Customer engagement in UBI: value proposition, behavioral change, risk prevention

READ ABOUT WHY CUSTOMER ENGAGEMENT DEPENDS ON A GOOD VALUE PROPOSITION, HOW YOU CAN CHANGE YOUR CLIENTS BEHAVIOR AND INCREASE RISK PREVENTION 

Customer engagement is a method used to create valuable customer relationships in many different industries, including the traditional insurance industry. With usage-based insurance (UBI), customer engagement models are brought to a new level. Why?

Insurance carriers who offer smartphone-based UBI have a direct communication channel with their clients - the smartphone app. Using it the right way, they can create a strong customer engagement strategy. Also, gathered behavioral data makes it possible to easily segment clients and develop personalized messages and run specifically designed engagement campaigns. 

Continue reading to find out how you can benefit from behavioral data and create your customer engagement strategy. 

The connection between customer engagement and value proposition 

As we mentioned in our previous article about customer relationships, any UBI product's critical success factor is a good value proposition. Customer engagement and bad value proposition can buy you some time but can't lead to a successfully marketed insurance product. If the insurance product is good, your clients will be eager to use it. Customer engagement is a great tool to change client behavior and better risk prevention but can't be the sole reason clients choose your insurance product.

The same goes for the value that the customer gets in exchange for participating in some kind of customer engagement campaign.

Customer engagement campaigns are a game of give and take for both sides, you as insurance carriers and your clients. If you choose to create a reward contest and request from your clients to drive 5000 km while maintaing a good driving core but reward them with a small 5% discount or irrelevant prize, you'll have a hard time achiving your enagement goals. Why? Your value proposition isn't aligned with what you're asking your clients to do in return. If you offer them a significant discount or prize relevant to the clients you've targeted, you'll see an improvement in driving scores and motivation to participate in the challenge.

As you can see from this example, customer engagement is linked to customer experience and behavior but can't impact the core value proposition. Customer engagement can help product promotion or deliver useful insights to you about engaged clients who have an excellent driving score and deserve more of your attention.

It's also essential for us, as your technology provider, to learn as much as we can about your value proposition to help guide you with customer engagement tactics.

The importance of segmentation 

Like any other strategy, the first step is to segment your target audience or, in this case, your clients. Segmentation plays an essential part in customer engagement because it gives you the option to offer relevant and personalized information motivating better driving behavior.  

How does segmentation work? After we gather the behavioral data from your clients, the first step is to clean and analyze them; the second step is to evaluate them with our scoring system and then segment the end-users according to their final score. 

This driving score enables you to send personalized messages, tasks, reward challenges, or other customer engagement tactics directly to your clients. You can also segment your clients based on the frequency they use the smartphone-app and watch how their behavior changes. As you can see from the graph below, the most significant positive behavioral changes have frequent app users who are usually eager to participate in engagement projects. 

user_driving_behavior

components of the customer engagement module 

The three components of the customer engagement module are communication, gamification, and incentivization, and they all are standing on proper segmentation.

Their main goal is to change the driver's behavior for the better and, in that way, increase risk prevention. Thanks to the safety score, you can see the impact of customer engagement on drivers' behavior, like in the graph below. It's showing the improvement of the client's safety score over 12 months.

safety_score_improvement_of_users

1. Communication

The communication component inside the customer engagement model provides numerous features that you can use to address your clients who are active in the smartphone app and those who are not. You can segment your clients depending upon their activity and use different combinations of communication features.

Multichannel messaging enables you to communicate directly and easily with your clients via: In-app message, Push notification, Email, and SMS. It's up to you to decide which channel is the best option for your client segment. Communication can be directed either to all clients, groups of clients who share common characteristics, or an individual client. If communication is directed toward a group of clients, client segmentation is being leveraged to profile and group clients based on any given parameter, including demographic characteristics, car brand, or driving behavior.

2. Incentivization 

The incentivization component includes voucher management and loyalty points and tiers, where the latter is only a concept. When creating an incentivization strategy, the important thing is to use the right reward for the task you ask your clients to do. The vouchers should contain prizes relevant to the client segment and your product's nature – a motor insurance policy. Vouchers containing discounts at selected gas stations are a great starting point.

3. Gamification

The gamification component aims to increase your existing clients' activity already using the app to collect more driving behavior data and improve client experience. As you can see from the graph below, the engagement rate depends on the app usage frequency.

frequent_occasional_and_regular_users_and_their_engagement_in_percentage

The set of mechanics comprised in the gamification module are not primarily intended to boost the number of new clients in the app. Even though, if combined with your external marketing campaigns, it can result in increased new clients. The Gamification module includes various mechanics, including activity badges, reward contests, challenges, scratchers, leaderboards, and crowdfunding.

As you can see, there is a lot to consider when creating a customer engagement strategy for your UBI products. For more information, you can download our whitepaper on that topic or fill out the form below:

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