A book I read, a while back was called, “Good to Great”. How do you go from being a good company to excelling at everything you do? One of the key differences is customer service: it’s easy to spot a company with great customer service and where it’s mediocre or even an afterthought. With social media helping make/break reputations, loss of reputation can come at the speed of light.
This loss of reputation can come from multiple facets – incorrect handling of a claim during a catastrophe, time to provide service, mistakes made as a part of billing… the list is long here. This can easily escalate into a DEFCON 1 type brand crisis situation. Carriers are in the process of recognizing the value of great customer service.
Now, I called out the issues that might cause a loss of reputation, however, a carrier’s reputation can be enhanced by a strong strategy around customer service. There are many stories you may not hear, where carriers will go the extra mile to ensure the policy holders’ interest is looked after first and then at the back end the due diligence is completed. This too can land you on shaky ground with how much is enough without exposing you to inherent financial and regulatory risk.
Talking about regulatory, the insurance business has become very transparent and commoditized – products, coverages, limits, prices etc. are the same across the board and this has been sped by the usage of web-based aggregators to get quotes for personal lines.
Interestingly, we can draw a similar parallel with the airline industry – the product they offer is almost exactly the same and for non-business travelers, there is little to no loyalty. It’s a game based on prices and customer service. The customer service here is on time arrival/departure, baggage handling, automated handling of delayed/missed flights etc. In fact, one airline in the US is starting to break away from this and is starting to greatly improve customer service as well as add in some moderate price increases with the hope that customers would be willing to pay the little extra to be treated better. The industry is watching and this might be a another shift in this industry.
You see where I’m going with this. Carriers compete on prices till margins are cut razor thin; however, following a similarly regulated industry, customer service can be the differentiator to ensure customers continue to stay engaged and loyal. Generally, most industry pundits see insurance as a minimal touch, low engagement, disintermediated vertical, where advertising drives profits as opposed to the service offered.
AM Best and JD Powers are one of the best ways to figure out premium growth and expense ratios for the market leaders and the laggards. In some quick data analysis, we saw that the leaders had DWP growth of 6-8% whereas the laggards were in the 3% range. In addition, average expense ratio for the leaders were in the 22-24% range and the competition was 2-4% points above that. The data gets very interesting because Cynosure has been involved with a number of these projects in different phases and some of recommendations we have made in the past and current project seems to have a positive impact on the growth and expenses.
Changing tracks a little bit, I was having a good discussion with our internal leadership team about customer experience and a program we put in place a couple of years back called “Return on Digital” (ZenROD). We go in and speak to customers about how they can have a stronger digital presence and we too need to eat our own dogfood. One key example is an internal app we built called ZenVerse – here the entire organization can send notes to our CEO with bouquets or brickbats and he responds to them. In speaking to the team in the trenches, they love this direct interaction with the Chief Executive. In surveys, this and other initiatives have increased satisfaction of our own associates. We eat our own dogfood.
So, now the question that comes up is how carriers can improve customer satisfaction to increase profitable growth. This is more than a mobile app or adding multilingual call center reps. It needs a significant investment, focus and collaboration across the enterprise. A customer’s different touch points with quotes, issuance, renewals, endorsements, claims, requesting services and billing are usually considered discrete touchpoints but even a single poor experience can tarnish the whole. In this context, the digital tools are exactly that, tools – what’s the need of the hour is a prioritized CXO level imperative of cross-functional, multi-channel customer experiences.
What are these cross-functional silos? Marketing, distribution, underwriting, claims & billing. Each of these teams are often managed differently with discreet goals and metrics, which may not have enterprise harmony. I do not fundamentally disagree with the structure and the imperatives; however, the horizontals may not take the customer journey into consideration. What gets even more interesting is the approach some of these teams might take that are very contrarian – one leader might insist that there needs to be more automated processes and artificial intelligence or even machine learning to minimize the amount of interaction; however other leaders insist that a more personal touch is necessary to increase satisfaction.
Both positions are very reasonable, and it depends on which part of the journey does the customer stand as well as their demographic. Complex policies and claims could need a human touch and younger customers might want a digital driven experience with getting quotes or filing claims. I’ll give you a personal example – recently I bought a car and opened up my carrier’s mobile app at the dealer and all I needed to do was enter the VIN to add the vehicle in. However, the vehicle had just been released, so it was not in the database, so the app gave me a notification that I will be called and provided me a choice of times (ASAP or schedule) to be called. I selected ASAP because, I was very interested in how this would play out. I got a call in about 10 minutes and they had my information; I gave them the make, model, trim and a few other things. I was told that they vehicle is currently not in the database for rating, but they will get it done in a day or two. However, I was given provisional coverage. In 2 days, I got a push notification from the app saying that the premium has been calculated and I can go in to see the amount.
