Saga’s new social networking site for the over-50s could open a platform for insurance companies to talk to their customers. Will others follow suit? Anita Anandaraja reports

Saga has chalked up a first for the insurance industry by setting up a social networking website. Following the lead of Facebook and MySpace, the over-50s insurer has set up Saga Zone, a website for those wishing to mingle in cyber space with their peers.

Saga has seized on an opportunity to build on its relationship with its niche market. Should other insurers follow suit?

Richard Mason, head of insurance at Moneysupermarket.com, thinks social networking sites are an add-on for insurers.

“Sites like this [Saga Zone] are great because they allow users to swap stories. It is inevitable that insurers will have to provide bulletin boards to facilitate this. As with TripAdvisor for example, people expect to interact with other customers.”

Mason does not see these sites as marketing tools per se; he believes the company benefits by building trust with potential customers.

“In the old days companies could get away with treating customers poorly, but now how a company handles negative publicity tells potential purchasers a lot. What Saga needs to be very careful about is how it deals with customer feedback. It raises the stakes in customer service,” he explains.

Social networking sites could be a great boon to the market’s relationship with its customers. Tim Ablett, general insurance consultant at Project Consulting Partners, says. “As insurers, we tend to treat our customers as policy numbers or claims numbers.

“The more you can create affinity groups, where you can identify customer needs, the greater you can tailor your product and service. This is particularly relevant with a claim, when service becomes most visible to customers.”

Confused.com will soon be setting off on the same path by embracing a ‘social media strategy’ for 2008. Marketing manager Sarah Baldwin revealed that Confused is in the planning stages for a social networking website.

Like Mason, Baldwin cautions that while such sites have the potential to become great marketing tools, care must be taken not to air a brand’s dirty laundry via negative feedback. “People don’t want to be bombarded with marketing jargon,” she added

“SagaZone is a good networking tool; there seems to be no advertising. It is also a good business tool because it enables you to listen to the customer and respond,” says Baldwin.

Can we expect to see more insurers making use of social media?

“Rather than setting up a platform of their own, I expect to see insurers tapping into existing networks to reach their audiences in a highly targeted way

Nick Leonard, Octane PR

Nick Leonard, managing director of Octane PR, a public relations firm that specialises in social media, doesn’t think insurers will take to social networking sites, for the simple reasons of cost and difficulty in quantifying the returns on such an investment.

He explains that the situation differs for Saga as the brand represents more than just insurance.

“It extends way beyond this into holidays and radio. Through clever marketing and entering new associated markets, it has become a flag bearer for the over-50s in general. It is, therefore, extremely well placed to set up a social media platform to tap into this market and bring individuals closer to it.

“I don’t see most pure-play insurance companies having the same relationships with their target groups and customers. Insurance alone is primarily a grudge purchase, so I don’t think most consumers would want to hold a daily relationship with their insurance company in the same way as they would with Saga.

“So rather than seeing insurers setting up a platform of their own, I expect to see them tapping into existing platforms, applications and networks to reach their audiences in a direct and highly targeted way.”

Leonard admits that the consumer insurance market has evolved, and firms now have marketing fronts set up to tap into key demographic areas.

“This is why social media could be an extremely important and effective channel. Social media is all about bringing together communities of like-minded individuals. It allows businesses therefore to tap into audiences and micro-trends and address those audiences directly, knowing them to be interested and affiliated with common causes,” says Leonard.

“Sheilas’ Wheels has made moves towards this with its Make me a Sheila campaign, an online competition to win a place in its advertisements; and easyMoney.com has experimented with viral games.”

Others will inevitably take this forward through podcasts, webcasts, virals, digital interactive television and social media applications.

“Insurance companies understand the concepts behind this better than most. Their advertisements are almost viral in nature – stuffed with jingles or catchphrases that stick in our heads, and which we often pass on in conversation,” he adds.

“It’s a short step to transfer this online and create vehicles which have an equivalent level of ‘stickiness’ within target groups.”

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