In banking, a startup has already made it. N26 was able to win many young customers with its bank app. The subject of insurance is much more difficult because the customers do not want to deal with the topic. Digital companies like One Insurance, Getsafe and Coya try to reach them anyway – with massive advertising campaigns. They offer, for example, liability and home contents insurance.
Exactly one measure is important for this reason: the customer acquisition costs, ie the costs to win a customer through marketing. In the founders’ scene interview, the marketing director of One Insurance, Alexander Huber, talks about the customer numbers of the young company and marketing strategies for the first time. So far, the Insurtech Startup wins most customers over well-known ways. Where is One one year after the start?
Alex, you started marketing aggressively a year ago. How is it going so far?
I do not know if you can call that aggressive. We did something called frontloading in marketing. To establish our brand and build trust right from the start, we have taken more money into our hands and later reduced spending. Meanwhile, the marketing costs to win a customer, between 30 and 35 euros.
Right at the start, there was a marketing campaign where customers did not have to pay for their home insurance for a year. The competition has arrived as an aggressive approach. Do you include these marketing expenses?
It was then a promotional offer from Wefox, the group’s insurance broker. One and Wefox are both part of the Wefox Group. This marketing campaign ran for two months independently of our own advertising campaigns. So I can not say anything about it.
The Wefox Group is currently in fundraising. More than 100 million euros will collect the insurance startup. So far, investors such as Salesforce and Target Global have invested in the Berlin company. In the summer Wefox was sued by US rival Lemonade and later agreed out of court.
So in the end, the parent company bears the marketing costs?
Wefox bears the costs for this specific action. It pays off for the company because it can later sell other products to the customer. The 30 to 35 euros, however, relate to our own direct channel. For example, customers we could win directly through social networks. So far, almost 90 percent of customers come through brokerage platforms such as Check24 or Wefox. Incidentally, Wefox and One are working independently of each other and are running their own marketing budgets and advertising campaigns accordingly.
How many customers do you have in total?
We have more than 70,000 customers in the market after one year. Thanks to our technology, we only need four clerks for this.
Do the customers need to use your app?
Our service is designed for that. For example, when it comes to getting your damage reimbursed, it works much easier on the app. But our customers can also call us at any time, especially in case of major damage.
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According to the Priori Data estimation tool you get 23,000 downloads. How can this big difference between downloads and customers be explained?
The estimate is not entirely correct. But it’s true, not all customers use the app. Customers who come to us via brokers, for example, are often older and not all want to enter the data themselves in the app. You have to remember that we are on a new terrain. We are confident that the acceptance of an app will increase, even with older people, step by step.
Insurance startups have started to bypass the expensive sales channel through brokers or platforms like Check24. How will the sale of insurance change in the coming years?
With demographic change, it will certainly take a few more years for people to change their behavior. However, insurance is a typical push product. Some insurance companies require a lot of advice, so the broker still has a right to exist. From a marketing perspective, insurance is one of the toughest products to sell. Our Berlin competitors, who are currently spending an incredible amount of money on marketing, are struggling with this problem.
For insurance products, it is generally possible that more than $ 100 in marketing spend is needed to attract a customer. The cheapest liability insurance costs at One per year 27 euros. In this case, with a marketing cost of about 35 euros, the customer has to stay more than a year to make money from him.
How can this sales problem be avoided?
We want to integrate One’s insurance with other companies. For example, if you want to buy a bike online, you will be offered a bicycle insurance directly. Traditional insurers, too, urgently need to think in digital ecosystems. Otherwise her future looks bleak. Otherwise, we are looking for our target groups in social networks – and not only focus on Millennials in Berlin, but also try to find young customers away from the big cities. By putting our marketing campaigns alongside those of our competitors, we see that they have copied our unique selling points. That makes us a bit proud.
The US startup Lemonade has already started before you – and is considered a role model for the segment.
Yes, Lemonade is also a role model for us. The whole brand communication is really good.
How should your product evolve?
We will expand our product offering to include so-called short-term insurance where the smartphone plays a key role in data collection. The insurance will adjust to the individual situation of the customer. Soon we will start with a product called Travel Light: For example, anyone traveling to the airport will receive a travel insurance via a push message. Through the smartphone’s GPS, the app detects that the customer is in the airport and offers a damage and theft protection for the duration of his trip. If, for example, the laptop is stolen while on holiday, our customers can get their money reimbursed within 24 hours.
Everything should work via app. How can the customer prove that his laptop was stolen?
He just needs to answer a few questions to our chatbot and take a report from the police and upload it to the app. The whole thing works on the website or via a hotline.
This also leads to fraud. Are you struggling with that?
Of course, there were cases of fraud. There are about a dozen per month. Especially with a young provider, people want to try it first. But we would have expected much more.
One of the main arguments in favor of One is the fast processing of claims. How many refunds already work automatically?
60 percent we had set ourselves the goal and there we are approximately. Most damages are electronic devices worth less than 100 euros. Once the kitchen of one of our customers burned down. Luckily, without people being harmed. That cost about 30,000 euros. For these cases, we work together with a partner who looks after customers on site and assesses damage.