What do Gen Y buyers really want?
PIA National's consumer panel probes the preferences of young consumers
By Thomas A. McCoy
How do the members of Generation Y make their personal insurance purchases? What influences their decisions? One way to find out is to bring together a handful of responsible individuals in that age group for a couple of hours, pay them adequately for their time, and ask.
PIA National recently did this, as Bill Jenkins, vice president of Business Development & Marketing for the association, moderated a panel of young consumers. The participants were ages 21-30 who own their own car, have a job and do not live with their parents. PIA National hoped to uncover some of the keys to reaching this age group, a generation that will influence the future of the independent agency system for a long time to come.
Jenkins explored issues such as the importance of price for personal insurance; what kind of advice these consumers seek about insurance, and from whom; what they think of various insurance Web sites; what led them to their current insurance providers; and what unserved needs they may have.
The group interview was conducted at a professional market research firm, which selected the participants and provided a room with one-way glass, enabling a writer and photographer to see and hear the discussion unobserved.
The assembled consumers said that for many purchases, including insurance, they are comfortable obtaining product and pricing information online. For some products that are complex or expensive, they often get advice from family or friends, or visit retailers to make their purchases.
One woman who had recently bought a camera said, “It’s nice online because you can compare things right up front, but I really wanted to go talk to someone in the photo department who’s seen pictures from each camera, who could advise me.”
In buying auto insurance, “The ranking of their top three considerations, in order of importance, were: price; reputation; and information and assistance,” according to Jenkins.
The price part is not too hard to understand. This isn’t the first younger generation to feel that way. The Gen Ys are in the early stages of a career, possibly paying off school loans, and, especially the men, don’t get many breaks on auto rates. But the women too complained about their rates: “I was paying $130 a month,” said one.
“I pay $95 a month, and I think that’s too much,” said another woman.
Woman #1: “I’m down to $90 now and I’m much happier, but I still think that’s a lot for never having an accident.”
To buy personal insurance, the young consumers used a combination of Web sites, insurer 800 numbers, and recommendations from friends and family. Four of the nine consumers started out by shopping either online or via 800 numbers and ended up purchasing their coverage that way.
A couple of the consumers had their first auto insurance with State Farm because their parents had used that carrier. One of them moved his coverage from State Farm to obtain a lower premium with an independent agency company by bundling his auto and homeowners coverage together. The other man said he called State Farm the day he turned 25, looking for an expected age discount.
“The company told me, ‘Oh, sorry, you missed the cutoff date by three days or something because your birthday’s on….’ so I told them to cancel the account right now. I went online to a couple of places where you could compare rates and I did it on several Web sites…and then I just asked all of my friends who they were with.”
One of his friends’ insurers—American Family Insurance—was the least expensive, so that’s where he wound up going for his auto coverage.
Both of these former State Farm insureds, take-charge types who are content using Web sites, 800 numbers and friends’ recommendations to purchase insurance, are wary of overly solicitous agents. “When I was with State Farm, the guy wanted to call me all the time,” said one of them. “And I’m a real sociable person, but he wanted me to come into his office and see how things were going. Basically, then he could sell me more insurance. I would rather contact them when I want to contact them, or when I have a problem.”
“I’m a lot different,” said one of the women consumers. “I was with Allstate. I ‘inherited’ that from my parents. I was redoing my budget, trying to figure out what I could do differently, and the car insurance was one thing that I knew I could probably lower. I try to support local businesses. A State Farm office opened in the shopping center right next to where I live, and I wanted someone to educate me about what my policy should be because I didn’t have a clue if I needed $30,000 or $10,000. I wanted someone to look me in the eye and say, ‘Here’s what you need.’ I wanted all my coverage there and to do it face-to-face with someone.”
Another woman agreed. “I stayed with my whole family. My parents, grandparents, aunts and uncles were all with Farm Bureau and lived in somewhat of a farming community. They went to a local branch and sat down, and that’s what I did because that’s what I thought I had to do. So I never shopped online for car insurance. It was kind of nice to go in and see that familiar face. They know you, and that was the best part of it.”
However, she pointed out, “Now that I think about it, I’m unhappy with the rate I’m getting. I probably need to shop around.”
There’s a temporary tone to a lot of what the consumers in this age group say about their personal insurance program. One 24-year-old, whose father guided her toward buying her first policy from an independent agency company, said, “I had just graduated from college, so I just said, ‘Yeah, that sounds good. Give me the lowest quote and let’s go with it. Get it done.’ But the next time I would probably go online and compare and then go and talk to people. When I actually come to the point where I want to buy a house, it will be different because it’s just a bigger thing.”
The “right stuff” online
Regardless of the insurance purchasing decisions they have made so far, Gen Y consumers are still young enough to alter their course many times in their lifetimes. Those represented on the PIA panel seemed predisposed to obtaining information online. What online features might be attractive and useful to them, or at least not drive them elsewhere?
Panel moderator Bill Jenkins showed the consumers several insurance Web sites—including those from major direct writing companies and independent agencies. In doing so, he taught an important marketing lesson, especially for those of us in generations other than Y. Your “identity” may not be what you think it is, and it’s a good idea to ask outsiders who they think you are, based on what they see online.
Opinions came fast and furious.
Moderator: “Okay, so you’re thinking that because it doesn’t look well designed that it might be kind of…”
Consumer #1: “A shady thing.”
Consumer #2: “If they can’t afford a professional Web site…”
Consumer #1: “You give them your money and the next day you go back and they’re not there.”
Moderator: “Okay. How about this one?”
Consumer #1: “It looks like a funeral home. You know what I mean?”
Consumer #2: “The calligraphy. Yeah, yeah.”
You can’t please everyone. A storefront-type Web site appearance was appealing to one consumer (a person who had enjoyed the experience of visiting a local agency). But to another individual, that site’s use of pictures of agency personnel was unprofessional.
However, “professional” to these young consumers doesn’t necessarily mean something interactive and splashy that requires a lot of time to use its features. They criticized a direct writer’s site that seemed to fit that description. “What makes Google so great,” said one, “is that they don’t put a lot of stuff on the Web site that you’re not going to use. It’s just a little search bar, and that’s it.”
Jenkins summarized some of the overall Web site conclusions this way:
“This Gen Y group clearly expressed the importance of Web page appearance and their initial experience in finding what they are looking for. If either was negative, they would tend not to go any further in establishing a relationship or even asking for a price quote.…There was a tendency to assume that if the Web site is bad or unprofessional, so is the company ‘behind’ the Web site.”
While much of the PIA consumer panel dealt with the initial experience in attracting new business to an agency, there was also discussion of servicing issues. Here, the Gen Ys exhibited various preferences as to how they wish to receive contacts from the agency: e-mail, phone, in person, and surface mail. In general, they value having choices.
In conducting this panel, the PIA could not expect to get the kind of statistical insights that would come from a much larger sample. But the consumers’ comments, including the spontaneous interaction between participants, provided another kind of insight into the needs and habits of Generation Y. And the idea of polling members of any generation as to how their needs can be served is a fundamental marketing concept that agents would do well to emulate. *