitive misers who naturally conserve our limited information-processing resources.” CIOs, web developers and marketers must keep this fact in mind.
In fact, people’s tendency to be “cognitive misers” makes the services of a reliable agent invaluable. Without an agent they can trust, consumers must wade through all the different policy coverage listings by themselves. Many view this as a daunting task. And all the amusing commercials in the world cannot make insurance easier to understand for the average insured or prospect.
How much of an effect does “cognitive miserliness” have on consumers? Peter and Olson answer:
The cognitive activity involved in purchasing can be a very important cost. The cost involved in decision making is often the easiest one for consumers to reduce or eliminate. Simple decision rules or heuristics can reduce this cost considerably.
This means that if purchasing a policy or dealing with an agent or company requires too much mental effort, consumers will often seek to eliminate what they perceive to be a hassle.
There are a few clear takeaways from this one fact that a body of psychology research reveals:
If you want insureds or prospects to do anything, make it easy for them. If you want them to understand something, make it clear and understandable without coming across as patronizing.
Insureds and prospects often use decision rules or heuristics to make quick choices about which alternatives deserve closer attention. The next blog post in this series will discuss this in detail.
Agents must take the time to get to know insureds and prospects, helping them to understand enough about their policies to feel secure. If clients and prospective clients know their agent is honest, well-intentioned and really understands the reasonably-priced insurance under consideration, many will entrust him or her with their business.
Marketing communications strategies should be designed around this central fact: Unless materials are personally relevant and clear, many will pay little attention to them. One to one communication tools, like customized brochures can provide a highly relevant and eye-catching way to get your message across.
A good blogging program can provide valuable information to help insureds who search the web to learn more about insurance. If linked to a company’s “Get an Online Quote” or “Request More Information” pages, well-written, informative blogs can generate sales leads that can be handled by direct writers or forwarded to agents. One industrial company has generated thousands of leads from its “Experts Blog.” Carriers that have good writers on staff or under contract can really benefit from a blogging program.
As mentioned above, research shows that many prospects and insureds use decision rules or heuristics to quickly decide whether your company or offering is a good value that deserves attention. Do you know which decision rules your customers use when they look at insurance? We’ll consider some heuristics you’ll need to know about in “6 Ways Psychologists Can Help You Sell More Insurance – Part Two.”