Buying protection is a price decision, right? There's been more research recently to confirm this ingrained view in the industry from Aegon.
It appears the vast majority of protection products are bought based on a recommendation from the adviser which focuses on price. We're all obsessed with price. We're all fed up with this blah blah ...
I asked the team what things they have bought recently and why they bought them and here's a short list:
- A lawnmower
- Hoodies (don't ask)
- A doormat
- Computer games
- A 'moth zapper' (?)
- A photo frame
- Harry Hill DVD
- Liverpool FC cufflinks
Now, just how many of these purchases do you think were based on price?
The answer? One. The doormat!
All the other purchases made were based on factors like quality, size, choice, lack of choice and style.
Now, correct me if I'm wrong but no-one usually WANTS a doormat. It's something you need, right? If you don't need a doormat, I guess it's not the sort of thing one desperately wants.
So... with that in mind I asked the team what things they bought that were based on price. Here they are:
- Train ticket
Things we 'buy' tend to fall into three categories. We either want them, need them, or both want and need them. Most of the things on this list are things we need. They are not either things we want but don't need, or things we want and need. With me so far?
So... the price game. The price focus. This makes sense and I think I'm starting to get it. We buy things we need but don't necessarily want based on a price decision most of the time. That certainly appears the case when you look at the purchases the team made recently.
So... what if life cover, critical illness cover, income protection, PMI etc are all things that consumers need, but don't want?!
If that's the case then isn't it a certainty the purchase decision will be one that's predominantly price focused? If that's true then why do we all moan about this?
One other thought: Most of the other purchases we've mentioned are things you can see, touch or feel, both at point of purchase and thereafter, hence there is an "emotional" element to the buying decision which can take some of the focus away from price.
Although we can't make products tangible we have to make them things consumers both want AND need! That way more decisions would be made based on a range of factors such as quality, service and feature differentiation, not just price!
Let's stop moaning about what the research says every year and focus on changing the root cause of the situation!
We've made a start actually...a number of providers and reinsurers are supporting research into a potential way in which we can make consumers more aware of our products. Group risk providers are also doing this through GRID, while the ABI are looking at this too.
Three initiatives which have merit. They may be successful. We don't know yet. Could they all team up and make this a more concerted effort? Possibly. If they did it might have more chance of succeeding - whatever it is - in changing consumer views of what we sell.
Until we do that, decisions in protection will continue to be price driven.
Andy Milburn is the head of marketing at Munch Re UK LifeIFAonline
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