WeChat, the Chinese route to Insurtech marketing
Marketing and customer-retention strategies now use methods which just a few years ago would have seemed unthinkable. A good example of this is the strategy used by the Chinese group Taikang Life Insurance to take advantage of the potential of mobile chat.
In a youthful, tense and dynamic economic and social climate like that in China, it is not uncommon to encounter innovative trends for increasing penetration in a market which, due to its size and internal dynamics, cannot be reached and maintained through vertical marketing strategies and communications channels.
This is why it is particularly interesting to see how Chinese insurance companies are increasingly turning to so-called social apps as a tool to expand their customer base.
In particular, it is the initiative put in place by Taikang Life Insurance in collaboration with the investment holding company Tencent which has raised the level of interest within the international community of Insurtech operators. It is, as a matter of fact, a new approach which takes advantage of the horizontal communication system offered by mobile chat in order to develop a gifting scheme (called “Wei Huzhu”) to get new customers involved and build loyalty with existing ones.
The mechanism is simple and immediate: through a bank payment or a money transfer made using the transaction feature offered by the WeChat app (developed by Internet services giant Tencent), a user pays a small amount — 39 yuan, around 16 US cents — and receives in exchange from Taikang Life Insurance an annual insurance policy of the value of 1000 yuan (around $160 US) for customers between 18 and 39, and 300 yuan for those aged between 40 and 49. This insurance policy only pays out if the policy holder has a malignant tumour diagnosed. What’s more, individual users can choose to share the promotion with their WeChat contacts list, and for every yuan that these contacts pay the company will increase the value of the insurance policy by a further 1,000 or 300 yuan, up to a maximum limit of 10,000 yuan, approximately $1,600 US.
The low incidence of the disease covered by this insurance policy in the selected demographic probably means that Wei Huzhu will not have significant repercussions in the Chinese insurance market, and it should probably be thought of more as a promotional operation than a marketing strategy. This initiative indeed represents a viral marketing operation which uses instant messaging as a tool to drive customer retention and build loyalty, and at the same time expand the customer pool using a customer recruiting mechanism which is potentially able to reach an audience of hundreds of millions of users. All of this has cost a minimal amount of direct effort, but its effects could reverberate around the chosen audience, which is expanding exponentially thanks to the viral effect.
Another element which plays an important role in defining the reach of this initiative is the positive value inherent in carrying out the proposed action, that is the contact who becomes involved being offered something of value. More generally, Taikang Life Insurance’s promotion shows the as-yet undeveloped potential of digitising insurance services. It should also not be a surprise that such initiatives are coming out of such a young market as China (the first legislation to regulate the insurance sector there dates back little more than two decades), which has evolved at the same pace as the technological revolution of recent decades.
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