Suggestion for a New-Year’s Resolution

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Monday, Dec 31, 2012 •  Posted by


I recently ran across a blog article from a major news outlet that talked about the personal impact of a particular notice that the author had received from an insurance company regarding the disparity in the national tax treatment of same-sex couples and how it applied to their situation within the state of Illinois. One of the key phrases in the letter to policy holders said, “Pursuant to Section 3 of the Federal Defense of Marriage Act (“DOMA”), same-sex couples and civil unions are not recognized for the purposes of federal law. Therefore, the favorable income-deferral options afforded by federal tax law to an opposite-sex spouse under Internal Revenue Code sections 72(s) and 401(a)(9) and “spousal continuation” rights are currently not available to a party in a civil union.”

The blog went on to point out that this type of document blatantly shows what discrimination looks like, and how the mishmash of laws between the states and the federal government make things needlessly complicated for real people. It’s not just an abstract notion anymore when it affects you directly. Because of the data we track, we see these kinds of notices all the time. This dry legalese tone isn’t unique to this situation, and is actually quite common for all sorts of communication from every carrier. As someone who’s been in the industry a long time, I recognize this sort thing as standard boilerplate disclosure language and thus don’t take its dry tone personally, but unfortunately, for someone who is simply a policy holder and unused to dealing with this type of heavy detailed language, it can seem quite clinical and intimidating.

It got me to wondering why insurers so often communicate like this. Is it to step back and only inform without putting any kind of a slant on it? Perhaps so, but mostly I think it’s intended to be posterior-covering information intended to absolve the insurer from responsibility for the situation being what it is; almost as if to cry out to the consumer that regardless of the issue, “it’s not our fault!”

The questions I’m putting forth are these; why do insurers seem to only communicate through the dense wording of legalese? Political stance for this particular issue aside, why not soften the language, combine the notice with some sort of contextual piece, and perhaps a Q&A document? For sure cost is a factor for direct mail, but with so many consumers opting for “green” email communications, that’s fast becoming a non-issue. I’d propose that either they are either lazy, don’t care, or simply lack some sort of incentive to do things differently. Which do you think it is? Regardless of the reasons, in this season of making new-years resolutions, perhaps this is a good time for insurers to try to communicate at a more personal level and quit alienating their policyholders.

Questions From Readers

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Friday, Dec 28, 2012 •  Posted by


The following is from the Q&A session of our most recent webinar entitled, “Trends in Banking Loyalty and Customer Communication.” To view a recorded version of the webinar, please click the link.

You mentioned that the marketing, especially on web sites, was getting more simple and streamlined. Are the products themselves doing that as well, or is it just the marketing?
The products are definitely getting more complicated, but the banks are working toward communicating about them in more simple terms. One example is the way that banks are communicating fees on the accounts. The banks have tried to get the fee information down to just one page of disclosures to easily convey the most important and common fees and conditions. With the packaging of products, customers must often meet more and more conditions in order to qualify for preferred pricing. That usually means maintaining a certain minimum balance or the requirement to utilize the product a minimum number of times each month.

Are product packages actually increasing loyalty? What stops customers from switching banks not on a simple product base but on an entire bundle?
The product packages that are based only on demand deposits don’t necessarily tie customers that strongly to the bank. For that reason, banks are focusing on rewards, self-servicing options and packaging loans and investment products with demand deposit products. One example of rewards is BankAmeriDeals. Customers earn rewards through the credit and debit card, but they must bank online to receive the rewards. The rewards are also available through the mobile app, which allows customers to use rewards at the point of sale. That approach effectively ties five products together. If the customer finds those rewards valuable, they are less likely to switch to another bank. In terms of mobile apps we’ve seen a lot of advancement in the functionality to make them more useful. One reason is just because of natural evolution, but another is because banks are trying to stay ahead of the competition. Providing a great mobile experience might not entirely prevent customers from leaving, but it might provide at least one reason to stay. Online bill payment would also fit into this category. More importantly; however, is that a lot of the packages now include investment or loan products. Those products are much more difficult to move, so packages that include them tie the customer more strongly to the bank.

Are discounts needed to encourage bundling?
The idea behind the bundling is that it provides customers with something they can’t get by purchasing the products individually. So, yes, discounts are needed.

Are there any moves among banks towards building an emotional/communal value offer?
Most of the offers we see are based on cash incentives or features and benefits such as ease, simplicity, control, and financial management. Emotional appeals are more frequently seen in investment offers, specifically retirement. We sometimes see communal messages in print or statement inserts. An example would be Chase’s Community Giving program. The bank communicates it in statement inserts and online, specifically through Facebook.

For the customer who is primarily self-servicing through remote channels, do you have any recommendations on how banks should communicate with them?
Banks need to consider communicating with the self-servicing customer when the customer has logged into online banking or the mobile banking app, possibly even within email alerts. This obviously needs to be done very carefully – if not done so, it runs the risk of irritating customers.

Roughly 30% of our customers don’t do online banking. Do you think banks should keep trying to convert them, or focus on the customers that are already doing online banking?
If a customer has been with the bank for a long period of time, and has received repeated communications about online banking and bill payment, but still hasn’t converted, it’s most likely that the customer won’t convert. Instead, banks should probably focus on getting new customers enrolled in online banking immediately.

It seems like a lot of messaging is done on the statement, or as statement inserts. But as the industry pushes its customers to receive paperless statements, how does that affect customer communication?
By pushing customers to paperless statements, banks lose statement inserts as a communication channel. That’s potentially a big loss based on how much customer communication is currently done that way. Banks generally provide online PDF versions of the statements and include all of the statement inserts, but it’s questionable as to how many people really read the inserts in the electronic format. Obviously banks need to evaluate other channels – online, email and mobile.

