When taking out home and motor insurance, we all know that price comparison websites can offer convenience…there’s less time spent shopping around from one provider to another and there’s the added convenience of only having to input your ‘needs’ once (rather than on every provider website).

But over half of consumers still prefer to take out their home and motor insurance direct with the insurance provider (59% of home and 55% of motor customers). For these people, the traditional approach of contacting a provider direct is preferred over the more convenient option of using a price comparison website. So why do some consumers still choose to use an approach which could cause them more work?

Research carried out by Harris Interactive has identified some interesting differences between these consumer groups which shows that purchase channel has a considerable effect on the customer experience and resulting levels of satisfaction with chosen providers.

While ‘price’ and ‘level of cover’ are obvious hygiene factors in any decision-making process, our research of over 3,000 UK respondents suggests that for many, the manner in which providers meet their service needs and treat them as individuals are still important influencers which impact our choice of provider. In addition, they also have a direct impact upon customer likelihood to continue using the chosen provider.

For those who have taken out their home or motor insurance direct or via a broker compared with via a price comparison website it is clear that the relationship they have with their provider is very different. The customer experience they receive is being translated into higher levels of satisfaction, greater likelihood to continue using and to act as advocates. Consumers who have experienced a more personal service are also significantly more likely to feel valued and to feel that the relationship is one based on trust.

When we look at how connected customers are to brands they hold insurance products with, we see that those purchasing direct or via a broker feel much more engaged with their provider – again, underlining the importance of personalised service.

Whilst significantly more direct and broker customers are likely to be fully connected with the brand, price comparison website customers remain indifferent. This is emphasized by the middle ground service ratings they are giving…the ‘slightly agree’ and ‘fairly likely’ ratings compared with the significantly higher levels of ‘completely agree’ and ‘definitely’ ratings given by the direct and broker customers.

Our research also shows a clear link between direct and broker customers experiencing higher levels of interaction and contact with their provider post purchase, compared with those who purchased via a price comparison site. In fact, 36% of home and 28% of motor customers who purchased via price comparison site claim to have had no contact or further communication whatsoever with their provider in the past year, which is significantly higher than the figures for direct and broker customers.

We asked consumers to rate their insurance provider on various metrics and yet again found that purchase channel had a bearing on customer ratings. Direct and broker customers are significantly more likely to cite higher levels of satisfaction with:

• the service that is provided
• knowledge and professionalism of staff,
• being treated as an individual,
• the range of products on offer; and
• the value for money they receive.

This perceived level of service and personal touch was more often cited by direct and broker customers and had a direct impact in terms of how their provider made them feel. In particular, those who purchased home or motor insurance direct are significantly more likely to have the following feelings in relation to their perceptions of their current provider:

• secure,
• supported,
• relaxed,
• and happy.

It’s no surprise then that direct and broker customers obtain competitor quotes less frequently and switch providers significantly less often than those who use price comparison sites, i.e. they are more likely to be ‘stickier’ customers. This also has commercial implications for providers who may be overly-reliant on price comparison websites, possibly suggesting they might be attracting a more ‘fluid’ type of customer, i.e. one more likely to shop around at renewal. This reinforces the image of providers’ topping up a ‘leaky bucket’ – a costly exercise for any insurer.

So why is this important?

The research does offer ‘food for thought’ for providers:

• Does encouraging customers to shop direct or via a broker offer a more sustainable source of revenue? Because customers are likely to be ‘stickier’ in comparison to those who shop on price comparison websites? Thereby increasing their lifetime value to the business?
• Even if these customers do begin their search on a price comparison website, is there something that might be done to encourage them to then contact the provider directly? And would this change the nature of the relationship enough to encourage customers to hang around come renewal time? Would an added incentive encourage this direct purchase to take place?
• And do those who purchase via price comparison websites even want a ‘relationship’ with their provider? And if so, what form would this relationship take? And what communications would they want from their provider and on what frequency?
• To be commercially successful, providers need to encourage customers to stick with them through multiple renewal periods, but to do so customers need to feel valued. So how can insurance companies better engage with customers in order to make them feel valued, particularly those who didn’t buy direct?

The importance of personalisation

In order to improve the probability of creating and sustaining strong relationships with new and existing customers, services and communications need to be tailored as much as possible to focus on what matters most to customers. This may be particularly true for (price driven) price comparison site users, for whom switching has become the norm, therefore allowing providers a better opportunity of retaining them. Focus should be on disseminating messages to price comparison website users in order to make them feel more secure and supported, whilst at the same time, successfully communicating product benefits and value for money.
As a provider, identifying which customers are fully engaged with your brand versus which are at risk, might play a key part in any retention strategy. Strengthening connections to promote sustainable relationships and reducing the triggers for switching is key. Understanding what can be done to reinforce relationships with those who ‘pose a flight risk’ might go a long way to stopping those leaks and delivering greater commercial revenues to the business.
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The report is part of Harris Interactive’s Customer Power series providing brands with competitor benchmarking trends and insights about customer relationships and experiences. Customer Power is designed to help organisations understand how consumer interactions with their brands are changing.

Harris Relationship & Energy Metrics. Connect customer hearts and minds with future intentions to understand relationship strength and sustainability. See which brands are the most dynamic and innovative to attract new business.