Imacs 2016 imecs 2016 Proceedings (Preliminary version) of the 4


INNOVATIONS IN THE INSURANCE MARKETING THROUGH SOCIAL MEDIA



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INNOVATIONS IN THE INSURANCE MARKETING THROUGH SOCIAL MEDIA

108.Claudia Hilker



Abstract

Social media have changed the requirements for the marketing seriously. Companies need to master new challenges that have arisen because of new media usage. This concerns the web 2.0 technologies, social media and the two-way communication between companies and customers. There are new opportunities for marketing, which require new approaches in handling, e.g. user-generated-content and risks like “shitstorm0”. Solutions may be reduction of risks and monitoring. It is a major challenge for such a conservative sector as insurance to integrate social media in their marketing in order to maintain existing customers and win new ones. They instigate changes in marketing strategy, marketing mix and processes and require a great deal of creativity in implementing them within the phenomenon of social media marketing. The paper deals with different views on social media marketing in the insurance sector using case studies on design of new processes within the innovation management, and indicating benefits in insurance business.


Keywords: Innovation, Insurance sector, digitalization, creativity, social media marketing.
JEL Code: G220, M310, O30

109.Introduction


Innovation is a perceived novelty. Innovation management allows the organization to respond to external or internal opportunities, and use its creativity to introduce new ideas, processes or products (Kelly, Kranzburg, 1978). The term innovation is heterogeneous and the intensity of implementation depends on the specific industry. The intensification of international competition led to increased pressure for innovation. As a consequence, the importance of innovation was increasing in science and practice and became a differentiator for companies in mature markets. Today, innovations decide whether a company can survive in the market Neubauer, 2008).

Innovations with web 2.0 technologies and social media have increased importance. Social media is a term designating a constellation of internet platforms allowing users to publish, share, comment, distribute and remix all types of digital content (Hilker, 2010). Social Media is a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content (Kaplan, Haenlein, 2010). Social Media are causing significant changes in the way the internet is used and perceived. The most popular platforms for business companies are Facebook, Twitter, Youtube, Instagram, Twitter and Youtube (Hilker, 2015).

Social media have revolutionized the marketing. The web 2.0 technologies have changed the way consumers participate, collaborate und communicate. In the digital age of globalization, social media marketing dominate the economy. To sum up, dramatic changes have eroded the effectiveness of the mass media in marketing 3.0. Kotler and Keller (2010) describe the paradigm shift in marketing: "We can say with some confidence the marketplace is not what it used to be. It is dramatically different from what it was even 10 years ago” (Kotler et al., 2012) Companies can react to the marketing environment in the following manners: 1) Reactive manner: a company can passively accept the current marketing environment and deemed as an uncontrollable element. They can design strategies to avoid the threats and look for opportunities. 2) Proactive manner: companies can pursue with actions to force against their environment. This can be achieved by using adaptions and changes.

110.1 Innovation in insurance marketing with social media


The innovation intensity in the insurance industry is low. In 2012, the companies in the automotive sector spent about 10.7 per cent of their turnover on innovation projects while the companies in the insurance company economy spent only about 0.5 per cent. The innovations focus of the German insurance companies is in product marketing (Swiss, 2011):

  1. Adjustment of insurance terms: Mostly, it involves customized „deal-by-deal adjustments“.

  2. Splitting/Bundling of risk coverage: The splitting of existing products as „modular“as well as the summary of existing products into bundles.

  3. Policies based on specific triggers: payed to the occurrence of a predefined event.

These product marketing innovations in insurance companies are mostly incremental innovations. It could even be a critical questioning, whether „tailoring“ or „bundling“ have already a sufficient degree of novelty, to be considered as a true innovation. Revolutionary or transforming innovations remain out (Swiss, 2011). Most of the identified innovations are rather driven in response to regulatory changes, specific customer requests or actions of the competition, but less by the active research for new opportunities in the market. The German insurance industry faces a dilemma. On one hand, innovations are needed to survive in a competitive market environment on the other hand innovations make it difficult to uncertainty regarding development duration and outcome a controlled use. The solution lies in establishing a framework for controlling the development of innovation factors.

