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Customer Segmentation in UK Insurance: Digital Lifestyles

Posted on 08 September 2016 by KenResearch

Standard demographic analysis often fails to reveal sufficiently deep insight into consumer behavior and the motivations behind this. We have produced an attitudinally based segmentation of the consumer market, and have used this to examine the market for key financial products. One of the eight key attitudinal groups is the focus of this brief: Digital Lifestyles.

According Ken Research Society is becoming increasingly connected. Technology has allowed us to be online anytime and anywhere, through portable devices such as smart phones and tablets. This means that consumers have instant access to goods, products, and services. Connection is also extending through the Internet of Things, where big data is collected through wearable tech, connected cars, and smart homes.

 DIGITAL LIFESTYLES: CHARACTERISTICS - Over a third of consumers feel nervous when unconnected

The 35% of customers who are Always Connected are more likely to research or purchase insurance online, on-the-go, using a device with a smaller screen. To cater for this group, insurers must tailor their processes to be simpler and smoother, as small touch-pad screens are a barrier to data entry.

Customers with the potential to be constantly online are also likely to expect longer service hours outside of the traditional 9 to 5 – a service expectation that has been set by retail brands over recent years.

Insurers could seek to strengthen their relationships with Always Connected customers by providing more touch points through social media and encouraging further interaction with products outside of policy renewal.

Smartphone features such as the ability to take a picture could be used to insurers’ advantage, such as for providing evidence of a car accident to make a claim. Big data collected by mobiles and smart devices could similarly be used to assess the risk of an individual, or help mitigate risk in real-time where customers are more accessible through their mobiles.

DIGITAL LIFESTYLES & UK Insurance customers - Younger consumers exhibit the Digital Lifestyles trait

65% of under-24s were defined as having the “Digital Lifestyles” trait – a label that also represented more than half of those under 44 before dropping away among the over-50s.

Women are most likely to have Digital Lifestyles characteristics (48% against only 36% of males). Reflective of the age weighting, these groups are also most likely to be single or co-habiting and high-earning.

Less popular channels were purchasing directly and via brokers. Price comparison sites were more than 9 percentage points (pp) more likely to be used by Digital Lifestyles types than by those not identifying as this segment.

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