Legal & General have identified four types of potential protection customers. How do you segment them?
Peter Hamilton, Zurich
We look at how customers might behave, so these are primarily attitudinal segments, although it's worth observing that our business is intermediated. To that extent, we are not targeting particular customers through advisers: we have a variety of customers coming to us through that route.
What we are doing is looking more broadly at the type of customers we have. We might look at things such as: the extent to which customers might value channel choice - either by the phone, internet, by speaking to advisers directly, or who might be happy to do financial planning themselves. There are some happy to delegate all of the planning to an insurer or an adviser.
We are looking to understand how customers view their finances, and how they approach them. Some will seek to avoid any engagement, some are confident planners, and some will be delegators who prefer to work with insurers. Others will be disengaged price seekers who look at the best price, not the process.
You have to look at the different customers and channels, and what forms of communication they prefer. Is it through paper, email or neither of those? How do they like to be contacted?
Our approach would be slightly different if we were going direct to consumers. In the intermediated world, we have no direct control over the marketing and segmentation, but the individual adviser does.
Kevin Burnham, Charles Derby Group
Charles Derby Group is looking at segmenting clients. I think advisers don't think too much about it, other than, for example, we have a young couple who have debt or have bought a house and have protection needs.
We have a big data project at the moment: we are trying to get better data and better contact details, such as email addresses, instead of home addresses, for the clients we have already.
We do have a segmentation piece in mind. There is the over-50s who might have different protection and product needs, such as taking out whole-of-life cover or inheritance tax concerns.
We haven't been very scientific about it in the past, but I know that when we have the data set in, we will be, and aiming to put clients into more specific categories, and looking at the opportunities. In some respects, it will good for advisers to think about models.There is a lot we could do in terms of segmenting clients.
I doubt many firms have segmented in protection, but I see the merit of it. RDR has meant general IFAs are looking at pensions and investment advice, and the mass affluent as a result of adviser charges, instead of small cases. Whereas with protection commission, there is still money to be made in selling a £25 a month term assurance policy. This is where protection advisers may have become lazier and failed to segment client bases.
Emma Walker, Moneysupermarket
We tend to start really high level and we're coming at this from a digital angle. We still need to mature this but what we have done is to segment customers who come to our business into seven categories. We look at affluence, wealth and life stage.
Rather than say a segment is someone who is buying life insurance who does have it, or someone who is buying life insurance who has never had a policy, we look at what is happening in their world.
What is happening in their lives, how do they feel and what do they think? How busy are they?
From that, we determine what the journey, product and pricing should look like. Take Foundation Families, which is one of our categories. We know they are families with have young children and will have really busy lives.
Giving them a buying process that is over-complicated will not help matters. With affluence, they are at the lower end: they know they need to take out life cover, but it is a cost they don't really want to have.
With someone starting out at the bottom, if we disengage we've lost them completely.
Life insurers tend to segment on their propensity to want to buy. How do we tailor processes around that?
If we know a motivation is putting families first, it will be around protecting loved ones. We will angle our communications around their thoughts, feelings and motivations, rather than almost making them feel guilty. It is more of a retail model, acting in the same way as a supermarket.
