Compare and compete

It was the summer of 2009 and annual performance reviews were on at policybazaar.com, a comparison website for insurance policies. The person under review disclosed that the year-old company was spending ₹100 to earn ₹10, and collapsed minutes later. Regaining consciousness after about half-an-hour, he explained to the company founder, Yashish Dahiya, that the company had no way of making money and this bleak thought had caused him to faint.

His fear was not unfounded. The website was set up in May 2008 and Infoedge had invested ₹20 crore in September that year. But profitability was miles away. “We had started marketing our services, but only one per cent of visitors actually bought policies from our site,” recalls Dahiya, the company’s CEO.

This meant that 95 per cent of Policybazaar’s revenue came from re-directing its visitors to insurance companies, which paid ₹100 per enquiry. With a few thousand visitors and about 100 transactions a month in 2008, the September revenue that year was ₹6 lakh, way below the continuous investments being made in technology, people and marketing besides recurring expenses like rent and electricity.

Dahiya realised that a complete overhaul was in order.

To begin with, his team and he focused on technology improvements. As user-friendliness and ease of navigation are paramount in converting browsers to buyers, the company looked into minute details such as the need for clearly visible buttons.

“We conducted thousands of A/B tests for every button,” he says. A/B testing compares two versions of a web page by showing them simultaneously to similar visitors. The one that fetches more buyers is chosen. But even after these painstaking efforts, the company was “spending ₹100 to earn ₹50”.

The second leg of Dahiya’s strategy involved refining the company’s marketing efforts. “We spend a lot of money in marketing, as insurance is not a top-of-the-mind product for anybody. People don’t find out about insurance products the way they find out about a car or a house before buying them,” he says.

So the idea was to grab eyeballs and introduce the concept of insurance as an investment. Policybazaar marketed itself on Google, through emails, banners and on other sites. “We tried radio and other mediums too, but they did not work. Digital marketing helped drive traffic to the site,” he says.

Finally, the combination of marketing and a user-friendly platform worked. Today, the site gets nearly 1.5 million visitors a month and the numbers are growing. To retain the momentum the company has set up an in-house call centre in Gurgaon, manned by 1,000 people.

“Our staff went on to learn what worked and what didn’t through trial and error... We have a strong mentoring programme and don’t believe in separate coaching for beginners,” Dahiya adds.

The result: Policybazaar today accounts for half of all life insurance sales in the country and 70 per cent for low-cost ULIPs. Its lapse rate (ratio of policies cancelled before three years) is 15 per cent, way better than the industry average of 60 per cent.

“We don’t sell any high-cost insurance products,” Dahiya points out. And that has possibly helped Policybazaar gain volumes through a product portfolio that includes term insurance, health insurance and low-cost investment products, and the critical illness, auto and personal accident insurance offered by nearly 40 companies.

From nearly 32,000 transactions every month, Policybazaar targets 50,000 next year. It has had a capital infusion of $15 million so far and is busy raising another round of funding for future growth.

Pointing to the evolving insurance industry and its shift to the digital world, Dahiya says, “The industry will not survive if it does not change itself. Bad products in a non-social media era were all right, but it is difficult to hush things up today.”

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