Innovation with the use of social media is an attractive concept for insurance companies, as there is growing evidence that innovation can bring about tangible results. One of the reasons for the surge of interest in innovation seems to hinge on the expectation that the contribution from social media can bring about a transformation and an increase in productivity in the insurance market. Those expectations are moderated by the evidence that innovation has a problem of speed and scale. An essential feature of the new innovation paradigm is the opening of the innovation process. Customers become relevant actors in the innovation process, by contributing ideas for product development (Hettler, 2010). Terms and concepts such as open innovation, customer integration and networks reflect individual aspects of this development. Social media may support open innovation activities like:



  1. Better interaction with external participants in the innovation process (customer, partner)

  2. External support of the ideation process

  3. Business intelligence to better understand the innovation ecosystem

  4. Identification of appropriate people, being capable of assisting dedicated innovation efforts

  5. Branding, promotion and marketing of innovation outcomes and capabilities.

Social media play an important role because in innovation because they allow new forms of interaction. Thus, the concepts such as open innovation or customer integration in product innovation development without the Internet cannot be realized. The web 2.0 and social networks provides the technical platform for numerous open innovations. In his concept of interactive value, Piller is based on a collaborative process with a social exchange (Reichwald et al., 2009). Clients participate in complex value creation process of companies. The following practical examples illustrate the innovation push of Social Media for the insurance marketing:

  • Innovation for product development: With Social Media, it is possible to integrate customers in the development of product innovation to evaluate customer-oriented ideas, for example: the Ergo platform (www. kundenwerkstatt.ergo.de).

  • Evaluation platform for insurance company intermediary allow customers to check in advance of the opinions, experiences and reviews (www.whofinance.de).

  • Insurance with friends: the customers of “Friendsurance” (www.friendsurance.de) share with their friends an insurance product. Within their peer-group, they support each other financially, if minor damage incurred. The insurance company pays only to complete greater damage. The insurance company save money and ensure that the customer gets money back.

111.2 Objective, Research Question and Method


The paper will explore new innovation with social media in the insurance marketing. The research question is: What is the impact of social media for innovation in the insurance marketing based on the Cases Ergo and Allianz? The premise is that insurance companies can build credibility, transparency and closeness to stakeholders with social media marketing, because it will offer insurers new ways to increase their market penetration and to increase the effectiveness of their customer retention and acquisition strategies. The starting point is the assumption that it must be the goal of an insurance company, to avoid a negative perception of the brand (e. g. shitstorm) and to create a positive perception in social media (e. g. recommendations, increase in sales) to achieve positive impact effects.

Based on negative and positive case studies, the modes of action (cause / effect) in social networks are to be analyzed to identify causal relationships in social media marketing and examine recommendations. The methods are analysis, monitoring and e-mail survey. Social media monitoring refers to the observation of discussions and opinion on the Internet.

A case study is suitable as a qualitative method to answer the research question, because it detects a holistic and realistic picture of the social world with the social interactions. The case studies have been researched and evaluated based on publicly available information with monitoring analysis due to online researches. The case studies base on publicly available information on the Internet and publications in the media, recorded and analyzed with social media monitoring. In addition, the companies were interviewed by an e-mail survey. It should be noted that there are few social media marketing case studies from insurance companies. Social media monitoring can help to find out what internet user think about topics, for example about the reputation. The observation, analysis and evaluation should be carried out professionally so that one can draw from the results of the right conclusions for market research and to discover new trends for product development (Sen, 2011). The aim is to filter out the relevant content, trends and opinion and evaluate it. This enables to identify relevant topics and gain knowledge. In addition to the monitoring results, the companies have been contacted in order to clarify additional questions that are not publicly accessible and concern sensitive issues, like revenue loss.

The instrument of observation and analysis, which is used in the negative and positive case studies, enables the observation of reactions to people and stimuli. Therefore, it is possible to draw conclusions about relevant marketing issues of crises in the social media environment. To complement support and evidence of personal observation and interpretation, analysis data are used by technical applications for the social media monitoring. Thus, the behavior of the social media user can be measured online, systematically documented and it can be objectively analyzed.

However, the limited and arbitrary selection of the samples will not lead to representative samples. It is primarily for the exploratory phase of research. There is still a gap of practical examples, because the social media use has only been established in the insurance branch in recent years. In this respect, the results of the investigation of the case studies are not representative, but they can be interpreted as trends. The following table provides an overview of the features of the examined case studies.
Tab. 1: Negative and positive case studies with special features; own representation

Case Studies

Negative Case Study

Positive Case Study

Particularities

Case study with negative effects such as a shitstorm

Case study with positive action results like sales promotion

Description

Ergo: Reputation Crisis 2011

Allianz with Facebook promotion and self service online

Hoped Insights

Recommendations for crisis management.

