Roland Berger Strategy Consultants content Fresh thinking for decision makers Image problems 2.0: critical opinions in social media are a growing threat for insurance companies Foresighted online reputation management can help limit the damage And tap the opportunities social media offer as well With compliments Financial Services CC February 2011
WEb 1.0 From the one-way street of virtual communication in Web 1.0...... to the democratic, self-determined, and critical chorus of opinion in Web 2.0. WEb 2.0
content Online Reputation Management These days, harsh online comments about insurance companies from their customers are not a crisis situation. In Web 2.0, they are in fact increasingly par for the course and run the gamut from complaints about insufficient service or incorrect advice to bad conditions. Networks and forums ensure that negative content spreads in no time at all multiplied by search engines and aggregators, such content is virtually forced down users' throats. As a result, reputations stand to suffer, both online and offline, which can subsequently have a substantial impact on commercial success. The results of a recent study suggest that insurers should view this as a long-term phenomenon and develop strategies for dealing with social media. Quickly voiced criticism can cause long-term damage. Social networks and consumer portals are full of negative comments about insurance companies and their products. "I've never had such a bad insurance policy. Steer clear of..." "I don't recommend... at all. If damages actually occur, they use all sorts of tricks to get out of paying. Happened to me with my renter's insurance and my personal liability insurance." Customers who search for a particular company's insurance products online are presented with comments of this kind. A study by Revolvermänner GmbH a leading provider of strategic online reputation management in conjunction with Roland Berger Strategy Consultants has shown that almost half of the user-generated content referring to insurance companies in Germany is negative. What's more, there is no end in sight to the flood of online comments. Over the last ten years, around 7,000 new ratings were added regarding Germany's top 20 insurers. That may not sound like much, but these comments are multiplied by the likes of Google and often achieve a higher profile than the companies' official websites themselves. MIXED IMAGE 46% of comments about insurance companies examined in German Q&A and rating forums are negative THE MULTIPLICITY OF OPINIONS PUTS REPUTATIONS at risk 7,000 Web 2.0: Public and Critical "Anyone-to-Everyone" Communication The internet has not just grown it has also changed fundamentally. Web 2.0 allows anyone to post their opinions, information, suggestions, and criticisms online. While Web 1.0 content was largely produced by publishers, businesses, or institutions and distributed via their websites, users are now generating their own content. Traditional "one-to-many" communication has morphed into "anyone-to-everyone" communication; consumers become producers and monologues are transformed into dialogues. Everyone has access to Web 2.0 applications and social media. Moreover, smartphones and tablet PCs are also driving forward and dominating the use of these services and networks. In this way, they are becoming an integral part of life around the world and around the clock. 200 1,300 The most famous social media are the microblog Twitter, which enables users to send brief messages of up to 140 characters to their network, and the classic social networks such as facebook. Media blogs such as YouTube and flickr are also included. Comparison sites and Q&A portals such as the German sites wer-weiss-was.de or gutefrage.net, comparable to Yahoo! Answers, are often not considered social media as their range of interactive features is more limited and their content tends to be more objective than that on networks such as facebook. However, it is precisely this aspect that makes them so important for insurance companies. This is because insurance customers are particularly active on these sites and the multiplication effect of the content is disproportionately high. Search engines further heighten this 2001 2005 2010 Number of new ratings relating to the top ten German insurers in the last ten years (cumulative)
Roland Berger Strategy Consultants SEARCH ENGINES HAVE a KEY ROLE AS MULTIPLIERS Search engines find comments in forums and networks and distribute them further POOR RATINGS DOMINATE 65% The percentage of the top 20 insurers with negative content within the first ten search results AN UNREALIZABLE IDEAL effect. If users do not set up the relevant protection for their content on the respective platform, it is also found by search engines making it accessible to an even wider public. If you take a list of the 20 largest German insurance companies and google a product together with the relevant insurer's name, one in three entries within the first five hits for a given insurer contains at least one negative rating (on average). The findings are even clearer if you look at the top ten search results, where two-thirds of all insurers receive critical feedback. Reputation in Jeopardy Customers Are Using Their New Power This poses a very real risk because a growing number of competitors, shareholders, analysts, potential job applicants, and customers research specific companies and products online. According to data from Google, almost half of prospective customers make use of online sources to find out about insurance policies before signing an agreement. They compare prices, share their experiences, and at times voice harsh criticism. The most common bones of contention are pricing and coverage (37% of content), the companies' alleged poor customer service (27%), and products or product quality (14%). Criticisms are usually left uncommented