Selling Online to Generation Y

Baby Boomers, and more recently Generation X, have provided a fertile playing field for insurance marketers looking to sell insurance. But what about the illusive and invincible Generation Y? Who are the members of this younger generation … where are they … and how can we, as insurance marketers, effectively reach them online?

By Kevin McKenna

To define Generation Y, it’s helpful to examine some of the common misconceptions. Many believe that Generation Y is Generation X – only “supersized.” The myth is that the Generation Y is more rebellious, more brand hostile, more cynical and less caring. Available data about this market, however, doesn’t reflect these beliefs at all; rather members of Generation Y tend to be characterized as “good kids” with little or no generation gap, and are both community and family oriented.

Among Generation Y, violent crime is down and the incidence of smoking, drinking, and drug use has fallen simultaneously for the first time in years. According to a Gallup Poll, 90 percent of Generation Y is close to their parents. It’s been reported that 86 percent “trust” their parents. When asked about their heroes, it is not uncommon for Generation Y to name their parents. When it comes to being active in their communities, volunteerism is on the rise. Generation Y has also been noted to be one of the most religious age brackets. Family orientation – in addition to the close relationships they members have with their parents – is key, with teen and young-adult marriage growing steadily.

Generation Y is also more multi-cultural than any generation before them. Some 34 percent fall into minority categories versus 24 percent of Boomers. There are 20 percent more inter-racial families among Generation Y.

Make Way for the Millennials

Members of Generation Y – also known as the Millennials – were born between 1980 and 2000. They are coming of age now and in growing numbers. Insurance marketers might consider them to be a little young today; but, because they won’t be too young for much longer, this segment holds great potential and the time to build strong relationships is now.

To understand Generation Y – their values, wants, needs, and behaviors – it helps to step into the world in which they live. Generation Y tends to be family focused, group oriented, and open to more diversity than those we are accustomed to targeting. They lead heavily structured lives with many obligations and responsibilities. They are “connected 24/7” as a result of being born with the Internet. Generation Y is always in touch – 85 percent of college students own computers. Some 72 percent check e-mail daily and 26 percent use instant messenger functions.

While these trends represent a tremendous opportunity for those marketers looking to target Generation Y online, it is important to acknowledge the challenges. Having grown up with the Internet, they tend to be less patient. They expect and demand real-time access. They want to find information on products and services instantaneously and at any time they choose; they demand real-time customer service. They also see personalization – customized products, services, and customer care – as a bottom line requirement for doing business with a company. But these challenges, if approached from a direct marketing perspective, can prove beneficial to insurance marketers looking to Generation Y.

Another piece of good news for insurance marketers is that because this target is so heavily family-oriented, they will have insurance needs at a younger age. And because they trust and respect the opinions of their parents, Generation Y will seek out the advice of their parents – the Baby Boomers to whom you have been selling for years – in researching insurance and making informed purchase decisions.

It’s All About the Product

So how does an insurance marketer go about selecting an insurance product to market to Generation Y on the Internet? It’s important to keep in mind that nothing is perfect – that there is no “optimal” product. Testing is critical. That said, there are guidelines – guidelines that have been tested and which work – to help determine which products in a portfolio may be appropriate for online sales to Generation Y. In our experience, insurance products that sell well online score high in these three important areas – consumer appeal, purchasability and infrastructure.

Does your product have online consumer appeal?

While it may be common to view the Internet as a mass medium that has the potential to draw anyone in from all over the universe, this thinking is flawed. The Internet is a direct marketing channel. For it to work, it must be leveraged as such. So, instead of throwing all your products up onto a website in hopes of selling something – anything – to younger audiences, your money is much better invested when you go back to basics. Think “targeted marketing” if you want to sell products to Generation Y online.

You can do this by either creating a niche-oriented product or offering a product that meets the needs of an underserved segment. Test products that meet the current needs of Generation Y and be prepared to develop a relationship that will allow for customization and expansion in the later years. Some insurers sell renters insurance online. The product is simple, inexpensive, easy to purchase online, and an efficient way to cement a relationship. What’s more, it can be inexpensively cross-sold to young auto customers.

Geography is also an important consideration in determining appeal. Limited geographies don’t cut it on the Internet, as almost no media can be targeted. When selling online, go with a product that is likely to drive high enough volumes to make your investment worthwhile. Then ask yourself, “Does this product make sense for the medium and my audience of younger people?” Selling identity theft insurance might sound like a great idea. That is until you remember that a Generation Y consumer who is worried about having his or her identity stolen is unlikely to offer personal information over the Internet.

Is your product purchasable online?

