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Social Commerce: The Next Trend in Online Shopping

A year ago when the world was in the throes of a health crisis, social media served as an answer key in scenarios such as finding medicines, tracking the availability of hospital beds, and providing meals to the Covid patients. Social apps became a significant part of the customers’ ecosystem. Its use was not just limited to building connections but also social buying. Here users could review and buy products in real-time on these channels rather than redirected to a website or sales platform. Social commerce: the next trend in online shopping has evolved into a simple-to-use marketplace for ordinary people. It is also helping them establish their own business with the touch of a button and reach a larger audience at a low cost.

According to Accenture, social commerce will grow thrice as fast as traditional e-commerce, hitting $1.2 trillion by 2025. China will remain the most mature market and developing countries like Brazil and India will witness the highest growth. Gen Z and Millennials, who account for 62 percent of overall social commerce spending will drive this growth.

What the Digital shoppers want is a ‘Buy At The Moment’ experience.

According to Statista, the number of social media users is expected to hit nearly 4.41 billion by 2025. 

Statista Report on Social Network Users

Source: Statista

These social media-savvy digital buyers place a high value on convenience and in-the-moment experience. When it comes to purchasing decisions, they heavily rely on their social networks. Word of mouth, influencer and consumer reviews posted on social channels builds a sense of trust and an immediate desire to buy amongst Gen Z consumers.

Why social commerce is a win-win for businesses.

  1. Wider Reach : 

According to a report by Recogn, there are 157 million social commerce shoppers, accounting for 53% of total online shoppers in India and this number could hit 228 million by the end of 2022, a 45% jump from the existing user base. Companies are increasingly collaborating with well-known influencers to boost their brand visibility. Leveraging influencers’ user base, brands are successfully creating trust amongst their followers in the long run. Recently, Instagram launched a product tagging in the US that lets users tag products featured on their posts. Customers will be directed to a dedicated page where they can access information such as pricing, availability, and more by clicking on the tagged product. Product tagging would help users discover products from the people they follow and businesses expand their audience on the platform.

  1. Higher Engagement:

Global Statistics revealed that Indians spend an average of 2.36 hours per day on social media. According to another report by Statista, India has almost 239.65 million Facebook users and 230.25 million Instagram users, and 126 million Snapchat users, making it the biggest country in terms of these channels’ user base. 

World’s popular brand– L’Oreal teamed up with Facebook to introduce an AR-powered makeup try-on experience using AR for Instagram Shoppers. Snapchat partnered with MAC Cosmetics and Ulta Beauty recently to roll out an updated shopping feature “catalog-powered” shopping lens. Within two weeks, MAC Cosmetics witnessed a 17-fold increase in sales and over 1.3 million Augmented Reality (AR)-powered try-on, while Ulta saw a $6 million increase in sales and 30 million product try-on. 

  1. Personalised and Localised experience: 

According to Facebook, 54% of people surveyed said that they made a purchase either in the moment or after seeing a product or service on Instagram.

Social commerce is an important aspect of the web 3.0 ecosystem. Here the actual emphasis is on buying online things rather than buying things online. In the past two years, social channels have broadened the horizon for not just big brands but also for young and budding entrepreneurs and small firms looking to expand their business. 

A Gurgaon-based company, Bulbul has registered 4 lakh transactions with around 15 million views via video streaming and interactive chat that helps users find new products. The bulk of the content is created by local women across the country who explain multiple products and their features in various Indian languages to give local trust to the audience.

The Road Ahead

As the social world expands, companies must create a fluid customer experience to gain customer attention and loyalty. There are some hiccups along the way. With so much content available today, creating real and reliable content for users is a significant challenge for businesses. Furthermore, because of the short customer attention span, keeping their audience captivated for an extended period of time is also tricky. Innovative engagement initiatives integrated with new-age technologies will go a long way in understanding customer buying patterns and helping brands develop a space in consumers’ minds.

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Retention playbook for Insurance firms in the backdrop of financial crises

4 minutes read

Belonging to one of the oldest industries in the world, Insurance companies have weathered multiple calamities over the years and have proven themselves to be resilient entities that can truly stand the test of time. Today, however, the industry faces some of its toughest trials yet. Technology has fundamentally changed what it means to be an insurer and the cumulative effects of the pandemic coupled with a weak global economic output have impacted the industry in ways both good and bad.

Chart, line chart

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Source: Deloitte Services LP Economic Analysis

For instance, the U.S market recorded a sharp dip in GDP in the wake of the pandemic and it was expected that the economy would bounce back bringing with it a resurgent demand for all products (including insurance) across the board. It must be noted that the outlook toward insurance products changed as a result of the pandemic. Life insurance products were no longer an afterthought, although profitability in this segment declined over the years. Property-and-Casualty (P&C) insurance, especially motor insurance, continued to be a strong driver, while health insurance proved to be the fastest-growing segment with robust demand from different geographies

Simultaneously, the insurance industry finds itself on the cusp of an industry-wide shift as technology is starting to play a greater role in core operations. In particular, technologies such as AI, AR, and VR are being deployed extensively to retain customers amidst this technological and economic upheaval.

Double down on digital

For insurance firms, IT budgets were almost exclusively dedicated to maintaining legacy systems, but with the rise of InsurTech, it is imperative that firms start dedicating more of their budgets towards developing advanced capabilities such as predictive analytics, AI-driven offerings, etc. Insurance has long been an industry that makes extensive use of complex statistical and mathematical models to guide pricing and product development strategies. By incorporating the latest technological advances with the rich data they have accumulated over the years, insurance firms are poised to emerge stronger and more competitive than ever.

Using AI to curate a bespoke customer experience

Insurance has always been a low-margin affair and success in the business is primarily a function of selling the right products to the right people and reducing churn as much as possible. This is particularly important as customer retention is normally conceived as an afterthought in most industries, as evidenced in the following chart.

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        Source: econconusltancy.com

AI-powered tools (even with narrow capabilities) can do wonders for the insurance industry at large. When architected in the right manner, they can be used to automate a bulk of the standardized and automated processes that insurance companies have. AI can be used to automate and accelerate claims, assess homeowner policies via drones, and facilitate richer customer experiences through sophisticated chatbots. Such advances have a domino effect of increasing CSAT scores, boosting retention rates, reducing CACs, and ultimately improving profitability by as much as 95%.

Crafting immersive products through AR/VR

Customer retention is largely a function of how good a product is, and how effective it is in solving the customers’ pain points. In the face of increasing commodification, insurance companies that go the extra mile to make the buying process more immersive and engaging can gain a definite edge over competitors.

Globally, companies are flocking to implement AR/VR into their customer engagement strategies as it allows them to better several aspects of the customer journey in one fell swoop. Relationship building, product visualization, and highly personalized products are some of the benefits that AR/VR confers to its wielders.  

By honoring the customer sentiments of today and applying a slick AR/VR-powered veneer over its existing product layer, insurance companies can cater to a younger audience (Gen Z) by educating them about insurance products and tailoring digital delivery experiences. This could pay off in the long run by building a large customer base that could be retained and served for a much longer period.

The way forward

The Insurance industry is undergoing a shift of tectonic proportions as an older generation makes way for a new and younger one that has little to no perceptions about the industry. By investing in next-generation technologies such as AR/VR, firms can build new products to capture this new market and catapult themselves to leadership positions simply by way of keeping up with the times.

We have already seen how AR is a potential game-changer for the insurance industry. It is only a matter of time before it becomes commonplace.

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