By Graeme Dean, Head of Insurance, Cover Genius
There’s a reason loyal customers are regarded as the ‘gold standard’ by many businesses. It costs 500% more to acquire new customers than to keep current ones. Additionally, repeat buyers are likely to spend 33% more than first-time customers.
Our digital age of ecommerce and online marketing means it’s easier than ever for customers to shop around for the best price. However, this has a negative knock-on effect on customer loyalty. Businesses must work harder than ever to keep customers coming back.
The good news is, brands can reap the rewards of customer loyalty by delivering excellent customer experiences. But how do ecommerce businesses keep their customers at their heart while growing and scaling in other directions? Perhaps the strategic use of insurance partnerships is the answer.
Incorporating partnerships with third-parties such as insurance providers allows ecommerce businesses to grow while offering benefits to customers. The ecommerce player additionally develops an alternate revenue stream, without having to do any of the legwork.
Previously, ecommerce businesses were unwilling to associate themselves with the archaic world of insurance. Fortunately, there’s a new generation of insurance providers. Here’s how insurtechs are changing the sector for the better, and how ecommerce companies can use it to their advantage.
The legacy of a sector
Before exploring how strategic partnerships with insurtechs can benefit ecommerce players, it’s worth exploring the historic challenges of the insurance sector that stunted such relationships in the past.
As with many traditional institutions, past generations of insurance providers were beset with clunky, legacy tech that hindered customer service. While we are referring to the historic nature of the insurance industry, this behaviour still continues.
The biggest inefficiency hindering customer experience is the reliance on manual processes. These require insurance staff to manually complete bank details, claims payments, and other administrative functions. When you consider that global insurers operate across timezones, currencies, languages, and legislation, this can delay processes further.
This reliance on sluggish, manual systems often accompanies a delay in claims payments. The typical claims payment time for global insurers is up to twenty days. This is far too long to leave a customer without payment when something’s gone wrong. The fault is not just with insurers: banks can also be too slow in notifying payees if their payments fail, leaving customers without cover.
Clunky systems aside, the actual cover provided is at times unacceptable. Traditional insurers favour one-size-fits-all policies, full of inflexible terms and exclusions. These incumbent insurers aren’t putting their customers first. As such, they typically see low customer satisfaction scores, ranging from minus 10 to positive 15. It’s unsurprising that ecommerce players have been reluctant to expose their valuable customers to partnerships with these archaic insurers.
Insurtechs: the next generation
Luckily, there is a new wave of insurance providers using technology to transform the sector for the better. These insurtechs are putting their customers at the heart of their operations, so they are well-placed to partner with customer-first ecommmerce players.
In our experience, customers are starting to reject one-size-fits-all cover. They want coverage tailored to their lifestyles and risks. Technology-led insurance firms recognise this and are offering cover that is customisable at point of purchase.
Some insurtechs implement AI systems to optimise their insurance product recommendations. This ensures customers end up with the right insurance, at the right price. Because such systems are built on newer tech, it is much easier to make adjustments. Legacy insurers often stay clunky because it is difficult to make improvements to tech that is simply not fit for purpose. This ease of adjustment means insurtechs are able to ensure product fit and pricing is continually optimised.
Typically, insurtechs still rely on traditional insurers to underwrite the cover they provide. As these technology-led insurers begin to attract the market share of customers, incumbent firms will look to them for inspiration. Partnering with insurtechs allows insurers to access new channels they would be otherwise unable to distribute through. As well as providing customers a better service and experience, this provides long-term benefits for the whole insurance industry.
The real test of insurance is how well it performs when a customer makes a claim. As we mentioned earlier, traditional insurers can take up to 20 days to approve claims – and even longer to pay them. This new generation of insurers is putting customers’ needs above bureaucracy and using tech to automate claims payments. Insurtechs are now able to offer instant claims payments, ensuring the customer is not left out of pocket.
Best practices for integrating with insurtech partners
Integrating with the right insurance partners can help online retailers broaden their offering, and provide greater customer service. Of course, the wrong partnership could do more harm than good, damaging your loyal customers’ relationships with your brand. Here’s how online businesses can get it right…
- Always prioritise the customer. Provide a frictionless customer experience, and additional business benefits can follow later.
- When choosing insurtech partners, look for a provider that has the authority to create the right policies for the customer. If they provide “off the shelf” policies, they are no better than traditional insurers. Ask your insurtech partner if they have the ability to build and distribute policies that can be customised for the product you are selling, and not ‘one size fits none’
- Ensure their insurance-buying and quote processes are integrated into the shopping experience through APIs. You want your customers to be able to buy their insurance without ever leaving your website. This should be a seamless, integrated experience — not an add-on.
- Insurers that use a customer-first approach typically have higher NPS scores for customer satisfaction. While traditional insurers often have lower NPS scores (-10 to 15), modern insurtechs focus on NPS as a key metric, and some have scores in the 60s or 70s. Partnering with an insurtech that is customer first and manages the entire process will ensure you deliver a superior customer experience.
Battling Covid collateral damage, Renault says 2021 will be volatile
By Gilles Guillaume
PARIS (Reuters) – Renault said on Friday it is still fighting the lingering effects of the COVID-19 pandemic, including a shortage of semiconductor chips, that could make for another rough year for the French carmaker.
Renault reported an 8 billion euro ($9.7 billion) loss for 2020 which, combined with gloomy take on the market, sent its shares down more than 5% in late morning trading.
“We are in the midst of a battle to try to manage a difficult year in terms of supply chains, of components,” Chief Executive Luca de Meo told reporters. “This is all the collateral damage of the Covid pandemic… we will have a fairly volatile year.”
