Innovative Services are Key to Sustainable Business Models and Customer Loyalty
by Maria Montenegro
Much of the buzz around the perceived consumer benefit of usage-based insurance (UBI) has focused on pricing, and in his keynote at the Insurance Telematics USA 2013 conference last week in Chicago, George Ayres, vice president of Global Sales with Verizon Telematics, challenged the audience to think beyond the discount and instead on building innovative and sustainable business models which will help ensure future success and reinforce brand loyalty.
In his presentation titled, "Beyond the Discount: Creating a Sustainable UBI Program", Ayres was prescriptive in recommending that a program which includes a roadmap of value-added services – such as GPS notification for locating a stolen vehicle or monitoring teen driving, or diagnostics tools for monitoring a vehicle's health and energy efficiency – is the more effective avenue for driving customer loyalty over lower premiums. He noted that two distinct UBI models have emerged – an acquisition model aimed at capturing consumers with better pricing, and a loyalty and retention model that includes a package of value-added services which will deliver longer-term customer value in the long run.
"Acquisition works in the early stages of UBI," Ayres noted. "At least in the U.S. market, a pricing discount makes a lot of sense. It's the easiest thing to talk about in advertising. But, at the end of the day... we need to develop the next idea."
Ayres proposed that this next idea for generating customer loyalty could see insurance companies take a more active role in delivering services beyond the traditional collision damage and liability protection that has been their hallmark. For example, information services that consumers care about such as directions and traffic conditions could be packaged together with safety features including voice-activated roadside and emergency assistance. "Insurers can get out in front of that and really be the primary interface that I might have with my vehicle fleet, with my family fleet, and across brands as well."
Ayres' pointed to the auto manufacturing industry as one that is capitalizing on demand from consumers as new technologies become available. "Some people may not yet be sure that value-added services will actually be the way to success, but on the new car side, that's one of the big strategies."
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