The document discusses how insurance companies can build brand loyalty like hotels do. It argues that while online sales are growing, physical stores excel at building trust and relationships. Leading insurance companies are realizing bricks-and-mortar locations complement online channels. Examples include RBC Insurance Centers colocated in banks and Belair Direct combining sales offices with a retail space offering insurance packages. The conclusion advocates a multi-channel approach including physical locations to avoid commoditization and build affinity through trusted, personal experiences.

1. Trusted Experience
What the hotel industry can teach insurance
companies about creating brand loyalty
White paper | June 2012

2. Shikatani Lacroix is a leading branding and design firm
located in Toronto, Canada. The company commissions
assignments from all around the world, across CPG, retail and
service industries, helping clients achieve success within their
operating markets. It does this by enabling its clients’ brands
to better connect with their consumers through a variety of
core services including corporate identity and
communication, brand experience design, packaging, naming
and product design.
About the Author
Jean-Pierre Lacroix, R.G.D., President and Founder of
Shikatani Lacroix
Jean-Pierre (JP) Lacroix provides leadership and direction to
his firm, which was founded in 1990. He has spent the last 30
years helping organizations better connect their brands with
consumers in ways that impact the overall performance of
their business. Mr. Lacroix was the first to coin and trademark
the statement “The Blink Factor” in 1990, which today is a
cornerstone principle to how brands succeed in the
marketplace. JP has authored several papers, has been
quoted in numerous branding and design articles and, in 2001,
he co-authored the book “The Business of Graphic Design,”
which has sold over 10,000 copies. JP can be reached at
jplacroix@sld.com and you can follow his blogs at:
www.sld.com/blog and www.sldesignlounge.com
Other Articles and Books
Belonging Experiences...Designing Engaged Brands
Business of Graphic Design
White paper | June 2012 | Trusted Experience | 1

3. The insurance industry, in state of anxiety
The recent PricewaterhouseCoopers (PwC) Top Issues Annual
Report for the insurance industry clearly identified that the
industry is experiencing significant challenges. Low interest
rates are impacting a life insurer’s ability to generate
revenues. Smaller margins are causing amortization to
accelerate. Goodwill is eroding as earnings decrease. Plus, the
financial impact of global warming. Adding to this anxiety are
the new U.S. insurance regulations, Own Risk and Solvency
Assessment (ORSA), adopted in 2011 by the NAIC, which
raises the level of complexity in managing risk. With the
added burden of new processes, and the inability to offset
lower revenues with a reduction in expenses, the insurance
sector has started exploring new initiatives that will ensure
long-term growth.
A key growth opportunity for organizations wanting to
continue to grow and prosper is in emerging markets as the
current developed markets yield slim returns. In these new
markets, the young well outnumber the aging population for
the significant future, the middle class is growing at a pace
that is driving double digit, year-over-year consumption, and
its governments are investing in infrastructure that is driving
the importance of insurance.
However, as organizations wanting to capitalize on these
emerging markets have learned, these regions have
demonstrated to be very price sensitive and hyper
competitive, challenging the beliefs that incremental profits
can be derived from a higher sales volume.
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4. Another opportunity identified in the PwC report is the shift
from product-focused to customer-centric operating models.
Of the many pillars described, one of the key strategies is to
alter the competitive playing field by developing a sustainable
and competitive pricing advantage instead of aggressively
fighting for market share with price promotions. The strategy
consists of providing customers with a customized and
personalized package of price, product and service at the
individual level. This initiative shifts the operating model by
focusing on customers’ needs rather than promoting generic,
one-size-fits-all products.
Both opportunities support the need for insurers to rethink
their go-to-market strategies to capitalize on these emerging
markets, and the more discerning consumers in mature
established markets. To establish a high degree of trust and
recognition, insurance organizations need to reconsider a
bricks and mortar strategy that will complement their online
experience as part of a multi-channel initiative, and will
provide greater value and build brand loyalty. This is
especially true in emerging markets where brands need to
build relationships to gain the trust of their customers.
We can also gain learning from our work in the wealth
management industry where online-centric service providers
such as ETrade, TD Ameritrade, TD Waterhouse and Charles
Schwab support their virtual world with bricks and mortar
initiatives that leverage the importance of building tangible
relationships with new customers who want training wheels
for their self-directed investment initiatives.
White paper | June 2012 | Trusted Experience | 3

