So I read with some interest over the weekend that Royal Bank of Scotland (RBS.L), the world's fifth largest bank, is now struggling to raise the £7bn from the proposed sale of its insurance arm that includes brands such as Direct Line, Churchill and Privilege. The reason for the difficulty - well according to analysts at JP Morgan, the rapid growth in price comparison websites (an experience economy disruption!) such as moneysupermarket.com in the UK marketplace is undermining older business models, where insurance companies have been delivering their product directly to customers online without having to offer margin to a broker or middleman.
I think it's fascinating how this one might playout, as it's a great example of an experience economy emerging on multiple levels. Who is going to lead this economy - will the biggest eat the smallest, or are the fastest beginning to bite chunks out the slowest ?
The Comparison Website Experience
If you're not familiar with price comparison websites, they are portals through which a consumer enters a minimum amount of information, with the comparison site then posting that data to a huge number of online insurance companies, collating the quotes and then presenting them back to the consumer. It's a great example of where the service ("I'd like you to insure my car in the event of an accident") is being commoditised, and instead replaced with an experience ("I'd like you to search the market for me and find the company that is willing to offer me the lowest monthly premium in the event of my current circumstances, and then take me to that site with the information I just provided you passed on to them so I don't have to enter it a second time").
And the success of these websites ? Well according to JP Morgan research, price comparison websites accounted for 5% of new motor insurance policies in the UK. This year - these same websites are accounting for a massive 35% of new motor insurance policies, hitting hardest the insurance companies who run a large renewal book and expect customers to stay with them from year to year. That's a stunning growth, proof positive that delivering an experience upon a commoditised product or service can reap significant rewards
The Commoditisation of the Comparison Experience ?
So that immediately presents a question; with the explosion in price comparison websites (you can't watch a television show in the UK without seeing an advert for one of these comparison sites) will they rapidly commoditise themselves, until someone differentiates with a greater level of experience ? Or, as the comparison websites become as much a commodity as the direct insurance companies they are replacing, does a differentiated user-experience become the opportunity to level the playing ground ?
In my next post, I'll look at some of the recurring solutions that Adobe technology offers to solve the challenge of customer onboarding, converting prospects to customers, and completing the on-boarding process as simply and easily as possible "behind the glass" in internal business systems.
Do you use price comparison websites ? Do you prefer to go direct online, or are you one of the millions for whom the online channel remains a frustration that still drives you to a telephone, a broker or a branch to renew your insurance policy ? What are some of the frustrations that drive you there ? I'd love your datapoints, to see how they curve-fit with mine.
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