How e-commerce retailers can drive loyalty through smart insurance

Richard Hankin
Richard Hankin

Head of Retail Partnerships, APAC

We’re all spending more and more of our lives online. This means sharing pictures and personal updates with our friends, checking our bank account balance, playing our favorite video games, and even consulting our doctor. But perhaps most commonly of all it involves shopping — which we’re doing in our billions worldwide. For e-commerce providers the battle lines have been drawn, and it’s customer loyalty they’re fighting over.

To stay ahead of the competition, retailers are constantly searching for ways to enhance the shopping experience, and in so doing win the hearts, minds and wallets of consumers. But this is easier said than done in such an ultra-competitive market. Smart insurance, delivered at the point of purchase, offers an innovative new dimension to online shopping which could well be the missing X-factor your business needs to thrive.

The tech-savvy shopper

Consumers are spending more online than ever before. They bought products worth over $2.8 trillion online in 2018, 18% up on the previous year, according to Internet Retailer. Although this sounds like a lot, it’s still only 15% of total retail sales worldwide, highlighting the huge growth opportunity that still exists. Nearly a third of consumers bought online every week or even more frequently last year, up 5% from 2017, according to PwC. Increasingly they’re spending not just on products but also services: over half (51%) of global consumers told the consultancy they paid bills and invoices, and transferred money, online last year. It’s all growing evidence that consumers increasingly trust digital services with their hard-earned cash.

So how can retailers hope to differentiate? By offering fantastic experiences. Those that invest in doing so can charge a premium of up to 16% for their products and services, a separate PwC report found. Providing a seamless payment journey is also crucial: it’s claimed that as many as 70% of customers abandon their carts before finalizing a purchase because of nasty surprises.

Nearly a third of consumers bought online every week or even more frequently last year, up 5% from 2017.

Yet offering a unique and compelling shopping experience is no easy feat. Consumer demands are rising all the time: they’re more switched on and tech-savvy than ever before, expecting seamless, omnichannel and highly personalized experiences delivered to any screen, anywhere, any time. In this context, offering tailored insurance on products and services would seem to be a perfect way to both build customer loyalty, and create an ancillary revenue stream.

The challenge is that old ways of doing insurance aren’t going to match this dynamic new online environment, where the customer is king and brand loyalty is hard-won but easily lost.

The right kind of insurance

Insurers have historically been unwilling or unable to integrate their offerings into e-commerce platforms, due in part to legacy technologies and concerns over escalating risk. This is no longer the case, thanks to a new breed of innovative distribution platforms designed to cut complexity, enhance the customer experience and keep visitors inside the e-commerce provider’s ecosystem. The key is for retailers to find the right partners. So what do they need to look for?

For starters, complex, opaque, one-size-fits-all policies will not work in these online environments. Instead, the focus should be on policies written not by lawyers but in plain English, so they’re accessible to all. They should also be personalized to each individual customer and what they’re buying, as well as their language, currency and platform of choice. To offer this level of customization, insurance platforms must be able to dynamically bundle policies from a range of underwriters across multiple categories and stitch them together to provide a unique offering for each user. Modern smart insurance platforms also leverage machine learning to offer dynamic premiums — ensuring the right price is offered at the right time to drive higher conversions.

Claims need to be seamless too. This area is one of the biggest failings of traditional insurance, and will reflect badly on an e-commerce provider’s brand if improvements aren’t made. If there’s also an option to pay claims by store credits, it could help to drive repeat purchases and customer loyalty.

Customers must be able to claim quickly and easily in their own language. Modern, microservice architectures combine multiple moving parts that are necessary to fulfil a claim — including communications, interface, payment delivery and notifications — so that they appear seamless to the end customer. This approach can enable instant payments, a far cry from the monolithic legacy software systems and internal bureaucracy which can typically delay claims approvals in traditional insurance.

Finally, all of the above needs to slot neatly into the customer journey, embedded in the point of sale via APIs. For an e-commerce provider, any insurance offering must be consistent in tone with the rest of the brand as this will resonate most with consumers and avoid any friction that could lead to drop-outs. The overall experience should be one of insurance seamlessly integrated into the whole, rather than standing out as an awkward add-on.

All successful retailers offer services that provide value and therefore create loyalty – think short delivery slots and free returns. Smart insurance offers ambitious industry players a new opportunity to do the same.

All successful retailers offer services that provide value and therefore create loyalty. Think things like short delivery slots and free returns. Smart insurance offers ambitious industry players a new opportunity to do the same. Finding the right insurance partner may take time. But the rewards speak for themselves: happier customers who are more likely to return, a new revenue stream, and market-leading NPS scores which could drive even more consumers to your site organically. That’s the kind of differentiator retailers need as the industry embarks on its next phase of global growth.

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