because insurers rarely have advocates who publicly declare themselves as such online and correct negative comments. This is due to the nature of the product: it is somewhat abstract or only becomes tangible at a very late stage perhaps after as much as 30 years, in the case of life insurance payouts. As a result, negative insurance ratings within networks are not automatically corrected in the way that comments are which lambaste emotive consumer goods such as the iphone or a midrange car. A look at facebook fan pages clearly illustrates this. The world's largest social network enables companies to set up official pages for their brands or products. By clicking on a "Like" button, any visitor can become a fan of the page in question. In this way, users endorse products and further define their own online image. Fan pages serve as "virtual accessories," as it were, used to underline an individual's own personality. If, for instance, a critical user posts a rant about the iphone, it is usually quickly replaced on the site by positive subsequent entries or at least put into perspective by them. This means that the entry often disappears without the manufacturer having to actively intervene. Insurance companies, however, cannot rely on fans to "auto-manage" their reputation, and criticism of their products tends to spread unchecked on the internet. Online Reputation Management Is The Answer But How? Web 1.0 tools such as sophisticated product presentations on a company's website can do nothing to counter this dynamic trend. Insurers need to take action themselves if they want to steer the discussion within social media in a positive direction instead of leaving it to chance. However, very few actively manage their online reputations at present. Online reputation management (ORM) means regularly monitoring online ratings of the company's own offerings and brands and intervening if necessary. Insurance is not viable as a virtual accessory
content Online Reputation Management Effective ORM must take a number of success factors into account: if insurers respond to criticism in online forums, their messages must be perceived as authentic, transparent, and personalized or specific. The writer's identity must be clear, the issues raised must be addressed, and their root causes explained. Using standardized texts and obviously concealing the identity of a user who sings the praises of the product in question may do more harm than good. Integrating the writer into the problem-solving process is a more complex but in many cases also a more promising approach. In any case, it is crucial to react to reputation-damaging content quickly in order to prevent it from being distributed unchecked. In addition to this, proactive management can minimize the foreseeable reputation risks for example if a reaction in the social media is anticipated in advance. If positive foundations have already been laid in the forums or networks, it is easier to communicate with those who have been affected, even in difficult circumstances, and the company remains far more credible. SIX ASPECTS OF ONLINE REPUTATION MANAGEMENT AUTHENTICITY TRANSPARENCY FOCUS ON SOLUTIONS INTEGRATION INDIVIDUALITY SPEED Insurance companies can do this by actively contributing tips and information to Q&A portals or recruiting fans by providing added-value content. For example, the insurer Allianz can already boast more than 34,000 fans with its facebook page Allianz Knowledge. Instead of focusing on insurance, visitors to the page discuss issues such as the climate, energy, microfinance, demography, health, and nutrition. Establishing Strategic Online Reputation Management Strategic ORM that is effective over the long term must be geared towards the specific circumstances and starting point as well as the insurer's objectives. In general, four steps must be taken in order to establish a successful strategy: 1. Analysis Establishing the status quo of a company's online reputation forms the starting point for all further considerations. All data on the company, the brand, and the key products is extracted from the relevant online channels in order to create a well-founded, quantifiable overview. Key questions include: What picture do social media paint of the company and its products? How does it compare to its competitors? Which reputation drivers (platforms, networks, etc.) exert the greatest influence on the company's reputation? How does the company currently react to user-generated content? This extensive set of information can scarcely by gathered "by hand." Technical solutions can be used to automatically scan the social networks and search engine results in a neutral, comprehensive, and comprehensible fashion. THE FOUR STEPS OF ONLINE REPUTATION MANAGEMENT ANALYSIS ORGANIZATION TARGET SETTING ACTIVE MANAGEMENT & TRACKING
Roland Berger Strategy Consultants PROACTIVE MANAGEMENT 2. Target setting In step two, the results of the analysis are assessed and targets are set. It is advisable to involve managerial-level employees from all relevant company divisions (communications, marketing, sales, product development, operations, etc.) in the evaluation process at an early stage. One reason for this is that important fundamental decisions must be made when defining targets: Insurers who are involved in the online discussion can use this as a means of building up a positive image REGULAR MONITORING IS IMPERATIVE Keeping a close eye on the company's reputation via active tracking Word How far-reaching should the dialogue be? How much transparency is prudent and desirable in communications? What content can and should be provided for individual channels? Which social media should be used actively or reactively, and which should merely be monitored? What proactive steps should be taken to build up a positive image online? What KPIs should be used to quantify a reputation? Should the operational side of things be handled in-house, externally, or using a combination of the two (e.g. determined according to online channel or event-based)? 