According to the Coalition Against Insurance Fraud, at least $80 billion in fraudulent claims are made annually in the U.S across all lines of insurance. This translates more than $400-$700 per year in increased premiums for each American family.
Bajaj Allianz Life Insurance Company recently hosted a unique insurance summit focused on putting customer experience first. The event titled Future Perfect-Customer First Insurance Industry Summit 2018 was a full-day event that was attended by 21 of the 24 insurance companies that operate in India. While the focus was life insurance, the summit also saw participation from a few general insurance carriers.
Customer Experience (CX) has seen a paradigm shift from just a good-to-have-function to one of the key differentiators and now a core strategy function for many organizations. CX is no longer limited to knowing what your customers feel about you, instead it includes taking essential actions to enhance a customer’s overall experience (by converting an unhappy customer to a happy one). Companies are offering best-in-class customer experiences over their competitors to grow faster and to be more profitable.
2017 has been a year when ML/AI technologies have become mainstream, and businesses are conversant with their application and possible use cases. 2018 will, however, be the year when trends from 2015-17 will finally come into maturity and we will be able to see results. Commercial application of blockchain (beyond Bitcoin), wider acceptance of enterprise SaaS solutions, and optimization of investments in data lakes – are just some of the examples we can think of. Customers too, are now beginning to understand more about data privacy and security, and want to be more in control of their own data. It seems that finally in 2018, technology and business will move ahead together.
The times of simple service fulfillment are long gone. Now customers demand for not only immediacy in service, but also for a superior customer experience. A lot of this can be attributed to a person’s metamotivation – a term coined by Abraham Maslow to describe the motivation of people who have crossed all key stages of the Maslow’s Hierarchy and are now reaching out to be the best that they can be.
Cross selling is a natural extension of trying to get a larger share of the customer's wallet. After acquiring a new customer, the sales and account management teams put their entire effort into: 1. Ensuring that the customer spends more with them; and 2. The customer buys another product or a service from them.
While Net Promoter Score (NPS®) programs are conducted to understand how happy or unhappy your customers are with your services, one of the main objectives of implementing these programs is to convert detractors into promoters. To achieve this, an EPIC customer experience throughout their customer journey is imperative.
The strongest indication of an EPIC customer experience is when the customer comes back to you for repeat business. But unlike in the past, today a very large number of customer interactions occur online, thus making the task of measuring customer happiness/satisfaction/likelihood more dependent on reaching out to them for feedback and insights. There are several methods available for organizations to measure customer satisfaction, each one of them is different from the other.
A 2016 Report by Econsultancy and Adobe on ‘Digital Marketing Trends’ rated Customer Experience as the most exciting opportunity for organizations to improve customer loyalty. That the two are related is a no brainer, but how deeply one affects the other needs to be evaluated at length.
'Retention' refers to the ability of a company to retain its customers over some specified period. High customer retention means customers of the product or business tend to return to, continue to buy or in some other way not defect to another product or business ‘Persistency’, during a period may be defined as the proportion of policies remaining in force at the end of the period out of the total policies in force at the beginning of the period. In other words, persistency is the percentage of business retained without lapsing or being surrendered. Low lapsation means high persistency and vice versa.
Customer Satisfaction is Good, but Net Promoter Score Drives the Action! P ossibly one of the oldest and surest ways of knowing if your customers are happy with you is to simply ask them. More often than not, customers are keen to share their point of view, and for a long time customer satisfaction surveys were the most often leveraged approach by insurers of all sizes. However, as customer demands evolved, and the way of serving them also changed, there was a dire need to understand a customer’s life journey in totality – up to the last interaction or transaction. The customer satisfaction survey methodology was successful only in getting a customer experience dipstick based on the last transaction or interaction. The introduction of the Net Promoter Score (NPS) framework by Bain & Company tried to address this gap to a certain extent by attempting to identify the customer’s probability of recommending the brand or service. But there are key differences in the nature of the customer satisfaction (CSAT) approach and the Net Promoter Score (NPS) approach, that insurers must understand to be able to improve overall customer experience and persistency. 1. Short Term vs Long Term CSATs work wonderfully when all you need to measure is the sentiment immediately after an interaction. For example, after a premium payment-related call at the call center. Think of it like a spot or event-based assessment. It won’t tell you if the customer has been consistently happy or the likelihood of her being a advocate of the brand. For example, if the auto policy renewal via the online channel was successful, the CSAT will tell you that the customer is happy with the process and that the infrastructure supporting the process is working as it ought to. On the other hand, NPS will help you assess the customer’s online renewal experience over the policy period, and across channels. NPS takes an aggregate view of the experiences to give a truer picture. 2. Retrospective vs Futuristic Since CSAT scores are measured after event triggers, they do not have a predictive value. They are retrospective in nature. Sure, over time you could develop a retrospective trend but that won’t help in developing the next course of action. Since NPS is tracking the customer journey and asking a customer’s probability of recommending the brand to someone, it is much better equipped to evaluate the ‘what next?’ question. By understanding the customer’s behavior, it becomes much easier to predict. By measuring NPS across processes and touch points, channels and products, an insurer can develop a next best action at each customer level. 3. Good to Know vs Actionable I will go out on a limb and say that CCAT is a vanity metric. A good CSAT score is a great ego booster, but that’s all there is to it. It is a good number to have on your annual reports and website and share with customers. But it is far from being actionable. The reason for a poor CSAT could be as trifle as a one-time poor interaction with the contact center. This is not really reflective of all the good interactions the customer may have had earlier, and completely negates the overall experience. What makes NPS a more reliable metric (not necessarily the only one though) is the fact that if tracked and measured regularly, it will clearly point out the highs and the lows of the customer relationship. Process owners can then pick this insight and run with it to address the challenges. 4. Marketing Teams’ Job vs Everyone’s Ownership Usually there is only one team which is responsible for conducting and gathering the CSAT ratings – the folks in marketing. They draft the survey, run it, collate it and present it. Since the business or process owners may not be involved, it is quite possible that the context is missed. With NPS it is possible to get the process owners or practitioners involved in the entire process. From the front line folks who interact with the customers to the folks who manage persistency and new customer acquisition. Everyone. This makes NPS a strong framework to not only evaluate customer sentiment, but also develop a plan of action. So which one should you use? Both. Yes, you read that right. While CSAT is indispensable to understand ‘in the moment’ sentiment, NPS can help you understand the customer’s journey.A lot of insurance organization are either using CSAT or NPS, and very few are measuring both (Hurrah!). We’ve also come across instances where one is being confused with the other. In our recent survey “NPS Maturity of Indian Insurers”, we observed that a majority of insurance providers aren’t clear with the post survey actions. You can download the survey here. We’d be wrong if we told you it’s OK to use either one. As a matter of fact, no customer metric should be used in isolation. While you need to understand the customer's relationship, it is important to have a feel of their PULSE, at all times. What are your thoughts?