Simply put, having an insurance product that is purchasable online boils down to making it easy for a consumer to make the purchase decision and eventually buy the product online. But even before that action can be taken, “purchasability” means ensuring that a product can actually be sold via the Internet – that it is priced right and that it is properly underwritten. In the best scenario, a site that is designed for insurance buying – not insurance shopping – will feature one product from one carrier and either a bonus offer or a niche product.

Can your product be supported by an online infrastructure?

Because it is a direct marketing channel, online marketing can be tracked. Are you ready, willing, and able to track online efforts and fulfill them electronically? Can you support all volumes? What payment methods can you accept? For best results, offer three options – credit card, electronic funds transfer (EFT) and direct bill. Credit card and EFT offer high pay persistency. Direct bill helps build robust databases. What about cross- and up-sell opportunities? If a prospect leaves your site without buying, are you prepared to offer a more affordable alternative while still meeting the initial need for insurance?

Are you prepared to offer customer service online? Do you have options for prospects to get the answers they need – when they need them? Are you willing and able to customize, and personalize, your offer and service?

Bottom line: the product you offer online needs to be simple. It needs to meet a specific niche or unmet need, and it needs to be presented in a way that makes it easy for the consumer to purchase. Selling insurance online is as easy as offering a salable product and viable offer to the right audience through market-proven direct marketing techniques. Well, it sounds simple, doesn’t it? When more direct marketers of insurance take this advice seriously, more insurance will be sold online both generally speaking and to the younger insurance buyer.

Finding and Reaching the Younger Generation

Now … how can insurance marketers find younger prospects online? Online media channels are varied and include such options as search engines, e-mail, surveys/sweepstakes, pop-up advertising, contextual advertising, affiliate marketing, newsletters and sponsorships.

Search engine marketing (SEM) is common and effective and can target younger consumers that want your products. Because Generation Y spends a great deal of time researching products and services that interest them, SEM can be one of the highest quality lead sources in an increasingly competitive channel.

E-mail marketing has a broad reach and is the highest volume generating channel. Marketers have access to virtually hundreds of millions of e-mail addresses. (Remember, Generation Y consumers are out there participating in regular e-mail communication with family and friends.) E-mail is also an effective cross-selling technique. Cross selling has been successfully accomplished through the “thank you/confirmation” e-mail – a communication that is sent immediately following the purchase of an online product.

Pop-up advertising may sometimes be perceived as annoying, but it is very effective. Pop-up buys, available through networks and single sites, find opportunities with your target audience. With pop-ups, monitoring is critical to determine what’s working and what’s not. Contextual marketing, while similar to pop up advertising, is more targeted. It is promoted as enhanced search functionality. It is driven by a desktop toolbar and can be used to target consumers by product, lifestyle, or competitor. Contextual marketing activities, therefore, must be monitored daily.

Sweepstakes are another excellent opportunity to target traditional “direct” consumers – those that have already been proven to be direct marketing responsive. Bonus offers work well for sweepstakes, and a data-rich environment, such as the Internet, is an ideal platform for marketing products. Couponing is a way to target youth that are looking for a deal. As with e-mail marketing, couponing provides an opportunity for targeting those that are direct marketing responsive.

Maximizing Value

How does an insurance organization looking to gain its share of online youth maximize value? It all comes down to leveraging media spends and customer data. It’s critical to deepen customer relationships and optimize advertising by utilizing the data that you have about customers – and by using every contact with a customer to gather additional information.

Successful online insurance marketers – regardless of which market they are targeting – are successful direct marketers. They control their own destinies and don’t rely on aggregators to drive their business. In fact, they use web technology to support multiple channels, including sales agents and call centers. Rather than sell all products on one site, they deploy single-product websites with a strong offer and design to make it easy for the consumer to buy. And, they use direct marketing methods to target prospects and drive them to their sites.

Those insurance marketers that will successfully sell insurance to Generation Y online will:

offer single products on a single site
commit to the direct marketing formula
take ownership of the technology
will leverage the database-building activities of the Internet

What’s more, sophisticated insurance marketers will not make the mistake of doing the “Gen X thing” – thinking they can reach and influence this audience utilizing the strategies and tactics applied to the previous generation.

Respected as the direct marketing channel that it is, the Internet can, and will, continue to deliver profits for insurance direct marketers, including those looking to reach Generation Y online.

This article is based on a presentation by Kevin McKenna at the Professional Insurance Marketing Association (PIMA) Annual Summer Conference. Mr. McKenna is chief executive officer of The Credo Group. Based in Princeton, N.J. Mr. McKenna can be reached at (609) 750-2649 or via e-mail at kmckenna@thecredogroup.com. Visit the Professional Insurance Marketing Association at www.pima-assn.org.

Posted: Friday, January 14, 2005 12:00:00 AM. Modified: Wednesday, September 07, 2005 3:20:27 PM.

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