De Meo, who took over last July, is looking at ways to boost profitability and sales at Renault while pushing ahead with cost cuts. There were early signs of improving momentum as margins inched up in the second half of 2020.
The group gave no financial guidance for this year, although it said it might reach a target of achieving 2 billion euros in costs cuts by 2023 ahead of time, possibly by December.
Executives said they were confident the carmaker could be profitable in the second half of 2021, but that they lacked sufficient market visibility to provide a forecast.
Renault struck a cautious note, saying it was focused on its recovery but warned orders had faltered in early 2021 as pandemic restrictions continued in some countries.
The group is facing new challenges as the European Union tightens emissions regulations and after rivals PSA and Fiat Chrysler joined forces to create Stellantis, the world’s fourth-biggest automaker.
The auto industry endured a tough 2020 but a swift rebound in premium car sales in China helped companies such as Volkswagen and Daimler to weather the storm.
Auto companies globally have since been hit by a shortage of semiconductors that has forced production cuts worldwide.
“The beginning of the year has shown some signs of weakness,” De Meo told analysts, but added the chip shortage should be resolved by the second half of 2021. “We have taken the necessary measures to anticipate and overcome challenges.”
Renault estimated the chip shortage could reduce its production by about 100,000 vehicles this year.
The group was already loss-making in 2019, but took a sharp hit in 2020 during lockdowns to fight the pandemic, which also hurt its Japanese partner Nissan.
Analysts polled by Refinitiv had expected a 7.4 billion euro loss for 2020. The group posted negative free cash flow for 2020.
The 2018 arrest of Carlos Ghosn, who formerly lead the alliance between Renault and Nissan, plunged the automakers into turmoil.
In a further sign that the companies have been working to repair the alliance, De Meo told journalists that Renault and Nissan will announce new joint products together in the coming weeks or months.
Renault has begun to raise prices on some car models, and group operating profit, which was negative for 2020 as a whole, improved in the last six months of the year, reaching 866 million euros or 3.5% of revenue.
Analysts at Jefferies said the operating performance was better than expected. Sales were still falling in the second half, but less sharply.
Renault is slashing jobs and trimming its range of cars, allowing it to slice spending in areas like research and development as it focuses on redressing its finances. It is also pivoting more towards electric cars as part of its revamp.
It was already struggling more than some rivals with sliding sales before the pandemic, after years of a vast expansion drive it is now trying to rein in, focusing on profitable markets.
De Meo told journalists on Friday that the French carmaker will make three new higher-margin models at its Palencia plant in Spain, where manufacturing costs are lower, between 2022 and 2024.
($1 = 0.8269 euros)
(Reporting by Gilles Guillaume and Sarah White in Paris, Nick Carey in London; Editing by Christopher Cushing, David Evans and Jan Harvey)
UK delays review of business rates tax until autumn
LONDON (Reuters) – Britain’s finance ministry said it would delay publication of its review of business rates – a tax paid by companies based on the value of the property they occupy – until the autumn when the economic outlook should be clearer.
Many companies are demanding reductions in their business rates to help them compete with online retailers.
“Due to the ongoing and wide-ranging impacts of the pandemic and economic uncertainty, the government said the review’s final report would be released later in the year when there is more clarity on the long-term state of the economy and the public finances,” the ministry said.
Finance minister Rishi Sunak has granted a temporary business rates exemption to companies in the retail, hospitality, and leisure sectors, costing over 10 billion pounds ($14 billion). Sunak is due to announce his next round of support measures for the economy on March 3.
($1 = 0.7152 pounds)
(Writing by William Schomberg, editing by David Milliken)
Discounter Pepco has all of Europe in its sights
By James Davey
LONDON (Reuters) – Pepco Group, which owns British discount retailer Poundland, has targeted 400 store openings across Europe in its 2020-21 financial year as it expands its PEPCO brand beyond central and eastern Europe, its boss said on Friday.
The group opened a net 327 new stores in its 2019-20 year, taking the total to 3,021 in 15 countries. The PEPCO brand entered western Europe for the first time with openings in Italy and it plans its first foray into Spain in April or May.
Chief Executive Andy Bond said its five stores in Italy have traded “super well” so far.
“That’s given us a lot of confidence that we can now start building PEPCO into western Europe and that expands our market opportunity from roughly 100 million people (in central and eastern Europe) to roughly 500 million people,” he told Reuters.
To further illustrate the brand’s potential he noted that the group has more than 1,000 PEPCO shops in Poland, which has a significantly smaller population and gross domestic product than Italy or Spain.
The company, which also owns the Dealz brand in Europe but does not trade online, has already opened more than 100 of the targeted 400 new stores this financial year.
Pepco Group is part of South African conglomerate Steinhoff, which is still battling the fallout of a 2017 accounting scandal.
Since 2019 Steinhoff and its creditors have been evaluating a range of strategic options for Pepco Group, including a potential public listing, private equity sale or trade sale.
That process was delayed by the pandemic, but Steinhoff said last month that it had resumed.
“The business will be up for sale at the right time. It’s a case of when, rather than if,” said Bond, a former boss of British supermarket chain Asda.
Pepco Group on Friday reported a 31% drop in full-year core earnings, citing temporary coronavirus-related store closures.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were 229 million euros ($277 million) for the year to Sept. 30, against 331 million euros the previous year.
Sales rose 3% to 3.5 billion euros, reflecting new store openings.
($1 = 0.8279 euros)
(Reporting by James Davey; Editing by David Goodman)
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