Trying too hard: insurers are spending time and money developing complex internet sales strategies, when what's really needed is a simpler approach. (Life/Health: Selling Insight).

Insurers have been putting great effort into online policy sales, but most still have not achieved the level of performance they desire and still lag other financial institutions in attracting customers to their Web sites. Some insurers have tried to emulate noninsurer financial institutions in the development of highly refined and complex Internet strategies. They have explored the use of sophisticated data-collection and analysis techniques to drive the development of these strategies, without great success.

In part, the lower traffic level at insurer sites is due to the less frequent need for insurance-related transactions by customers. But another problem might be that insurers are trying too hard. Perhaps too much effort is being focused on the analysis and development of an Internet sales strategy and not enough on the execution of the sales strategy.

Many insurers have done extensive work to collect detailed data on customers and potential customers concerning buying habits, socioeconomic classifications, life events and myriad other factors that the insurers believe will indicate customer product and service needs and preferences. Data mining has become a significant and sometimes expensive new function at many insurance companies in an effort to develop deeper insights about what will work best to attract customers through the Internet. Despite all this effort, Internet sales success has been spotty at best for the insurance industry. Sophisticated segmentation and hyper-segmentation of customer groups and other complicated sales-strategy tools may be limiting their own success.

Sales strategies, especially Internet sales strategies, must be simple to be successful. Simplicity has several advantages:

* faster to develop;

* quicker and easier to implement;

* more adaptable or changeable; and

* more readily understood and accepted by sales staff and customers.

Insurance company managers should keep in mind that the key to selling is satisfying customer needs and that the value proposition for customers seeking insurance products is different--and typically more basic--than that for other financial products. Insurance is typically valued by customers more for providing a sense of security than for the return it will generate, unlike other financial products. Purchases of investment products are frequently preceded by customer research of past product performance, projected economic conditions, evaluations of product or company management and a multitude of other variables, all of which reflect upon the return to be generated and, therefore, the value the customer will place on the product. Insurance purchasers usually seek information related to security and Price. The value proposition for these customers is simpler.

This is especially the case for Internet insurance sales. Customers seeking insurance over the Internet typically want the process of acquiring security at a low price to be as simple and convenient as possible. These buyers do not want a full sales presentation by a highly trained sales professional with extensive brochures and charts. Their needs are usually basic and limited, making highly sophisticated sales strategies unnecessary.

Successful Internet sales strategies must answer several basic questions:

* Who are the customers that the company will serve through the Internet?

* What products and services do those customers want?

* How will the insurance company differentiate itself and its Internet products/services from its competitors? (What unique value, in terms of security and price, will the insurer offer so customers will purchase its products and services instead of a competitor's?)

As insurers improve their data-management capabilities and reduce their costs and time to collect and analyze data, more sophisticated analysis and strategies may make more sense, but for now simpler is better.

The Internet carries with it an image of complicated algorithms, far-reaching data access and mystifying research capabilities or, in other words, an image of high complexity. But the image of the Internet is not the image of insurance. Insurance buyers on the Internet have a limited set of issues they are looking to deal with and Internet insurance sales strategies should recognize that and be simple.

Gregoy J. Hoeg, a Best's Review columnist, is managing director of Hoeg & Co., Doylestown, Pa. He can be reached at [e-mail].