5. Bricks and mortar, the foundation for building trust
The challenge in today’s competitive landscape is the ability
of organizations to build trust, which is the foundation for
creating strong brand loyalty. Brands that market intangible
benefits such as insurance and investments are challenged
with a range of options that offer a lower frequency of
purchase and a complexity of choice that can be
overwhelming. With the advent of online shopping and the
growth of this category as a percentage of total sales, many
insurance organizations have rushed to provide a virtual store
to sell their services as a means to build market share.
Companies such as Aviva now offer RAC, a unique online
brand to capitalize on the growth of this medium as a distinct
sales channel for auto insurance. Other insurance companies
have also initiated similar strategies such as the launch of
Esurance by Allstate to effectively compete with online-only
brands such as Progressive and Geico.
White paper | June 2012 | Trusted Experience | 4
“Bricks-and-
mortar
stores won
the highest
marks for
‘Most
reliable’
(69%) and
‘Safest’
(77%).”
Nielson June 2012 Study

6. Although the growth of online sales provides brands with a
high degree of convenience and ease of access, it does
eliminate an important dimension of brand loyalty — the
ability of building personal relationships that lead to deeper,
long-term affinities for their brands. Studies have shown that
retaining customers is highly profitable. In the financial
services industry, a 5% increase in customer retention
generates more than 25% in increased profits as the lifetime
value can effectively be capitalized. A key factor in building
this profitable customer base is the ability to create an
environment that provides reliability and a sense of security
that customers are making the right purchase.
And this is the area where bricks and mortar experiences
excel over new emerging online offerings. With the rise of an
aging population and the growth of ethnically diverse
communities, physical experiences truly become the key to
building customer relationships.
The online impact of commoditization
The growth of online insurance sales can potentially lead to
the commoditization of the industry as seen in many other
service sectors. In particular we can learn from the hotel
industry which has seen a major impact on price and margin
as more and more purchases are done through websites such
as Hotel.com and Expedia.com. These online stores offer
customers price protection, a great range of options, in
addition to highly competitive pricing that is hard to match by
conventional travel agents.
White paper | June 2012 | Trusted Experience | 5
“Lack of central
leadership,
wayward priorities,
and the inherent
difficulty of shifting
from traditional
customer contact
points to online
channels all detract
from the
experience that
retailers provide
their customers.”
Forrester’s study on U.S.
retailers

7. The abundance of choice and the ease of shopping for the
lowest hotel cost have significantly impacted the profitability
of brands and their ability to differentiate themselves while
building brand loyalty. A recent industry study clearly
identified that the challenges facing the hotel industry will
only get worse as the gap between sales and the cost of sales
and margin continues to widen, undermining a hotel’s ability
to reinvest in the bricks and mortar part of its brand
experience. At first, the internet provided hotels with an
opportunity to escape commoditization by opening new
channels of distribution for their services. Hotels quickly
adopted the online channel of sales as a means to remain
competitive and increase their occupancy levels.
However, without clearly understanding how to change the
customer’s physical experience and other elements of the
marketing mix, this rapid move to online sales has led to
exactly what they had been attempting to avoid — the
commoditization of their offering.
To overcome this commodity trap, primarily created by an
online experience that diminishes the value of hotel brands,
leading hotels have reinvested in their physical presence
through renovated hotels that cater to the emotional side of
their clients’ needs. These new enhanced brands still rely on a
multi-channel strategy while ensuring the physical experience
of the guest translates into brand loyalty and preference over
other less expensive offerings. This supports the premise that
the tangible branded experience has a significant impact on
customer preferences within a category that has become
commoditized through a high dependency of online sales and
marketing.
White paper | June 2012 | Trusted Experience | 6

