White labelling—repackaging product with a full Web application linked to back office processes at the insurance company—is coming of age and gives insurers an advantage where they have a product offering and someone else has the market, says Aidan Cook, CEO, Sense Internet.
If the market and marketing muscle of the ‘someone else’ is bigger than the insurer, the attraction of such an arrangement can be seductive. Even niche players taking a product from an insurer can play a role in expanding the business.
Why should the insurer be interested in white labelling? For an answer, let’s put ourselves in the shoes of the proverbial man or woman in the street. They like to buy things from people and places that they know and trust. For instance, the greengrocer at the end of the road provides an Internet connection and an Ethical ISA can be had from the place where they buy their underwear. They can even buy house insurance from a failed budgie-breeder with a conviction for tax evasion (who also leaves a crate of wine in my garden shed every month). You get the idea. Familiarity breeds not contempt but trust.
But actually Cable & Wireless provides the Tesco broadband, the ISA allowance goes to HSBC not M&S, and the Virgin house insurance is underwritten by UK Insurance Ltd. Loyalty is to the brands the man or woman know, but the services are actually provided by organisations with supposed expertise in their relevant areas.
Aside from wondering how did we ever lose so much faith in the insurance experts that we’d rather be willing to trust a brand that we originally experienced as a logo on the middle of a Sex Pistols record (Virgin) with our money, the switch away from buying direct from insurance companies happened and we’re now all used to an environment where we’ll buy almost any product from brands we like.
The development of consumers buying from brands rather than experts—and the diversification of services that trusted brands found themselves able to offer by making a few strategic alliances with other companies—happened just as the perfect technology to support it began to emerge.
But from the brand’s perspective, would offering these new products be a useful extension to its sales portfolio, or a painful learning experience in unfamiliar territory? To enter into this form of partnership, a brand needs the certainty that as well as the financial benefit of more sales, it won’t do its precious brand equity any damage by offering a sub-standard service.
White labelling is a mix or catalyst of processes and technology—and people and their ideas—although a more precise analogy might be the lab equipment that enables the catalyst to happen. The people at the insurer (or other type of company), including its IT department, and at its Web technology provider, work closely together to provide a seamless and pain-free solution for the brand. The result is a white label Web site—in essence a tool without a brand. All the brand has to do is put its logo on the side and link it to its Web site.
The brand is happy because it has a new product offering and the reassurance that the technical application selling it is robust, reliable, and resilient. It also hasn’t had to do any technical development online, which removes any worry, cost and headaches from its side of the equation.
The argument in favour of white labelling is persuasive, especially as I’d argue that it’s reflective of why people buy insurance off the Tesco Web site; familiarity and trust, combined with a convenience that is propped up by a familiar name—ah, that word again! And all of the technology and advertising/marketing sweat is taken out of the insurer’s hands.
Transitioning part of their business to white labelling seemed at first a tough call for insurance companies to make but, increasingly, they recognise there is a benefit to them; they have the product that the Tescos etc of this re-aligned world desire. In some respects, then, they are in the driving seat, but it’s a seat they have to share, because Tesco (and corner shops…pause for breath) are also in the driving seat. One little corner shop may have a limited customer base locally, but it’s loyal and the shop is one of ten of thousands in the UK. You get the picture…
Alas for the bystanders among insurers, the changes wrought by popular retailers—and other types of brand—and customer power, seem destined to accelerate the take up of white labelling. A popular, trusted consumer brand name—with a marketing-led Web site dedicated to the branded product and fully integrated with the insurers back office—is a proven mix that works in favour of all parties involved.