As you can see, the process was very streamlined from a digital-only experience to handing over to a human when an exception was hit and then back to digital. I had a very positive experience and have been using this vignette in multiple situations. The key items I would call out that caused a higher level of satisfaction were:
- Ease of communicating with the carrier across channels
- Employee courteousness
- Transparency and ease of the process
- The speed at which my issue was resolved
- The non-intrusive approach to customer service
My carrier understood what I wanted and created the processes to enable that. Interestingly, some of our leaders have worked on the core systems and digital implementation project at this carrier a few years prior. Using this and additional data from JD Power as benchmarks, there seem to be a few key facets to consider when creating your customer experience strategy:
One of the first things senior leaders need to do is exemplify and model the vision needed within the organization. This isn’t the free coffee or ice cream; that’s nice and powerful, but what’s needed is the institutionalization of customer satisfaction from the ground up. These could be incentives for being collegial with customers, knowing the details of all their policies (personal, farm, commercial etc.) before connecting with them and ensuring their needs were met before concluding the transactionMeasuring (as noted in the next bullet) is very important, however, what’s even more critical is the brand promise across all channels.
- Key performance indicators
Tangible improvements in customer experience is an aggregation of both, an understanding of customer needs as well as the operational implication. Customer centric process improvements will often improve operational efficiency but considering the institutional investment needed, the articulation of the Cost-Benefit Analysis will help guide the decision making. Most carriers use either the top-down or the bottom-up approach to decision making and both have shortcomings:
- Top-down: Occasionally surveys might be sent to customer, whose responses are very telling, but each of them is siloed like the departments. Often, it’s hard to draw organization-wide conclusions.
- Bottom-up: Internal surveys are done within each department to generate ideas for improvement, but these usually focus on the tactical/technical improvements as opposed to taking a wholistic approach.
Customer intelligence and satisfaction are two sides of the same coin. However, the intelligence gained from market research needs to reveal satisfaction linked across the all interactions as opposed to narrowing down on a particular one. This will help understand the perception of brand, pricing, service and how they contribute to business success, improvements prioritized and industry differentiators.
This level of detail helps carriers investing time, effort and money in what will help them stand out in a commoditized world. This is not a once and done situation; customer expectations are constantly evolving and carriers need to understand what will continue to drive operational excellence and satisfaction
Now that we have the vision in place as well as the KPIs, the next step is to create a roadmap for improvements. This is likely the hardest part of the journey because it’s constantly evolving. Something that might be a priority in this quarter, might not be so next year, so agility is key in this step.
The central part of this process is to consider incremental improvements as opposed to big bang. Considering digital is faster place to make customer experience changes, consider rapid pilots and pivots in stages.
4.Making it industrial-strength
These are paradigm shifts in the entire DNA of the organization, which is only achievable if it starts from the executives, all the way to the trenches. Reaction time needs to be fast and yet pragmatic to respond to constantly changing challenges. That being said, there are a few crucial considerations all leaders need to establish.
The call to action
We’ve recommended starting with one or two small pilots and especially, if it’s tied into a core transformation, it makes the clean-slate decision making process much easier. Once a flag is planted in the ground to demonstrate the approach to the customer journey, create owners to establish the methodology, identify synergies between the departments and identify the skills needed for excellence.
As carriers, you will need to invest both human and financial capital to consider the customer-centricity of all engagement points and how to stay ahead as opposed to keeping up.
The opportunities for carriers to differentiate themselves now are huge and growing. The key issue they face is inertia and making the business case. Carriers that continue to hold on to the old strategy of functional-siloed-channel view of customer risk losing ground to the ones who have a unified approach to their customer.
This is the biggest continuous transformation in front of carriers at this point and stakes are also very high.
About the Author:
Anupam Mittra – Managing Partner & Co-founder – Cynosure, A Zensar Company
Anupam Mittra is a Managing Partner and Co-founder of Cynosure, a Zensar Company. Cynosure is a Guidewire Systems Integration Partner and a leader in P&C core transformations. Anupam is responsible for supporting P&C carriers with creating multi-year roadmaps and the execution plan thereof. He is focused on a “Return from Digital” strategy that encompasses big data, machine learning, artificial intelligence and digital engagement.
The leadership at Cynosure has managed over 60 implementations globally including Underwriting, Rating, Billing, Claims, Data Management, Document Management, Digital and Cloud Strategy. They are headquartered in the Chicago area and have a offices globally.
Anupam has more than 20 years of experience in the information technology and strategy field, which includes over 8 years as a Product Manager at Guidewire Software. He has experience in personal, commercial and specialty lines, as well as rating & reinsurance. A couple of the areas he has a keen interest in, is core systems upgrades and user experience; he has presented at multiple conferences on these topics. Anupam can be reached at email@example.com