Case Study: How an Insurance Company Tripled Email Conversions Using 3 Behavioral Principles

How can you convince customers to accept a great offer when they’ve failed to recognize its true value from the get-go? Surprisingly, very easily. Learn how you can reframe your message to your advantage and increase engagement.  

Welcome to InsideBE

InsideBE is the largest behavioral economics and consumer psychology hub for marketers, sales people, and business professionals alike.

About us

When an insurance company came up with the idea of offering free travel insurance for a year, they were sure they were on a winner. “What a fabulous offer!” was the reaction they expected. Who wouldn't want to travel knowing they’d be covered if something bad were to happen to them? The insurance company will pay all the bills for your broken leg in Thailand or that lost luggage at Istanbul Airport.

But to the insurance company’s surprise, customers weren’t really down with the free one-year insurance as much as they had hoped. And it showed. The conversion rate for their new email campaign was abysmal.

That was the question MINDWORX was hired to solve. And solve it they did. After successfully applying principles of behavioral economics, the insurance company saw an incredible 300 percent increase in its conversion rate. How, you ask?

Well, the first step is to get inside the heads of your customers. Put yourself in their shoes and try to pinpoint the psychological barriers in your copy that could be preventing them from behaving the way you want them to. Once you manage to do that, you’ll start seeing the free one-year travel insurance a LOT differently. 

When you have a seemingly great offer that customers just aren’t buying, then there’s always some psychological reason behind it.

When Michal Plevka (Behavioral Strategy Director at MINDWORX) took a good first look at the insurance company’s email campaign, the first thing that crossed his mind was all the barriers potentially getting in the way.

“When you have a seemingly great offer that customers just aren’t buying, then there’s always some psychological reason behind it, usually either uncertainty or a high perceived effort. Since the offer was presented as a simple, single-click process, I immediately thought: ‘Right, uncertainty or fears must be to blame for the low conversion rate,’” Plevka explains.

And that seemed to be it – a potentially good-looking offer plagued with uncertainties and psychological barriers that were enough to hold customers back. So what solutions did he and his team propose?

Communicating products and offers to customers directly via e-mail is one of the most common, yet challenging tasks companies face nowadays.

But before we dive headfirst into Plevka and his team’s solutions, let's glance at the original email messaging that the insurance company was sending to their customers.

Conducting a behavioral audit

A major first step before coming up with some solutions was to do a bit of investigative work: a behavioral audit. The team took a look at the data that the insurance company provided them with, including click rates, conversion rates of different emails, and the most common reasons why customers didn't want the insurance (from the call center).

So what did they find? Apparently, there were two major uncertainties discouraging customers, both of which could actually be solved fairly easily. Let's explore them step-by-step.

Nipping the first uncertainty in the bud

After getting to the root of the problem, Plevka’s team had to confront the #1 most unbearable uncertainty existing in customers’ heads: the dreaded auto-renewal. You see, our brains crave certainty and predictability, and so anything that sows doubt will immediately make us want to swerve in the other direction.

You’ve probably already experienced an auto-renewal yourself with a free trial service. You signed up thinking you’d just copped yourself a great deal only to find out a month or so later that a big chunk of money had disappeared from your account. That’s right. Your free trial was up and either you failed to read the fine print, or the original marketing e-mail left something to be desired.

Our brains crave certainty and predictability, and so anything that sows doubt will immediately make us want to swerve in the other direction.

Many of us can mark “no free trial reminder” of our bingo cards, but we’d be hard-pressed to make that same mistake twice. And so that’s why our PTSD from such a mistake makes us think “What if I forget about it?” whenever the word “free trial” pops up in the future.

Because of this, the MINDWORX team made certain to add some assurance so that customers could feel more at ease: “Don’t worry. You won't forget about the free trial ending because we’ll send you a reminder well in advance.” This messaging removed the biggest barrier of all: the fear of forgetting, making it far more likely customers would hop right on that offer.

How being more precise solved a fear of the unknown 

For anyone who actually was considering the one-year travel insurance and who could get past the lack of assurance mentioned above, they were then met with the second biggest barrier: “How much would I be covered for in the event something bad happened to me?”

By failing to mention the sum of insurance coverage, it came across as a sketchy product. Why would anyone sign up for a deal they didn’t know the true value of? Would you sign up for a gym membership without knowing what kind of workout equipment they have? Same concept.

And that's why Plevka’s team decided to stick another piece of important information into the e-mail communication: how much the customer could expect to be covered.

They also made sure to leverage the power of social proof. Regarded as a key principle in behavioral economics, social proof taps into our innate tendency to mimic what others are doing and how they think and behave. Think of it as a marketing cheat code to erase uncertainty in customers’ heads. So, how did Plevka’s team do it?

Well, they reframed the message to reassure people that the insurance covered all they could ever need. And to do that, they used indirect social proof by framing the risks covered as “all the most frequently purchased coverage plans for your trips around the world...”

Let's look at the message now in the picture below.

Make customers feel like they already own the product

Another concept we can activate in people's heads is the endowment effect. People place a greater value on things they own compared to things they don’t: just think about how an Airbnb tenant takes care of an apartment compared to the owner of that same apartment. 

The goal is to make customers feel like the free travel insurance is already theirs rather than stating it could be theirs.

Using the endowment effect in this context is a little intricate. The goal is to make customers feel like the free travel insurance is already theirs rather than stating it could be theirs. 

The original message doesn’t evoke the feeling of ownership: “We have a reward for using our services.” 

Now take a look at how Plevka´s team reframed the message: “Thank you for being with us. You have just received a gift – free travel insurance.” See the difference? You OWN the gift now and you’ll lose it if you don’t act.

Reframe disadvantages as advantages

The next task on the to-do list was tackling the most potentially problematic caveat of all: the automatic renewal itself. It involved yet another round of fiddling with the wording, but this time with some added fluff to help minimize the damage. After all, the truth hurts. But how could the team put a band-aid on that “renewal wound?”

Just compare the original message with the new and improved version. What was perceived as a major turn-off at first (“After the first free year, your insurance will automatically renew for €21.60 EUR.”) was completely turned on its head by immediately directing the customers’ attention from a negative aspect of the insurance to a positive message: “After the first free year, your insurance will automatically renew for €21.60 EUR so that you won’t need to worry about your next traveling season.”

Not only does the potential customer get a clear idea of what’s going to happen once the trial is up, but the message also even comes across as an advantage if they let their insurance renew automatically.

“Now when the customer reads the message, they’ll go: ‘Hmm, automatic renewal, no thanks. Oh wait, they’ve got a good point. I’ll definitely be traveling in a year’s time. Maybe this isn’t such a bad idea after all,’” explains the MINDWORX Behavioral Strategy Director.

The conversion rate skyrocketed!

After implementing these steps, a rigorous A/B test showed a whopping 300% increase in conversions. Surprised by how the change in framing made such a huge impact, Plevka admitted: “The whole campaign just reassured us that removing uncertainties can sometimes be the only thing you really need.” 

“Uncertainty is the biggest sales killer,” adds Plevka. “You could have an excellent offer with hundreds of benefits, but as soon as the customer has one reason to hesitate, it’s game over. If you do manage to remove that uncertainty, then maybe all you need is just one more added benefit and you’re golden,” he concludes.