Your guide to auto insurance market segmentation  

What is auto insurance market segmentation?  

For smart marketers, segmentation is a critical part of any strategy. Without it, it would be like showing up to a comic book convention and presenting your marketing goals for the year. Wrong place, wrong time – or more accurately, wrong audience, wrong message.   

Segmentation involves breaking consumers into groups of audiences based on certain factors, and tailoring your messaging and outreach plans accordingly. For auto insurance market segmentation specifically, these factors could include the “traditional” demographics like age, gender, zip code, or income. Or these factors could delve deeper and look at psychographics like a drivers’ life stage or actual driving behavior.   

Why is segmentation beneficial to auto insurance marketers?  

There are multiple reasons segmentation is a must-have when it comes to building an effective auto insurance marketing strategy:   

• The message you want to convey should be different depending on who you’re talking to.  

• Different segments of consumers can be found in different places, and along different points of the customer journey.  

• The price you want to pay to reach certain segments of customers may vary, based on their value to your business.  

• There may be segments of consumers you actively do not want to reach or convert into customers.  

Where should auto insurance marketers start with segmentation?   

Digital marketers have a powerful tool at their fingertips when it comes to segmentation and targeting: DATA  

There is a tremendous amount of data available to digital marketers today that didn’t exist before the advent of the internet. So, over the years, the challenge has shifted. There’s no longer a lack of data, there’s now an overwhelming amount!  

Today, the key challenge is understanding how to segment consumers in a way that’s beneficial to your business, then figuring out what kinds of data are needed to do that and where to get it.  

How can auto insurance carriers effectively segment and reach consumers? 

To start, you should ask what kinds of factors are most important when it comes to attracting new customers. What makes sense for your book of business?  

Here are a few examples of how this comes to life:  

Demographics

If an auto insurance carrier only operates in 24 U.S. states, then they likely want to focus their marketing spend and only target drivers who live in those states. In this case, demographic data is essential and should be layered on to their marketing campaigns. 

Driving behavior

Another factor an auto insurance carrier could look at for segmentation is driving behavior. Since consumers who exhibit safer driving behaviors are more likely to become better, more profitable customers, carriers may want to spend more money to attract safer drivers, and less money to attract the riskier drivers.  

Or if a carrier’s strategy is to market across the low- to high-risk spectrum, they could reach and tailor their messaging to this segment by promoting competitive rates, accident forgiveness, and roadside assistance.  

Life stage

A third way carriers can segment and target effectively is to reach drivers who are more likely to be in-market for a new auto insurance policy, based on their life stage or recent milestone. For example, knowing if a driver is buying their first car, graduating college, having a baby, or moving to a new state can empower you to tailor messaging towards their current challenges and concerns.   

Who can help auto insurance carriers get access to the right data?  

As I mentioned earlier, all these types of targeting require finding and leveraging the right kinds of data. But who can you turn to for access to these valuable datasets?  

Here’s a start:  

• Geographic and location data can be licensed from companies like SafeGraph and GroundTruth.  

• Driving behavior data, also known as telematics data, can be leveraged from companies like Arity who specialize in understanding how, when, and where consumers drive.   

• Life stage data can be accessed from companies who look at retail behaviors, like Experian and TransUnion. For instance, those who are shopping for cars, baby clothes, or furniture and appliances.  

Ready to get started with data-driven market segmentation? Learn more about Arity’s expanded and enhanced suite of marketing solutions, and how it can help you reach the right drivers with the right message.