Today’s customer really expects a truly extraordinary customer experience. That means that your company, your brand and the experiences you provide are not just in competition with people in your category. They’re in competition with people like Amazon, Uber and Starbucks, who have managed to make the mobile device a one-click ordering platform for convenience and extraordinary experiences.
Are you winning the price war or gaining the customer's trust?
The importance of data
In pursuing customer trust, many of you are really struggling because most brands really only hear from less than 1% of their customers. "The vast majority of your customers are truly silent,” says Apptentive CEO and co-founder Robi Ganguly.
If we project this into the insurance world, the statement becomes even more dramatic. How often do we hear from our customer? How many opportunities of interaction do we have? Is motor insurance just a commodity, and all we need is to propose the right price to the right customer?
When you aim for excellence you find out it is a moving target. Elon Musk from Tesla states Tesla Insurance could potentially be America's biggest auto insurer. In fact, they have something that traditional insurers are striving to have – data. Data that brings insights not only on customer behaviour and driving style but also repair costs. This could then allow Tesla to make changes to its processes and even vehicle designs to make them cheaper and easier to repair.
How could a traditional insurer survive this competition? We believe this could be achieved through gaining customer’s trust and focusing on the customer relationship, thanks to contextualized and continuous customer communication.
Pricing is a core insurance process. And actuarial transformation is the hottest area of innovation in today’s insurance world. But the transformation of just this single process within the company will not necessarily bring real innovation. Pricing strategy needs to embrace the customer. It needs to be part of a customer journey. And there are many touch points of this journey that could be considered:
The key focus is to maximise conversation rates across any sales channel whilst maintaining portfolio quality and driving cost-effective revenue growth. Often pricing is uncompetitive as risk assessment lacks granularity on customer propensity and customer future value. The customer profile and interaction data is siloed and not fully used to enrich customer understanding. And often insurers, agents or brokers are unable to react in a timely and relevant manner to customer behaviour.
Insurers need to maximize customer lifetime value by increasing brand loyalty and driving additional revenue opportunities outside of the typical acquisition, claims and renewal touch points. Interactions with customers are rare, inconsistent and not proactive. Insurers need to focus on personalization of offers, their conditions and delivery channels. Agents need to be able to explain to the customer the value of a product or service. And to go to a further level of communication than just a merely pricing and discounts issue.
This is the real moment of truth. Insurers need to deliver a claims experience that exceeds customer expectations, protects the company from the risks and reduces the associated administration costs. They need to provide effective claims interactions with real-time support and suggestions for both agents and customers. Moreover, real-time claims data could be leveraged to constantly reassess the pricing strategy and underwriting decisions.
Insurers’ focus should be on how to initiate and monitor targeted customer protection programmes to reduce customer churn and maximise customer and policy lifetime value. They need to segment customers on churn, lifetime value attributes and campaign success. This optimises retention strategy by deciding which customers to focus on for further actions.
How could insurers make sure they retain profitable customers that are likely to churn using the optimal level of renewal investment? Which is the right level of discount or pricing increase? How can they make this coherent with the company strategy and focus on specific customer segments?
Each step of the customer journey in insurance companies is extremely relevant to guarantee customer satisfaction, retention and fundamental for new business growth. Each touch point is an opportunity for the insurer to intensify communication and better understand their customers. In each touch point, the company could get crucial insights and take important decisions that impact its pricing strategy.
This could be done by collecting relevant data and information, analyzing it both offline and in real time, then transforming the insights collected into actions available through direct channels but also as decision support and suggestions to agents and brokers.
By guaranteeing a unique customer view and journey orchestration for all touch points and stakeholders, insurance companies of today could set their way to a successful future.
The actuarial transformation needs to be part of an end to end customer-centric journey – we cannot afford to have this as a standalone process anymore.