8. Where some lead, others will follow
Leaders in insurance and banking are realizing the importance
of a bricks and mortar presence as part of their multi-channel
marketing strategy. Our work in 2008 with Royal Bank of
Canada to launch the RBC Insurance Centers, which colocate
with their conventional banking services, allowed the
organization to capitalize on customer branch visits by up-
selling them on insurance services. The physical presence of
insurance centers also allows the brand to build credibility in
the longevity and seriousness of the offer. By having a
colocated design, it also allowed RBC to overcome the
regulatory restriction that prohibits the promotion and sales
of insurance products within a financial institution.
Another approach consists of providing promotional material
and brochures inside conventional bank branches or as part of
auto dealer showrooms, which introduce the services within a
bricks and mortar environment only to be completed in an
online or telephone service. These referral merchandising
approaches are the most common within the automotive and
travel industry and can lead to incremental sales but do little
for building brand loyalty or retention. Insurers wanting to
gain a greater share of their customer’s wallet need to
consider more permanent and integrated approaches which
leverage all aspects of the multi-channel with a strong
physical presence.
White paper | June 2012 | Trusted Experience | 7

9. Other organizations have embarked on different strategies
such as State Farm who recently launched a community
center as part of an integrated program designed by IDEO, a
global leader in design innovation. Next Door is a come-as-
you-are community space and cafe where anyone can ask
questions about finances and insurance and find answers.
There is no sales pitch. The one-of-its-kind facility, located in
the tony, uptown Chicago neighbourhood Lincoln Park, was
created by State Farm to provide a place for the community
to share ideas, a place where the organization can learn from
customers, and a place to encourage innovative new ideas.
White paper | June 2012 | Trusted Experience | 8

10. Another approach leveraged by Belair Direct, a leading
provider of auto and travel insurance in the Quebec market,
combined its telemarketing offices with a new front-end,
customer-centric service area. Traditionally, the company
offered walk-in customers with the ability to purchase travel
or auto insurance from a customer service desk similar to
banking services. It was felt that the organization could better
serve its customers by providing a retail experience that
featured all of the services available. Our firm was retained to
explore three different customer experiences, which included
interactive pods that allowed customers to shop online for
their insurance needs, guided by a sales associate. The final
program was launched in Trois-Rivières, Que., a small town
just east of Montreal, and consisted of a coffee and seating
area, four service pods that featured the range of products
available by Belair Direct, in addition to a transaction area to
enroll customers into the insurance packages. The operator
also offered pre-packaged kits when bundled insurance
services were purchased, from a road safety kit to a home
emergency package.
White paper | June 2012 | Trusted Experience | 9

11. Conclusion
As online sales represent a larger portion of an insurer’s
revenues, it will be important to avoid falling into the
commodity trap by training consumers to focus on price as
the differentiating factor. As insurance organizations look at
growing their revenues and slowing the account churn that
eats away at profits and margin, it will be important to
reconsider the importance of a branded place to build
relationships.
The market place has become a very competitive space with
bottom and top line challenges that will lead to greater
industry consolidation and a bigger challenge in creating
meaningful differentiation. To prosper, organizations must
remain focused on the customer and their emotive need
states, such as trust and security, while creating a proprietary
brand experience that includes a bricks and mortar strategy.
A lot can be gleaned from the wealth management and hotel
industries and applied to insurance sales and marketing that
will ensure greater brand affinity and market share.
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12. For more information, contact:
Jean-Pierre Lacroix, President
Shikatani Lacroix
387 Richmond Street East
Toronto, Ontario
M5A 1P6
Telephone: 416-367-1999
Website: www.sld.com
Email: jplacroix@sld.com
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