In March this year, US news reports cited Facebook as the most visited website in the US, having more visits than Google for the first time since its inception. In South Africa, the trend is similar, with social networks fast becoming central to the Internet experience for most people. The use of social networks is indeed a global phenomenon and is already affecting insurers.
While the number of users of social networks continues to increase, there are definite opportunities for forward-thinking insurers to utilise this new medium. Today, there are three principle reasons for participating in social networks: they are a cheap method of advertising; they are growing as a communication channel to customers; and they are increasing in influence. Customers will increasingly use social networks in pricing decisions and to engage with organisations for services. Nothing is more powerful than the recommendation of a product or service based on personal experience. An insurer that fails to engage in social networks has little influence on this content and may certainly miss the opportunity to engage with customers through these emerging channels
A study by Anderson Analytics on the demographics of social networkers and non-users in July 2009 found that 110 million Americans had used a social networking website within the last month — 60% of the online population. The study found the average user logs on five days a week, four times a day, for a total of about an hour a day.
In South Africa, there are three social networks with significant influence: Facebook (over 3-million South African users), Twitter (over 55 000 active “tweeters”) and MXit (over 22-million registered). MXit is a mobile social network, a chat application for phones which is a South African product taking the world by storm. It is extremely easy and cost-effective to use, providing advertisers with an opportunity for highly targeted advertising.
Most social networking sites offer their services for free. The business model centres on allowing third parties to pay for targeted advertising to customers of the social networking websites, and this is why these sites are so relevant to digital marketing and insurers.The popularity of the sites raises interesting questions for insurers about how this channel can be leveraged. What is an important and as yet still unanswered question is why insurers should take social networks seriously; that is, what is the business case, and if there is one, what might the execution of such a strategy look like?
For starters, understanding of the types of social networkers will help insurers to better understand their target market and rather than the current model of searching for content and pulling it, relevant content will be pushed to Internet users through recommendations from their friends and targeted advertising.
A number of global insurers are already testing the waters in the world of social networks, and best practices are only beginning to emerge. In the United States, for example, nine of the top 10 non-life insurers have at least one Twitter account, and eight of those have at least one Facebook page. These social media websites are both active and have an engaged customer community involved. By contrast, only seven of the top 20 life and non-life insurers in the UK have a presence on Twitter, with fewer on Facebook – the interaction is rare and adoption is just starting.
In South Africa this percentage is much lower. “Surprisingly, we found more South African insurers on MXit: 1 Life Direct, 1st for Women, Auto & General, Budget Insurance Brokers, Dial Direct, Insurance Driven by AA, Hippo Insurance, OUTsurance and Virgin Insurance,” says Angus Robinson, executive creative director at Native, South Africa’s first full service digital agency.
“Most of the major banks, particularly Standard Bank, FNB and ABSA, have had a presence in social media since as early as 2007. These platforms are used to address customer queries and concerns, as well as to inform users of new products, including insurance products. We believe in the future we will see a growing population of social networkers who are used to seeing friends’ comments in search results for financial services products and who expect to be able to engage with their chosen insurer through the channel of their choice. In addition, social networkers will be comfortable with the concept of sharing information about their behaviour and their location and also paying small amounts for key premium services,” says Robinson.
These key concepts will allow new innovative insurance products to come to market, leveraging off data, new payment methods and the on-demand requirements of the customers.