Why Insurers Want to Sell like a Superstore: 4 Profitable Lessons every Insurer can Learn from the World’s Most Valuable Retail Brands

April 18, 2014

A smoke alarm isn’t the only kind of protection on sale at your local superstore these days. Need some life or health insurance with those printer cartridges? You’re in luck.  

Over a year ago, insurers like Metlife and Aetna entered the world of selling insurance policies through superstores. Walmart launched a pilot program with Metlife to sell life insurance policies at 200 Walmart stores and Costco members can now select from five Aetna health plans offered through Costco’s Personal Health Insurance program. Though Costco has offered its members discounts on auto, homeowner, renters, umbrella and specialty insurance through Ameriprise Insurance for several years, Walmart just launched its pilot program offering Illinois customers the opportunity to purchase discount auto insurance in 2013.

Will these insurers clean up selling risk protection in aisle 5? Watch for a future blog post on that… These are good examples of insurers experimenting with approaches to tap into large, underserved markets, new sales channels, and create brand awareness in a shopping environment where there’s a natural connection with the products they sell. 

What I’m most curious about is the impact the superstore channel will have on how these insurers sell. What can insurers learn from two of the world’s most valuable retail brands about creating the kind of convenient, affordable one-stop shopping experiences that Walmart and Costco offer and consumers so desperately want? Plenty. 

1) Focus on Selling your Brand rather than your Product

Walmart and Costco both offer lower-priced house brand products but neither focus their attention on selling their own product even though it obviously benefits their bottom-line. Their goal is to own the customer by meeting their brand promise of offering low prices and good value on any and all product that a customer wants to buy. Walmart doesn’t worry about selling a competitor’s product – even with a small profit margin, they still generate revenue, profit through multiple product sales, and they keep the customer coming back rather than sending them to shop with the competition. It’s good business sense to focus on what the customer wants to buy rather than what a retailer wants to sell. 

Similarly, it’s good business sense for an insurer to consider sell products that are a good fit with their brand and complements their other product offerings – even if that means offering a competitor’s product. 

Selling a competitor’s products can help insurers facilitate that convenient, one-stop shopping experience that consumers want. It allows the insurer to keep the customer relationship while generating revenue from underwriting the risk, and/or brokerage fees. And in cases where an insurer doesn’t have the experience, appetite, or capacity to underwrite the product, it’s better to make fee income than the underwriting income. 

An insurer’s number one goal is to own the customer. The insurer that underwrites the product makes one sale; the insurer that owns the customer can sell to them for their entire lifetime. And that can mean decades of selling renewals, cross-selling related products, and generating referral business. 

2) Offer Customers Choice

Mac or PC? Chocolate or vanilla? We’re a culture of consumers that covet choice. Even a limited selection is enough to provide customers with this valuable component of the shopping experience. While Costco is cautious about the number of brands it offers (limiting the number of brands they sell allows them to get the kind of volume discounts they need to offer the lowest prices), like Walmart, it offers at least two choices of brands for any given product.  

It’s another way that providing competitor’s products can be helpful for the insurer. The objective is to give customers a selection ample enough that they can compare insurance products and choose the product that works best for them. Like Costco, this may mean offering the customer a choice between two brands that offer different price points and levels of coverage. 

3) Sell the Customer Everything They Want

There’s nothing haphazard about the layout of a Walmart or Costco. Superstores invest a great deal of time and money walking the walk of their customers. They think through how customers search and shop for products and how those products should be grouped for optimal cross-selling opportunities.  

While insurers understand the profitable art of cross-selling in theory, I’ve witnessed more than a few property and casualty insurers who’ve missed big opportunities to cross-sell products. What happens when that flower shop you just insured needs auto insurance on their three delivery vehicles and you don’t have it? An insurer should be prepared to sell their customers all the risks related to their brand, not just one or two products. If the insurer isn’t prepared to sell the customer what they want, the customer will go to the competition to satisfy their multiple coverage requirements. 

4) Never Let the Customer leave Empty-handed

The path from creating awareness to a customer walking through the door ready to purchase is long and expensive. A superstore does everything in its power to make sure you have no excuse to walk out the door without buying something. 

Factoring in advertising and promotional campaigns, the cost of bringing a paying customer through the door could be as high as $400 to $500 for some insurers. Every insurer’s goal should be to make effective use of a lead by finding some way to fulfill the customer’s product needs. 

I’ve only scratched the surface.  Now it’s your turn…what superstore selling practices do you think insurers should consider to win market share?

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