Recommendations for social media marketing.

112.3 Case studies on innovations in insurance marketing

3.1 Negative case: Ergo Insurance (Incentive Travel 2011)


  • The crisis: In 2011, Ergo0 was in the headlines with an incentive trip, miscalculated Riester contracts and faulty life insurance. In May 2011, the Handelsblatt announced that the HMI (a sales organization of Ergo) had invited hundred best salespeople and high managers as an incentive for a sex trip to Budapest in 2007.

  • The course of the crisis in Social Media Monitoring: The crisis of Ergo has been debated intensively in media. The f. Fig. shows the crisis in the course of social media monitoring.

Fig. 1: Online reputation crisis of Ergo [12, p. 208]

c:\users\user\pictures\themen\prezi\ergo.jpg

At the peak of the crisis (22/05/2011) 2,000 postings were identified through Ergo online. The tone slips into the vulgar language with insults. The Ergo shitstorm shows how the balance of power has changed by social media. Previously, companies have designed their brand by image measures. Today, customers share their opinions online and create the reputation.



  • The consequences for Ergo: The scandals surrounding the sex party and miscalculated contracts have significantly damaged the image of Ergo. Every fourth German does not want to be consulted by an insurance agent anymore. This is due to lack of confidence: 60 percent of the Ergo-refusers fear that the insurance agent give them a wrong advice0.

  • The measures of Ergo: The Compliance for incentive trips should save the reputation of the Ergo crisis0. Since that, there are stricter rules for bonus trips. In addition, Ergo has invented a hotline for whistleblower to give anonymous tips for misconduct. However, that was only to limit the damage, because the trust of 40 million customers and the company image were in danger. Amazingly, Ergo has neglected the social media marketing and reputation management despite a marketing budget of 80 million euro.

  • Evaluation of the case study: The case illustrates the great importance of online reputation. When customers share negative opinions about a brand online, it damages the reputation of the brand. Therefore, it is important for insurance companies to use social media monitoring in the risk management, in order to take advantage of opportunities to detect crises at an early stage to ensure minimal risks. The consequences of a shitstorm are archived on the Internet and are even difficult to remove with legal assistance, because in Germany the law of freedom of expression shall apply. The figure shows the Ergo crisis as an effect chain.

Fig. 2: Ergo crisis as an effect chain, own illustration

The effect chain shows the causal event of the Ergo crisis with the timer that triggers a chain of other events in a dynamic sequence, inter alia, whistleblower and viral effects. One could speak of causal chains, as each action itself will cause a new event, again.


3.2 Positive case study: Allianz Germany (Allianz-helps and Facebook-Toolbox)


The Allianz0 has been using social networks since 2009. The use of social media for the Allianz is intensive in terms of the diversity of platforms, contribution rate and response. Therefore, some studies describe the Allianz as a pioneer (AMC/Hilker Consulting, 2014).

  • Social media of Allianz: With social media, the Allianz wants to use new ways to interact online. Allianz Germany uses social media in functional areas: communications, human resources, marketing and knowledge management. The criterion for achievement is that every measure must have a demonstrable effect on the information and decision process, while it stands in a cost and performance ratio to other measures. The social media channels of Allianz are bound to a strategic control in the market management of Allianz Germany. For example, they established a central social media monitoring to use it as an early warning system for crises and complaints. In addition, Allianz has introduced guidelines for governance and compliance for the whole company. Overall, the Allianz sees its SM-commitment as a learning system. Here, KPI systems and various communities are maintained for the learning process. Thus, a continuous exchange of the development of the Social Media strategy with all stakeholders is supposed to be ensured (AMC/Hilker Consulting, 2014).

  • Innovations in customer service: Allianz leaders and members of the community answering user questions, whether it is a complaint or someone is looking for a partner or a quick information. The forum Allianz-helps (www.forum.allianz.de) reduces the amount of calls in call centers. The customer can find the answer online. The reaction rate of the team and the processing status of customer inquiries are visible on the homepage in real time0.

  • Innovative promotion of the Allianz on Facebook: Since 2012, the Allianz has been using the Facebook Toolbox for insurance agents for all agencies because they strategically focus on creating a network between insurance agents and their prospective customers in the local environment. Therefore, the Allianz provides relevant locally content for the fan pages of the insurance agents to win fans. The Facebook Toolbox for insurance agents is created out of modules that try to win existing network contacts of the insurance agents as fans and new customers. In addition, Facebook presences of mediators are to be brought into line with regulatory and brand-specific requirements. The application consists of a Facebook page with legally secured templates for Facebook design0. The figure Facebook Toolbox for insurance agents shows the main processes in relation to the buying cycle.

