The downgrading of protection's value post purchase is a prime factor in making it a grudge purchase, according to recent research. Jo Miller says better contact with customers is key to changing consumer attitudes.
On February 4, people logging into Facebook were greeted by a news feed full of friends sharing their ‘Facebook movie’. As part of its tenth anniversary celebrations, the social network had given users the chance to look back over their time on the site.
It is not unusual for users to greet Facebook iniatives with high levels of cynicism, but with this simple move Facebook had achieved a coup. Users were simultaneously supportive and emotionally touched by this very personal jigsaw of the key moments of their lives. Suddenly their social media habit had both tangibility and a purpose.
A recent report by The Syndicate, a research partnership between The Protection Review and Hannover Re UK Life Branch, suggested the lack of such tangibility is a huge obstacle facing the protection insurance industry and one that must be overcome if sales of the product are to be encouraged.
If only it were as easy as personalising a video for each customer like Facebook managed. But perhaps it is. The Syndicate research asked people who had previously held protection products why they had subsequently cancelled them, and the majority of responses suggested people felt they had better things to spend their money on or had not seen the value of the products while they held them.
The message from this group was clear: protection insurance doesn’t feel like good value once it is bought. While quite different conclusions might be reached if a health catastrophe had intervened, for the vast majority of people there appears to be no strong feeling that buying protection is a good use of hard-earned cash.
Shaking off the ‘grudge’ tag
The process of making a purchase is much more enjoyable if the purchase can convey instant and lasting gratification. First there’s the interest and anticipation, then the research and investigation, and then the satisfaction of knowing you’re buying the right thing – and, finally, you get to enjoy the product.
Except it’s not quite like that with insurance, hence the oft-used label ‘grudge purchase’. Indeed, protection is unique in that once such a significant purchase is made, the value and benefit of that purchase diminishes radically post sale.
Nobody boasts to friends about the size of the cover they’ve just bought. Instead, it is ticked off a list of obligations and tucked into a drawer, often forgotten and rarely fully understood. It is paradoxical that such a significant purchase, in terms of the impact it can have, rarely stays front of mind.
Emphasising the value of the benefits offered by an insurance policy is essential. The Syndicate research asked those who currently held a protection product what they valued about their policy.