You talked about website redesigns. We all know that people are resistant to change. How do customers feel about website redesigns? Is a redesign a dangerous thing to do, because it runs the risk of confusing customers?
It’s well established that customers don’t like change, so any changes need to truly make navigation or some other immediately visable aspect easier for customers. The recent efforts by banks to redesign their sites were right on target though. The navigation is truly easier and customers aren’t bombarded by multiple marketing messages.

Timing is Everything!

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Thursday, Dec 27, 2012 •  Posted by


On a recent trip, I flew on an airline that I hadn’t used in a very long time. It had the cheapest fare, and since I wasn’t going to be flying first class, I figured it didn’t matter. In my mind, coach is coach, and it’s pretty much a commodity at this point. I truly didn’t worry about which carrier it was. Hindsight being 20/20, I wish I could go back in time and change my decision. On the other hand, I got to see a real life example of why the timing and concept of a marketing message is important, and how doing it wrong can potentially have a negative effect. My intent here isn’t to bash my flight experience, but it provides the context for the sales offer I heard.
I’m a tall guy, not freakishly so, but tall enough that I am extremely uncomfortable in places like movie theaters, the back seats of cars, and of course coach airline seats. The seats are measured to accommodate waists, not shoulders, so they are inadequate for anyone older than middle school kids if you don’t want to touch the person next to you or get hit by every single person walking down the aisle of the plane if you have the aisle seat, which I did. So after nearly three hours of getting hit, rubbing shoulders with the guy next to me, and getting irritated by the frequency of annoying interruptions/announcements over the intercom trying to sell me a variety of lunches and beverages, I was treated to a nearly four minute announcement that could not have made me feel worse about my flight. I spent the last few minutes of time, when using electronic devices was still allowed, to hear an offer for their frequent flier mileage credit card – complete with the promise of a large number of miles added to the account if I filled out the application today.
I think the best time to try and approach someone for a loyalty program is when they’ve had a positive experience, or at least a potentially positive experience, not after three hours of near misery. Perhaps I’m being melodramatic, but the anecdotal evidence I have points to the fact that most people don’t usually have a great flying experience. Since everything about the flight both physically, and from an aesthetic point of view (the plane was dirty and they were too cheap to have any video monitors) wasn’t great, I was left wondering, “Why would I inflect more of this on myself?”
This brings me of course to the inevitable insurance tie-in. While this airline was cheerfully trying to sell me more misery, it occurred to me that insurance as a product tries to alleviate misery and suffering by providing the resources to make you whole after what is usually a horrible experience. What I found interesting here was that insurance companies in general and this particular airline had opposite strategies. Insurance companies try to sell you in advance of a horrible experience, largely needing you to imagine or remember a bad event, in order to sell you products that help heal and restore you to where you were before the event. While at the same time, this airline was trying to sell me on the opportunity for more experiences like the one I just had without taking into account that it might be a bad experience and would reinforce that experience rather than alleviate it.
Can you change outcomes and build on sales opportunities if you change your timing? It would be worth a shot to find out. I wonder what would happen if insurance companies used the context of a bad experience, like an auto accident, to update and cross sell products like supplemental health and life insurance – that hasn’t happened to people I know that have been in accidents. And conversely, if the airline had tried to sell me a loyalty program at the start of the flight after getting settled in and might be in a better mood and more receptive to a well-tailored sales pitch. Perhaps opportunities lie in the “when”, and not always the “What” or “Why.”

Home for the Holidays

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Tuesday, Dec 18, 2012 •  Posted by


As families gather around this year, a variety of conversations are sure to take place; sports, politics, food, and general family news, some of which might even generate some heated arguments. One thing though that’s probably not going to come up, since quite frankly it’s a bit on the depressing side, is a conversation about having all your affairs in order. Conversations about where family members can find important documents; wills, living wills, powers of attorney, financial accounts, and yes, even life insurance contracts. It’s a conversation you should have, even if it’s not fun.

Due to lost, hidden, or misplaced paperwork, it’s quite possible to have a policy that’s not entirely obvious, so communication is important. Don’t assume that it can be easily discovered. With so many bills and statements being sent online, policies can get buried and all but forgotten. As a result, many life insurance policies go unclaimed and the proceeds turned over to the state. Much of the problem stems from the simple fact that family members don’t know if the deceased had life insurance, and if so, which company. It’s commonly assumed that life insurers will somehow know and that the payment of the policy will occur automatically, but that’s definitely not the case. Many insurers do use resources like the Social Security death database to determine if death benefits should in fact be paid out, but proactive usage of it to find potential beneficiaries has been, if not rare, than much less common than it should be. The onus is really on families to know which life insurers to contact, and it’s a simple problem that’s easily resolved through some basic communication.

As morbid as this might sound, I think we’d all our families to talk about us at future family gatherings in a positive light. It’s better to be remembered for how we took care of each other, not that we left everyone hanging to pay our bills and debts, and put shackles on our family’s financial future. The holidays can be a tough time of the year for families following the loss of a loved-one. I think most of us would like to be remembered for what we did, and how we lived, than for what we forgot to do. So while we are all gathered together as families this time of year, or quite frankly any time of year, please take some time to show or tell the family what policies you have and with whom. And if you don’t have life insurance, be sure to communicate those excuses as well, perhaps you can convince your family that they will be better off financially after you’re gone if you don’t have life insurance. That would make a fascinating argument; I’m open to hearing what that would sound like. Or better yet, just go out and make sure you’re covered.

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