In this age of digitized bureaucracy, people seem to be less concerned with who they’re dealing with and more with what the company can offer them – and at what price. Does the insurance brand even matter to customers anymore?
Price-comparison sites allow customers to acquire the financial services they need at the lowest-possible price, but this means the brand they are buying from is less important. It’s common for customers to have to look up who they’re insured with in their policy documentation before making a claim, for example.
As a result, companies providing the lowest price can often undercut the competition regardless of who they are. This means it’s increasingly common for challengers to enter the market and start to dominate with promises of cheaper and faster services that traditional players cannot provide.
David Ogilvy, the “father of advertising”, describes branding as:
“The intangible sum of a product’s attributes: its name, packaging, and price, its history, its reputation, and the way it’s advertised.”
In other words, a brand is more than just an idea or a logo. It is an identity representing who you are as a company and what you stand for. Brands are built on many factors including culture, values, and heritage. Branding is intended to help companies to stand out from the competition and create a unique value proposition for their customers.
With a market full of many startups, neobanks, challenger insurers, etc, it’s no wonder consumers can easily forget who they’ve bought their financial services from. These challenger institutions rotate in and out of circulation frequently. They regularly go bust, get bought out, and are sometimes sub-brands of bigger competitors. While they’re around, these new brands can offer low-cost and often novel financial products to consumers that can convince them to switch from their normal brands.
“Competition in the insurance industry could quickly intensify as consumers become open to buying insurance not only from traditional competitors, such as banks, but also from Internet giants,” said Michael Lyman of Accenture.
This was in response to research Accenture conducted in 2014 into whether or not consumers would consider purchasing financial services from companies like Amazon or Google.
Insurers and other financial services firms spend millions, if not more, on branding, but does it matter anymore? Is it more important to just provide the services customers need at the lowest price, regardless of branding?
Brand names have always been advantageous in the modern world, with consumers more likely to buy products from companies that they recognize and trust. Technology has made it easier for brands to get their name out there, and consumers have had an easier time finding the brands that they like over the years. Effective branding can lead to:
New customers are likely to test the waters before committing to more than one financial product from a new company. Loyal customers are likely to spend more with a company they’ve already had good experiences with.
Having a clear and recognizable brand can help build trust with consumers. If they know that the product or service, they’ll receive is a quality one, they’re more likely to choose you.
Every generation has brand names that they’ve heard of, or their friends suggest, or they’ve been seeing adverts for since their childhood. It’s only natural that they lean towards a known brand as a sign of quality and trustworthiness than a start-up that could be closed down at the drop of a hat.
Brand size used to be the foremost factor in how consumers chose products. In today’s fast-paced world, however, consumers are constantly looking for solutions that help them meet their needs and solve their problems. With those needs changing for the modern consumer, marketers must find ways to engage with customers that speak to their values and meet their expectations.
In 2017, price-comparison websites in the UK drove 25% of credit card sales, 40% of home insurance sales, and 55% of motor insurance sales. That was all before the pandemic drove a surge in online retail, so the numbers will now be higher.
These sites ask users to enter the features they need from a product and produce a list of products from various retailers that fit their needs, with the cheapest at the top. Many customers simply buy the cheapest product, which may be from a brand they do not recognize or remember. They may then not think about that brand again until they need to claim or use the service.
Yes and no: brand still matters to many customers.
Even if they are looking for the cheapest option, a recognizable brand can make a similar product stand out from challenger products. If the price difference is negligible, consumers will still often choose the brand they’re familiar with.
Yet, offering the same services and prices that the challengers do is important to prevent your product from being ignored by some customers who only want the lower price. To compete, established brands need to ensure their products meet or exceed the needs of consumers.
Financial service providers should offer a premium product to lifetime customers, boasting all the bells-and-whistles customers could ask for. Simultaneously, they should also offer a cheap-and-cheerful, flexible and digital product that will stand out on a price comparison site.
Digital products are more tailored to customer needs, such as providing a solution for someone who wants to manage their investments online. With a variety of factors, like rising customer demand for convenience, businesses need to stay on top of these changes so that they can provide their customers with the best service possible.
The FintechOS platform can help you keep your loyal customers and convince new customers to choose a well-established brand over the ‘shiny’ new challengers on the market.
To find out more, book a demo.