3. Organization Due to the specific expertise involved in social media and its rapid rate of change, a central responsible body and dedicated capacity are essential for successful ORM. This does not necessarily mean establishing a new unit. However, this may be advisable particularly when problems delineating responsibilities make an alternative solution difficult. The central responsible body needs decision-making powers, authority, and budgets in order to act with the necessary speed. Information and escalation processes have to be defined and the interfaces with all the organizational units affected need to be specified. It is desirable that powers from the various divisions be pooled in order to achieve the best possible integration into the corporate structure. A uniform policy on how staff use social media is absolutely essential, along with relevant training sessions. Incorporating sales into the active management process can be a very good strategy to improve communications between the company (headquarters) and the public (customers). A sales employee could, for instance, build up and use their own social media network. This will attract far less criticism because the threshold for criticizing an individual is much higher than that for an anonymous company. 4. Active management and tracking Once a company already actively manages individual cases and incidents within social media, tracking their success and making corresponding regular adjustments to the company's range of measures are the next step. Tracking is carried out by continuously monitoring keywords automatically and both measuring and reporting on the defined indicators. In order to ensure that the results are analyzed optimally in-house, the company divisions
content Online Reputation Management involved need to be supplied with information so that they can initiate improvement processes (e.g. operations/claims) or react to ideas and innovations (e.g. product development). Web 2.0 is constantly evolving and key parameters frequently change. The strategy and organizational structure must therefore be flexible. Should it prove necessary to correct the process, ongoing tracking provides a reliable early-warning system, and the team can then proceed to step two or three again if applicable. Reputation Risk Official Profiles More than half of the top 45 German insurance companies already have a profile on facebook. However, only 18% of these profiles are actually official profiles created by the companies themselves. It is these unofficial profiles in particular that present a threat to the reputation of a company that should not be underestimated, especially as they feature prominently in search engine results. For users it can be extremely difficult to differentiate between the official and unofficial profiles, and they may assume that the discussions and information there, created completely without company monitoring, have in fact been authorized by the company. In the worst case scenario, accounts are even created in the company's name with the intent of spreading questionable content damaging to its reputation. In such extreme cases, the only solution is to react quickly, set the facts straight, and take action against the damaging content. In order to minimize the risk to their reputation, companies should preventively ensure that they register the most important account names for their company and key products themselves. If a company wishes to then actively use these profiles, this may be a considerable undertaking but well worth it. Profiles must be regularly maintained and updated with current content. In some cases, the sales representatives at insurance companies may already manage unofficial profiles and have built up a sizeable fan base. Companies can use such profiles to their advantage if they add targeted content via a company-wide social media policy. Online Reputation Management As An Opportunity Admittedly, a great deal of work can be involved in addressing this issue. Furthermore, the benefits are often difficult to quantify and frequently only become clear in the medium to long term, depending on the situation. It is also unclear which social media channels will remain relevant over the long term for example, the significance of Twitter for insurance companies is already questionable. However, it is clear that users of social media including insurance customers are using the internet more and more for information, dialogue, and networking. This means that both information and flows of information will become increasingly specific and tailored in the future. It will become more difficult to place the desired information in a targeted manner. The prospect of following customers, reserving a place for their sales force in virtual discussion forums, and thereby ensuring a good strategic position should be reason enough for any insurer to look into online reputation management now and get involved in social media. german and us insurers on faceb0ok and twitter 47% USA 65% USA 18% Germany 47% Germany Official profiles of the 30 largest US insurers and Germany's top 45 insurers on Twitter and facebook IF YOU HAVE ANY FURTHER QUESTIONS, please contact us: Stefan Wojahn, Partner 49 40 37631 4331 stefan_wojahn@de.rolandberger.com Christian Scherg, Executive Director, Revolvermänner GmbH 49 211 520636 0 christian.scherg@revolvermaenner.com think:act CONTENT Editors: Prof. Dr. Burkhard Schwenker, Dr. Martin C. Wittig Overall responsibility: Torsten Oltmanns Project management: Dr. Katherine Nölling Roland Berger Strategy Consultants GmbH Am Sandtorkai 41 D-20457 Hamburg 49 40 37631-4421 news@rolandberger.com www.think-act.info
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