Fig. 3: Facebook-Toolbox for Allianz agents; own illustration based

c:\users\user\dropbox\hilker consulting\projekte\dissertation\paper\innovationsmanagement\facebook tool.jpg

The Alliance has defined the Facebook Tool to the processes related to sales: 1) awareness, 2) consideration, 3) preference / intent 4) purchase / recommendation. The actual impact on sales and customer loyalty are collected by a standardized customer survey. Relevant KPIs are the postal commitment rate0, the conversion rate and the NPS0.



  • The evaluation of the case study. The facebook toolbox of the Allianz promotes the user engagement and the sales success. This presents a KPI for the social media conversion from Facebook in the online initiation phase to incept a contract in an offline environment (ROPO0). The Allianz asks the mediator for the sales success every six months. For the Allianz, the net promoter score is relevant in terms of customer loyalty and word-of-mouth. A positive NPS is desirable regarding a strong customer loyalty and to generate a positive word-of-mouth communication. According to the Allianz, 2,500 of the 8,400 insurance agents are currently using the application (May 2015). 29 percent of the insurance agents on Facebook are successful in closing contracts with Facebook contacts (conversion rate). Overall, 55 percent of Allianz agencies have closed contracts with Facebook contacts and around a third has closed even more than ten contracts per quarter. Thus, it illustrates a high competitive relevance of the social media strategy of Allianz. The Allianz aims to implement further plans via social media, in particular the purchase process with information, contact initiation, consulting, sales, service, after-sales and recommendations online.

113.4 Summary of the main conclusions


Regarding the positive and negative cases, the following findings can be concluded. The negative case study Ergo shows how reputational crises can spread quickly with exponential growth in social media. The negative consequences are stored in the digital memory of the search engines (like Google) long and appear high up in the ranking on searches. The negative consequences are only conditionally (monetary) to reduce measures. When submitting an application to Google to remove z. B., the pages are not output in the search as a hit. While this reduces the findability, but does not rule it out. If the offending entry to another site linked, this link will also continue to exist. This is just one example of the complex issues and the consequences of digital reputation crisis. It is recommended, therefore, before the SM-start an opportunity and risk analysis carried out, social media monitoring and reputation management use. Regarding the innovations in the insurance marketing through social media shown by the both cases (Ergo, Allianz), the following conclusions can be made:

  • Social media monitoring is an important innovation tool in insurance marketing to detect crises, problems and causes earlier, as the crises of Ergo has shown.

  • Insurances that have integrated social media marketing systematically in their marketing and have built it up professionally (as Allianz), win an interactive dialogue with their customers and show positive experiences of the brand online.

  • Insurances that build service communities online strengthen their positioning online and can save costs through self-service like Allianz-helps.

  • Next to image, branding, relationship management and community building, Facebook also works for sales promotion as the case of Allianz has demonstrated.

As a limitation, it must be added that these are not generalized statements because of the limited number of case studies. The paper also confirms that a risk analysis in social media marketing is relevant to new opportunities such as to use branding and acquisition safely (especially younger target customers). Likewise, the restricted areas of application in innovation for social media marketing have been confirmed. The NPS measurably increase the customer satisfaction and online degrees promote the premium income. In addition, the digital skills of the insurance agents are promoted, which is becoming increasingly important in the competition for the process of change in the business transformation. Thereby, they gain market advantage through unique selling points. The integration of social media may rise opportunities of innovations for insurance marketing. The approaches for innovations in social media and its potential for insurance marketing are explained in the following table.

Tab. 2: Social media innovation potentials for insurance companies, own table

Corporate functions

Selected functional Concepts

Potential Innovation Benefits

Marketing

Reputation Management

Digital Branding

Cross Media Marketing

Monitoring Conception

Campaign Management


Through viral effects, people in social media become brand ambassadors and promote the range of messages for businesses. Customer loyalty improvement through social media.

Product Development

Crowdsourcing

Innovation Management

Trendscouting


company get new suggestions for improvement through feedback, the costs of market research can be reduced.

