Wipro BIS countdown: Virtual reality check

Insurance is a largely advice-driven industry and trusted relationships have had a strong influence on customers’ selections. However, customer base demographics are changing, with Generation Y forming the majority of the prospective consumer base. It is fairly evident that both Generations Y and Z spend significant time connected virtually to their social communities, and have built a trusted relationship with those virtual communities.

Given that community-based selection is a powerful influencer, carriers can benefit by riding the social networking wave to boost prospect-to-customer conversion and profitable growth. Virtual marketing — through digital platforms — can bring carriers closer to this reality, and give an option for a low cost, efficient alternative channel of trusted-relationship based marketing. There are many trends in virtual marketing and insurers can benefit from these.

Success of viral marketing
Emarketer forecasts that virtual advertising will leap to $96.8bn (£60.5bn) by 2014, increasing at an 11.9% compound annual growth rate, faster than other media, despite the slow global economic recovery. Additionally, forecasts indicate that internet advertising is growing market share in all geographic areas. In 2011, online spend will be 18.2% of total spend in Western Europe, compared with 16.3% in Japan and 14.6% in the US. When seen in light of the increasing growth of online distribution channel (see graph, right), it is even more evident that virtual marketing can play a strong role. Also, there are good examples (see table, right) of the success of virtual marketing.

Cross-industry trends indicate that 64% of companies are increasing their search engine optimisation-focused budget, 51% are adding a paid search marketing budget and 70% are increasing their social media budget for Facebook, Twitter, and other social networking sites, even though there are many who are admittedly without capabilities to measure social media return on investment.

A digital marketing platform can be good for lead generation. Getting a continuous and appropriate flow of good-quality, qualified leads from a diverse set of sources can help increase the effectiveness of the sales force. Sources of leads can be search engine marketing or paid online advertising. Statistics indicate that it is possible to convert 20% of lost leads into prospects with lead nurturing, which is practised through collaborative techniques like unified communications.

Digital marketing generates customer intelligence, which has evolved to encompass customers’ preferences, behavioural analytics, hobbies, household views, lifestyle, social profile, friends, products purchased, opinions and views, which can give important clues to which prospect would buy which product through which channel.

Virtual marketing can shorten the cycle time for product introductions. Mining digital consumer forums and blogs can help outline customers’ wants and needs, which can augment inferences from traditional channels to guide the new product introductions team. Traditional outreach methods are slow to get marketing messages out, and also unable to integrate their messaging across multiple channels. Virtual marketing uses publishing controls for touchpoints like Facebook, Twitter, Linked In, Google+ and Youtube for a faster and well co-ordinated targeted outreach to customers.

Getting connected
Sales enablement can also be done with online tools such as social gaming, collaboration, audio and video sharing and knowledge management. Furthermore, agents or brokers can be connected to customers like never before due to device and location independence. In addition, branding, awareness, reputation management and ROI measurement can be done through a digital marketing platform together with campaign planning, management, execution and measurement. Virtual marketing can be a powerful marketing and selling tool.

The business and IT challenges that have hindered adoption of virtual channels are channel conflicts, reputation permanence, readiness of the insurer, and the inability to get a sense of ROI. While a number of UK insurers have a presence in the social media world, a close look reveals they are not using it as a marketing and selling channel. However, with success stories of virtual marketing building up across the industry, we believe carriers will push forward to realise the true promise of virtual marketing.

Uddipan Bagchi is global head of the domain team at Wipro and Saravana Sundaram is practice director for insurance sales & distribution.