Most people who work in financial services seem to have mixed emotions about comparison sites. I am sure most of them see themselves as savvy consumers but are users of these sites.
We are all aware how such websites work – basically it is all about price. Some attempt to rate products on quality but this does not change the fundamental nature of what they do. However, I feel they change how their customers think.
Every advertisement, whether featuring a desert-dwelling relative of the mongoose or showcasing the world’s most irritating tenor, is about price. “Fur cheeperr caaahr inshewerance,” as our furry Russian-accented friend says.
Whenever search results are ranked on price with the lowest cost at the top, the overwhelming message drummed into consumers is that cheaper is better and cheapest is best. Consumers are becoming conditioned not to look at what they really need but how little they can get away with paying. There is no space for qualitative judgement – it is not about finding the best product but about finding the cheapest product.
It is an unspoken message that professionals in the protection market should really worry about. It encourages the customer to believe the products are almost exactly the same because the only thing you need to worry about is the price. Fine, if you are after an economy flight from Heathrow to JFK but when it comes to life policies, few are identical.
Consumers are becoming conditioned not to look at what they really need but how little they can get away with paying
I tried grappling with this issue by thinking what else you might market on apart from price and to see if there were lessons from other sectors. Why not try and market the product based on good service, for example?
I buy car insurance with service in mind and because of the fantastic service I received when I had to make a claim, I am currently with Admiral. To me, it is worth the £50 or so extra in annual premium, although I admit I check the prices on a comparison website to make sure they are not too far out of line with the rest.
However, I am unable to see how you can convince new customers to take out your product based on service alone. It is intangible and customers only have your word for it until they experience your service for themselves. Service can keep customers loyal but it does not drive acquisition.
To buy a new product, or even to switch products or providers on the basis of claims of better service, is a leap of faith.
Perhaps it can work if a product is well designed. It works with cars, for example. You do not buy a Mercedes because of the fact that you get better service. It is more tangible than that. You get the extras when you buy the car.
Coming back to protection, I am still not sure how much increased awareness you will get talking about a product’s design or a provider’s service.
But then I started thinking about one of the bigger battles in advertising at the moment.
Some firms will no longer deal with aggregators at all. With Direct Line, it is in its corporate DNA, it is in the name and it can afford Stephen Fry and Paul Merton to do voiceovers. But others are following suit. The trend could even begin to undermine the message of the comparison-makers. If you cannot compare the whole market, can you say you compare the market?
With protection insurance, I wonder if a specialist provider could not only emulate these firms but also go one better by making what differentiates them core to their message about the product.
Companies could refuse to go on the comparison sites, be brave and back their brand with a strong advertising and marketing campaign and position their offering above the commodity play and justify higher premiums.
The argument would boil down to: “We have a great product and great service. We do not go on comparison websites because we do not believe that critical illness and income protection should be chosen on price alone. It is not the best outcome for the consumer, whatever a Muscovite mongoose might say.”
Maybe these sites are simply part of the new reality in financial services distribution and have to be dealt with but I would love to hear your views.