6 Tips for Insurance Carriers Focused on Efficient, Profitable Customer Acquisition

How to drive the margins you want in your customer acquisition

Insurance carriers can use these tips to maximize their customer acquisition efficiency.

For insurance carriers, there’s no one definition of customer acquisition success. Sometimes, you’re looking to grow your customer base or your market share. In these instances, you may be focused on acquiring as many new customers as possible, even if it means sacrificing efficiency.

At other times, you might be more focused on efficiency, acquiring customers only when it fits your ideal return on investment. In these cases, you may be willing to sacrifice scale in order to earn a select group of customers who generate the greatest lifetime value at the lowest possible cost. It’s this scenario we’ll cover here.

Here are six ways you can get the most bang from your digital marketing buck.

1. Make sure you have the right measurement tools to measure efficiency

If your goal is to acquire customers efficiently, you need to collect and report metrics that allow you to accurately assess whether or not you’re succeeding.

One common hurdle to accurate measurement is when carriers use the flawed cost-per-quote metric to understand performance. While this can help you understand whether you’re getting consumers to request a quote at an efficient cost, it doesn’t tell you how many of the shoppers you quoted wound up purchasing a policy. By implementing a conversion tracking token, you can track and report actual policy sales, enabling you to measure your cost-per-bind.

You can take your measurement one step further by measuring your true return on investment with a metric known as lifetime value to customer acquisition cost (LTV to CAC). While cost per bind is a better metric than cost per quote, it fails to differentiate between high-value customers and low-value customers.

By contrast, LTV to CAC compares the revenue you earn from a consumer over the course of your entire relationship to the costs you paid to acquire them. As a result, you can better measure your long-term profitability and see which kinds of shoppers are really helping you grow your profit margins.

2. Bid granularly to pay the right price for every consumer

Once your measurement is squared away, you’ll be able to identify the segments of your target audience that are most and least profitable for your business, enabling you to adjust your bidding accordingly. As an example, you can use the Distribution page of the MediaAlpha platform to see your performance broken out by the publishers your website visitors arrived from and the channels those publishers acquired their traffic from (e.g. organic search, paid search, social media, etc).

This transparency into channel performance is crucial for assessing the value of the different kinds of shoppers you’re targeting, but it’s not the only variable that can be predictive of a consumer’s value to your business. You might also try splitting out consumers into different zip-code tiers based on the profitability of shoppers in different locations, or setting different cost-per-acquisition goals for consumers with different driving records based on past performance.

3. Drive higher conversion rates with pre-filled forms

Paying the right price to bring the right consumers to your website is only one piece of the puzzle—you can also improve your efficiency by ensuring your quote flow is optimized to maximize your conversion rate.

One way to do that is to alleviate a major hurdle for online insurance consumers: the time they spend filling out forms to receive a quote. The average consumer requests around three quotes before purchasing a policy, so it’s possible that a shopper has already gone to the trouble of completing several lengthy quote forms on carrier and comparison shopping websites prior to arriving on your site.

By implementing a data passing integration, you’ll receive the information that the consumer submitted on the referring website. As a result, the user sees a pre-filled quote request form on your site, making them more likely to complete the process and purchase a policy.

4. Use Predictive Experiences to generate more value from each site visitor

Another way to generate more value from your site visitors is by showing them tailored consumer experiences based on how likely they are to purchase a policy from you. By using a data science technique known as predictive analytics, you can confidently predict the likelihood that each shopper will bind, based on how consumers with similar characteristics have behaved on your site in the past.

This information enables you to deliver a range of Predictive Experiences that provide a better user experience and maximize the return on investment you receive from each shopper. For example, if a shopper is highly likely to purchase a policy, you can generate more revenue from them by offering them a high-value, bundled policy. Or, if a shopper is highly unlikely to bind, you can still monetize the consumer by referring them to a sister brand under the same corporate umbrella, or showing them paid click listings for other carriers alongside your own quote.

If you’d like to learn more about how Predictive Experiences can help you generate millions of dollars in new annual revenue, you can read our whitepaper on the subject here.

5. Saturate the bottom of the funnel

One of the best ways to efficiently add new customers is to make sure you’re capturing demand at the bottom of the marketing funnel.

Insurance carriers spend hundreds of millions of dollars on brand advertising, but there are so many touchpoints between inspiring a consumer to shop for insurance and earning the final purchase that shoppers often veer off course. A consumer who sees a TV ad for one brand winds up on another brand’s website after beginning their search for a policy online. Another shopper decides to pause their search after reviewing their finances.

All of this is to say that while brand advertising is certainly important, profitability-focused carriers can generate cost-efficient sales by saturating their performance channels and catching consumers at the bottom of the funnel, just as they’re getting ready to make a purchase.

6. Make targeted spending cuts instead of cutting across the board

At times when insurance carriers are looking to reduce marketing costs, they sometimes decide that they need to reduce their overall marketing spend by a certain percentage and cut every piece of their budget by the same amount. This strategy hurts them in the long run, since they invariably wind up reducing spend on channels and consumer groups that were performing for them, while continuing to waste money on those that weren’t.

That’s why we recommend making cuts with a scalpel instead of a machete. Rather than making across-the-board cuts, it’s best to identify what’s not working for you and begin trimming the fat there.

Want more help optimizing your spend for maximum efficiency? Let’s talk.

Maximizing efficiency is a tall order for any marketer, but implementing these techniques will put you well on your way toward getting the absolute most out of every marketing dollar. If you’re looking for help analyzing your own performance and bidding granularly to increase your profitability, your client success manager is just a phone call or email away.

And if you’re not yet a MediaAlpha customer, we’d love the opportunity to tell you a little bit about how we can help you achieve your marketing goals. Schedule a meeting with us on our website today.