Customer Service, Benefit and Claims Management

Customer Self Service online (Allianz-helps)

Service Apps

Communities

Website Chat
Through applications like blogs and apps, customers can find the answers to their questions online through self-service. This reduces the costs of call centers. Through the higher pace of communication in real time, the customer satisfaction (NPS) increases.

Online / Social Media Marketing

Recommendation

Facebook Marketing

LinkedIn Marketing

Twitter Marketing

Youtube Marketing

Pinterest Marketing



Presences in social networks can reach new target groups. Especially younger users are important for insurance companies. Through viral effects, social network effects can be used strategically for mouth-to-mouth marketing.

Corporate Communications

Online Public Relations

Blogger Relations

Corporate Blogging


Through interactive online dialogues with stakeholders, the communication gets cheaper, faster and participatory.

Sales Promotion

Community Building

Brand Ambassadors

Social CRM-System


Communities promote customer loyalty. Through Social CRM, new customers can be identified and recovered.

Insurance marketing can get new innovation impulse with social media. The customer determine the change and drive it forward. The new Internet technologies cause innovation potentials, through which interactive value can unfold quickly and easily without large capital investments, but with high performance, flexibility and quality. In addition, a change develops in the consciousness of many users, who no longer see themselves as consumers but as active creators. In my opinion, these developments will lead to the result that the diffusion curve of innovation benefits with social media will be considerably steeper than the previous approaches in the evolution of insurance marketing. 

114.References


AMC / Hilker Consulting (2014): Studie: Social Media für Versicherungen. Von Hilker, C.; Schubert, D. ISBN 978-3-00-046778-3.

Hettler, Uwe (2010): Social Media Marketing. München: Oldenbourg, R/CVK. – ISBN 3486591150.

Hilker, Claudia (2012): Erfolgreiche Social-Media-Strategien für die Zukunft. Mehr Profit durch Facebook, Twitter, Xing und Co.: Linde Verlag Wien – ISBN 9783709303689.

Hilker, Claudia (2015): Eignung von Social-Media-Netzwerken für Unternehmen zur Marketing-Kommunikation mit Kunden. In: Hofbauer, p. 281–301 – ISBN 3944072340.

Hilker, Claudia. (2010). Social Media für Unternehmer. Wie man Xing, Twitter, Youtube und Co. erfolgreich im Business einsetzt. Wien: Linde [Linde International]

Kaplan, Andreas M. - Haenlein, Michael (2010): Users of the world, unite! The challenges and opportunities of Social Media. In: Business Horizons 53, p. 59 -68. Paris: Elsevier.

Kelly, P. and Kranzburg M. (1978).Technological Innovation: A Critical Review of Current Knowledge. San Francisco: San Francisco Press.

Kotler, Philip; Kartajaya, Hermawan; Setiawan, Iwan (2010): Marketing 3.0. From products to customers to the human spirit. Hoboken, NJ: Wiley. – ISBN 9780470598825.

Kotler, Philip; Keller, Kevin Lane (2012): Marketing management. 14th [ed.]. Upper Saddle River, N.J: Prentice Hall. – ISBN 978-0-13-210292-6.

Neubauer, K. (2008): Erfolgreich produzieren in Deutschland, in: Gleich, R., Sauter, R. [Hrsg.], Operational Excellence: Innovative Ansätze und Best Practices in der produzierenden Industrie, Haufe, München, p. 51-68

Reichwald, Ralf; Piller, Frank; Ihl, Christoph (2009): Interaktive Wertschöpfung. Open Innovation, Individualisierung und neue Formen der Arbeitsteilung. Wiesbaden: GWV Fachverlage GmbH, Wiesbaden (Springer Link : Bücher) – ISBN 978-3-8349-0972-5.

Sen, Evrim (2011): Social Media Monitoring für Unternehmen. Anforderungen an das Web-Monitoring verstehen & die richtigen Fragen stellen. 1. Aufl. Köln: Social-Media-Verl (Social Web, [4]). – ISBN 3941835025.

Swiss Re (2011): Produktinnovation in der Nichtlebenversicherung. Sigma Nr. 4/2011 Vahs D, Weiand A.: Workbook Change Management. Schäffer-Poeschel, Stuttgart.

Contact


Claudia Hilker, Ph.D. student at the Institute of Management,

Slovak University of Technology in Bratislava

Vazovova 5, 81243 Bratislava, Slovakia.

Home: Bergerstrasse 23, 40213 Düsseldorf, Germany

e-mail: info@hilker-consulting.de.



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