Insurance & Technology: Cognizant Business Consulting Experts Explain how Marketing Analytics Helps Differentiate Insurance Services and Products, and Pursue Niche Insurance Markets

“Price competition may favor a handful of big insurers, but marketing analytics can help increase the demand for differentiated products and services,” write Michael Kim, Vice-President of Insurance Consulting, and Agil Francis, Senior Manager of Insurance Consulting at Cognizant. “The trend is definitely toward a few companies grabbing significant share of the market, offering fewer and undifferentiated products as well as services at lower prices. There’s no easy way to break this cycle of consolidation, but there remains a substantial minority share of the insurance market that can be expanded by offering differentiated products and services.”

According to Kim and Francis, marketing analytics can help companies not only find the right customers, but also determine what products they want and are willing to pay a premium for. “Outside of the big-brand market, there is definitely room for differentiated services,” they write.

The authors believe that there are two main ways to differentiate in insurance—first around service, and secondly, around product. “Efficacious insurance is what guarantees peace of mind that you will receive money to recover your losses,” they observe. “Service will determine the quality of your experience. From the standpoint of customer experience, beyond the product itself, it's the service that creates a positive feeling, and leads to beneficial customer feedback on social media channels—part of the holy grail of marketing these days, across all industries.”

The authors add, “The second way to differentiate an insurance product and add value for which you can charge a higher premium is to make a product look different from the competition. Marketing analytics can help strategize what gaps exist in the market, and suggest how to fill those gaps with new variants of products that people would want to buy.”

Kim and Francis state that marketing analytics provides a view into various niche segments—the types of people who want differentiated products and services in the first place, and what they need in these new value-added products and services. “The value of marketing analytics is found in the efficiency with which you can spend marketing dollars,” they aver. “Better data in real time shortens the development time for these products and services, and can be used to figure out how your promotions and messages can be geared toward differentiated products and services. While differentiated brands may not lead to a much greater market share, they could mean a significant bottom-line improvement—a niche market focus could generate twice the margin of the lower-priced product.”

The authors write that by harnessing the power of information through marketing analytics, more specialized insurance companies can figure out not only what differentiated product and service to offer, but which geographic and other micro-segments to target these offers to.

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