Embedded insurance offerings are on the rise, and e-commerce brands like yours can take advantage of integrating them into your online business to offer your customers something that they need while helping you make more money. In a modern world where there is lots of uncertainty, customers are more likely to purchase insurance products, so how can you use this to your advantage?
E-commerce brands can use embedded insurance in various ways to generate revenue. These include marking up insurance premiums, offering extended warranties, insurance for events, subscription services, upselling and counseling, and offering premium coverage to customers.
Offering embedded insurance helps you generate revenue and has other benefits like reducing cart abandonment, improving customer experiences, and differentiating your brand from your competitors. Embedded insurance is not only innovative but opens the door for online businesses to extend their revenue streams.
How Ecommerce Brands Can Make Money With Embedded Insurance
The e-commerce market is constantly growing and evolving, and e-commerce brands need to keep up to date with changes in the industry to remain relevant to their customers. Through embedded insurance offerings, e-commerce brands not only generate revenue but can offer their customers extra value on their purchases.
Consumers value peace of mind, and embedded insurance can give them that. For example, if you’re purchasing a new laptop with a 1-year warranty but then offered an extended warranty for a small fee, which option are you likely to go for? I think many would opt for the extended warranty. This extended warranty is an excellent example of integrating embedded insurance into a product offering.
Mark Up Embedded Insurance To Generate More Revenue
When e-commerce brands integrate embedded insurance into their product and service offerings, they may only get a small percentage of this revenue, and the rest goes to the insurance company. But if e-commerce brands mark up insurance premiums slightly, they have a greater chance of generating more money.
This strategy is tricky because, as a brand, you want to put your customers first and cater to their needs by offering them a product or service they value at the right price. The markup needs to be reasonable and well-balanced so the customer feels they are getting value from their purchase.
Use Levels Of Embedded Insurance To Suit All Budgets
Customers are more willing and likely to buy products or services that have embedded insurance if they cater to their budget. Using a tier system of embedded insurance can help e-commerce brands generate revenue while catering to their customer’s budgets at the same time.
E-commerce brands can also use strategies to convince their customers to purchase higher tiers by letting them know they are getting more value at a slightly higher price.
Implement Strategic Partnerships And Affiliate Marketing
E-commerce brands can collaborate and partner with insurance providers to offer customers embedded insurance policies. For each customer who registers for an insurance policy, the e-commerce brand will receive commissions based on this sale.
This type of embedded insurance works well if you have an online store and want to offer customers insurance on their products during shipping. You could partner with an insurance company and offer customers embedded insurance on lost or damaged packages.
Offer Embedded Insurance Specifically Suited To Events
Ticket e-commerce businesses can adapt their ticket products to include event insurance. This type of insurance covers the customer in case they cannot attend the event and may cover other aspects related to the event, like convenience fees, shipping, and parking. The event insurance is usually through an insurance company, and the e-commerce business gets a percentage of the insurance amount for each ticket sold.
Some insurance partners offer upgrades on ticket insurance, which covers rescheduling a date to attend an event or covers the price of the ticket in case the event is canceled. The type of ticket insurance offered depends on the insurance company; many do not offer insurance if the event is canceled.
Use Extended Warranties As A Form Of Embedded Insurance
Extended warranties in the form of embedded insurance are commonly found in e-commerce stores that sell items like appliances or electronics. Most appliances come with a one or two-year warranty. But customers can pay an extra amount to extend the warranty, so if something should happen to the product during that period, they will either receive a replacement product or get their money back.
Implement Upsell And Cross-Sell Strategies
E-commerce brands can generate more revenue for their businesses by upselling and cross-selling products with embedded insurance. When customers shop online and want to purchase a specific product like a camping tent, they may be offered complimentary products like a torch, inflatable air mattress, or camping mugs during checkout.
If the customer decides to purchase the tent and the air mattress, the e-commerce store has successfully cross-sold a product. This store could offer the customer embedded insurance on both products instead of only one.
Upselling offers a greater opportunity for e-commerce brands to earn money with embedded insurance. If a customer is looking at purchasing a 50-inch television, you could persuade them to buy a 75-inch television instead by offering an incentive like free shipping or free returns.
Additionally, you could offer embedded insurance in the form of a four or five-year protection plan for the television, which includes repairs and replacements for an additional fee.
Offer Premium Coverage To Customers
Customers are likely to go for premium embedded insurance on costly products. Products like cell phones are a great example of offering premium coverage. When customers purchase a new cellphone, that cellphone comes with a warranty.
But customers are then given the option to purchase additional insurance, which could cover the phone if it’s stolen, broken, requires repairs, or has a cracked screen. This premium-embedded insurance costs more than the standard insurance you’d purchase with the phone.
Because a cellphone is costly, consumers are likely to opt for premium insurance coverage to have peace of mind should anything happen to the cellphone.
Integrate A Subscription Service With Embedded Insurance
A subscription-based service with embedded insurance generates recurring revenue. Customers can subscribe to paying a monthly or yearly fee for embedded insurance. This type of subscription is an excellent way to make more money than a once-off purchase of embedded insurance.
Use Data And Analytics To Better Understand Your Customer
E-commerce brands can use website data and analytics to understand their customers better. This information helps offer customers tailor-made insurance for their needs and can increase customer loyalty and satisfaction. This data also helps e-commerce brands better understand customer behavior and the steps they take when purchasing.
Conclusion
The constant evolution of e-commerce makes it easier for customers to shop online and offers e-commerce brands more ways to generate revenue. Through embedded insurance e-commerce, brands can utilize an existing platform to make more money, understand consumers better, and find even more ways to turn abandoned carts into product purchases.