Illustration by Nhung Lê

Kate Terry (MBA 2005) knows that no one attends their fifth-grade career fair and comes home hoping to pursue a career in insurance—but that’s exactly where she wound up. “I really fell in love with it,” she says. As cofounder and CEO of Surround Insurance, Terry hopes to share that enthusiasm with a group that is also unlikely to fit the traditional insurance mold: people in their 20s, 30s, and even 40s.

Terry, who worked in product management at Liberty Mutual for a dozen years, observes that life used to be more linear: Getting a job after college meant buying a car, which then necessitated car insurance. As people progressed along the track toward adulthood—starting a family, buying a home, and so on—they would level up their coverage. “But that cookie-cutter game of life doesn’t exist anymore,” Terry says. Many people are forgoing the assets that were traditionally associated with growing up and choosing instead to rent cars and apartments, even if they have the means to buy. Surround is a digital insurance agency that operates in 30 states and offers just the right insurance for these tech-enabled, younger insurance buyers.

Terry estimates that about 4 million people graduate into the insurance market every year and spend four to five years in this phase, in which they aren’t buying traditional assets. Surround aims to land these customers early by offering products that no one else does, like non-owner car insurance (for people who drive rented, leased, or borrowed cars). Because other agencies aren’t chasing these young people, Surround enjoys a low cost of customer acquisition for a customer that has “the highest lifetime value of any insurance customer out there, if you think of the years ahead of them,” she says. Eventually, when they decide to buy a vehicle or settle in a condo, Surround offers the next level of insurance and will hopefully keep their business for the long haul.

The average age of a Surround customer is 29, and figuring out how best to reach them can be a challenge, Terry acknowledges. The VC-backed startup currently relies on three channels: organic blog and video content like TikTok and Instagram reels; B2B2C partnerships with companies like Go, an on-demand car rental company whose customers need insurance to use their products; and Google paid search. The team is trying to figure out where to focus their distribution energies between these three channels.

Terry wonders whether they should focus on one or two of those streams, or if there’s a way to think more holistically about how they could support one another. The partnership channel has a lot to recommend it, because every new partner brings along a stack of new policies—and the team at Surround can use their blog and video content to support precisely what those customers want. That can create a virtuous cycle that helps them land another, similar partner. Paid Google search has been surprisingly economical in Surround’s niche but results can be a little all over the place, Terry acknowledges, and the organic content is probably better for top-of-the-funnel awareness. As a small startup with no brand awareness, Surround needs more activity at the bottom of the funnel, Terry says—which is one more vote in favor of the partnership model. Between the three existing channels, how do you think the team should maximize their distribution energies?

The challenge with additional focus on paid search is severalfold: Terry may find that it simply does not scale beyond lower levels of volume, and they have a bespoke-enough product that prospective customers don’t know that they want or need this product yet.

Partnerships around insurance have been valuable in driving growth in new categories like travel and event-ticket insurance. Those might be a hook into other insurance lines that deliver even greater overall lifetime value for Surround, aligned with Terry’s other objective. Partnerships can also shine a light on adjacent areas that might have product market fit with a few additional tweaks to the product, thereby driving additional differentiated growth.

This should be balanced with continued focus on organic content. Particularly in a world where AI is driving e⁄ciencies, this marketing can in fact drive great brand value, as Terry theorizes, at lower cost than has ever been possible in the internet marketing era.

—Jay Parekh (MBA 2011), is a vice president of business development at Chime.

Kate Terry has created a fascinating product offering that takes advantage of changing consumer behavior to reinvent a staid category and, as a result, benefits from economical acquisition costs. But being the first in a category comes with a drawback: having to educate the customer about their problem and spend more effort at the top of the funnel than you’d like.

Think about it: The usual catalyst to buy car insurance is to first buy a car. Same for homeowners’ insurance. These moments triggered discrete opportunities for companies to intercept customers. Without that, owned media (like a blog) and search engine marketing won’t be particularly effective if no one is looking.

My advice: Before you build an audience, borrow someone else’s. Home in on where your customers are already gathering, and whom they trust for advice on these topics, and deliver your messaging there. Similarly, if the old purchase triggers no longer apply, look for new ones that you can leverage to intercept customers.

The partnership opportunity with Go falls into both of these categories, providing the catalyst of renting a car for an existing pool of customers. To ensure she gets what she needs from the partnership, Terry will want to negotiate for access to customer data so she can ultimately own the relationship (rather than white labeling it through Go). Alongside this channel partnership, I’d encourage Terry to continue to invest in robust content but look for opportunities to gain reach, like guest posting on trusted media platforms, podcasts, and newsletters. Put search on hold for now and see how this duo of content plus channel partnerships plays out.

—Christina Wallace (MBA 2010), is a senior lecturer in the Entrepreneurial Management unit at HBS, where she teaches entrepreneurship and marketing. She is also the author of The Portfolio Life and an angel investor.

Got a case? To take part in a future “Case Study,” send an outline of your company’s challenge to bulletin@hbs.edu

Post a Comment