All online bases covered

As buying online becomes a normal occurrence for more consumers, expectations of price and service are getting higher. It’s generally accepted that you can buy pretty much anything on the internet. Whether it’s having your weekend groceries delivered to your door, bidding for football memorabilia on auction sites or even buying a shed for your garden, many people’s first port of call when making a purchase is their computer.

But, how do people fare when buying home and motor insurance policies on the Web? Online shopping continues its upward trend in nearly all sectors. But, while we don’t think twice about buying items such as CDs online – because the product is the same from each supplier and the buying process is straightforward – it’s a different story for products where the buying process is more complex, like, for example, financial services. As consumers grow more comfortable with buying commodity products online, so their demand for greater choice, lower prices and speedier transactions is extending to the more sophisticated product sectors.

The latest research from user experience consultancy Foolproof reveals just how important the online market is for financial services. Motor insurance is the most popular financial service to be purchased online, with half of the UK’s motor insurance policies being bought online. The credit cards sector is in second place with 38% of business carried out online, personal loans third, at 36%, followed by home insurance at 28%; mortgages is the least popular, at 9%.

Foolproof’s 2006 Online Shopping Survey into general insurance predicts rapid growth in online purchasing of motor and home insurance policies. Two-thirds (66%) of those surveyed expect to buy their next motor insurance policy online (a 32% increase on the amount currently buying online), and nearly half (49%) think they will buy their next home insurance policy online (up 75%). By 2016, even greater growth is forecast, with four out of every five (82%) general insurance products expected to be bought online. If the forecast turns out to be true there is a lot at stake for companies involved in these markets.

The internet is the principal source for finding information on insurance and its providers, with 82% of those surveyed agreeing to this. This is ahead of speaking to friends and family at (31%) and advertising (31%) or visiting a branch (20%).

When probed on the types of site they would use to investigate their purchase, 86% cited a search engine, 74% insurers’ own websites, 69% comparison sites, 39% consumer review sites, 35% general financial sites, and only 1 in 5 (19%) go to broker sites. There was very little difference between motor and home insurance.

But the most telling data was the comparison between consumers’ expected usage and actual usage of sites to purchase an insurance policy. Consumers were broadly correct in predicting their actual usage of search engines, providers’ sites and comparison sites – expected use was 85% versus actual use 94%; 72% vs 92%; and 66% vs 64%, respectively. But usage of other online destinations such as consumer review sites – 37% vs 4% – and broker sites – 19% vs 10% – were wildly overestimated, a result of the fact these sites no longer get high positions in insurance search results on the major search engines.

So, what do online sellers need to do to be successful? Foolproof’s report identifies some pertinent findings across three core areas: visibility, comparability and usability.

Taking visibility first, the report shows there is no clearly defined way that consumers buy an insurance policy. In fact, online shoppers are being distracted or ultimately hijacked from their intended path by sites that aggregate different insurers’ offerings.

The high usage of comparison or aggregator sites – 66% up from just 5% in 2005 – should set alarm bells ringing in insurers’ marketing departments. Unless they match the investment they make promoting their brands through conventional media with a significant spend to get their brands listed high on aggregator sites’ comparison tables and on search engine results, they will become invisible in the online world.

Foolproof’s study found there are only three super-brands in the general insurance market that have sufficient brand cut-through to cause shoppers to seek them out: Direct Line, considered by 27% of people when shopping for motor or home insurance, Norwich Union (20%) and Tesco (15%). If shoppers didn’t see these brands appear in their search for a quote they would seek one out because shoppers see them as an authoritative benchmark. No other insurer was afforded this treatment.

The need for comparability is next on the agenda for insurance sellers. Online shoppers typically spend just over 30 minutes online when sorting out motor or home insurance. Just over a quarter of this time is spent on comparison sites. Therefore, it is vital that insurers focus on providing like-for-like comparisons so that shoppers can check if they can beat their renewal quote.

Finally, the issue of usability must be addressed. Foolproof’s research highlights that one in four (23%) of all quotes were abandoned before completion because of irresolvable usability problems or simple fatigue. Forms were often badly presented with no clear direction and often long and laborious to complete, leading people to ring up call centres to get a quote, or abandoning the process completely.

To reach their target market, there are several things online marketers of insurance products should do. First understand how shoppers shop – spend time observing and learning shoppers’ habits. Then they need to understand where shoppers are shopping and how and where their brands are positioned. Successful differentiation can be achieved without a great deal of time and effort just by offering a rewarding user experience. People want slicker and quicker visits and quote generations, free of glitches – give them that and you’ll have them returning again and again.

Peter Ballard, managing partner of Foolproof, contributed to this week’s Trends Insight