Digitally Altered

While insurance providers may recognize that consumer behaviour is shifting, many continue to grapple with how best to respond. Understanding and meeting customer needs takes on new meaning in this digital age, and getting closer to the customer is essential.

Just how to get there likely revolves around positioning the customer at the centre of the value chain, and using customer data as the vehicle.

Consumers have more power than ever before, again a byproduct of the proliferation of digital devices and the reality that information is now everywhere. A mind-boggling number of digital devices — computers, tablets and smartphones among these — are currently in use.

In concert with that, social networks are fast becoming a key medium by which people and businesses communicate. There are more than 900 million active users on Facebook; every day, 340 million Tweets are sent.

These channels enable consumers to communicate with each other and to share experiences, both good and bad. They have the ability to make or break brands with a few keystrokes. With near-unlimited access to information and ample channels to share it with the world, consumers are becoming more and more empowered.

This empowerment is serving to change behaviours and expectations about how, when and where to engage with companies. Whatever method they choose — be that call centres, online, via smartphones or in person with agents and branches — customers want a seamless, secure, consistent interaction, and have increasingly high expectations for quality of service, price and delivery.

Start to finish

In this environment, establishing a relationship with insurance customers is becoming increasingly difficult. Thirty years ago, agents, brokers and to a lesser degree conventional mail were the only insurance communication channels used to search for and sell insurance. Not so today.

There are many different interaction points that consumers prefer. Often, a business exchange starts in one mode (for example, online) and finishes in another (for example, in a call centre conversation).

Today’s insurance customers prefer choice when it comes to ways to interact with insurers. IBM Global Business Services research from 2008 — involving 4,400 consumers surveyed in Europe and the Americas — shows that only about 20% of consumers use a single point of interaction to search for insurance, while another 20% of respondents report using as many as four or more interaction points while doing so.

The upshot of this is that providers today face some tough marketing challenges: engaging the right consumer at the right time and place, via that consumer’s preferred media, with an offer targeting his or her personal needs; maintaining multiple products and services; and synchronizing all of these efforts across multiple distribution channels.

To address this, insurers need to take a different approach to segmenting their customers — one based on attitudes, interests and lifestyles, rather than on demographics. Customers are becoming harder to satisfy and to maintain, and generally, they still do not trust the insurance industry.

This may help explain why only 31% of surveyed consumers maintain coverage for all their needs with one insurer — down from 42% just two years ago. And while there is no comparable substitute for insurance itself, consumers can and will switch insurers if preferred interaction points are not available.

The good news is insurance is still a product that relies on personal trust — people want to buy from people who can demonstrate they know their customers and their preferences.

Deeper understanding

This new approach to customer segmentation requires that insurers have a much deeper understanding than in the past about who is being targeted through marketing and selling efforts. The payoff is obvious: more compelling sales conversations; and clients who feel more valued, feel they have a closer relationship with the insurer, are more loyal, and view business dealings with the insurer as easy.

The path to getting there may be less obvious. The answer lies in using data analysis to put the insurance customer at the centre of the value chain. Making better use of the wealth of insight and knowledge that customer data analysis can generate can help insurers demonstrate that they do, in fact, know their customers.

To foster a closer relationship with customers, insurers should consider the following approaches:

• Increase the number of available interaction points: As consumers want to use multiple touch points to search for and purchase insurance, insurers should make their products and services accessible via non-traditional channels — internet, mobile, etc. — and adopt the practice of courting customers using mobile phone and social networking sites. These interactions should be branded consistently, present identical information and allow users to switch interaction points without losing any information provided at other contact points.

• Follow customers and invest in analytics: Insurers should study the data around consumer search and purchase decisions to help deliver better services and engender loyalty. Consumers should be engaged to share data about their preferences so that providers can develop personalized recommendations and offerings. A technology investment in analytics can reveal valuable behavioural data that will allow insurers to match interaction point offerings to the preferred mix of targeted customers.

• Improve interaction quality: Customers are demanding good advice, a wide range of customized products and offerings, and fast and efficient service. To boost customer loyalty, insurers must focus on perfecting their interaction quality so consumers will be transformed into true advocates of their businesses.

Unimaginable just a decade ago, the rise of the internet, mobile phones and social networking is changing how consumers shop for and purchase insurance. Insurers must work that much harder to both build and sustain customer relationships.

Selling opportunities

When done properly, the outcome for insurance providers is improved time to market new products, reduced training time for new agents and enhanced call centre efficiency and information access, making it easier to cross-sell and up-sell.

One Canadian provider, for example, implemented a system that determined what information should be diverted

to the agent based on the task at hand, such as requesting a quote or offering a new product to an existing policyholder. The system acts as a virtual senior agent, collecting customer information and training junior agents by sending contact-sensitive messages, prompts and data directly to their desktops in real time during customer interactions.

Providing flawless customer service across customer interactions requires capturing the wealth of customer information in a central system, analyzing it and sharing it with front-line people across the business when they need it. This approach helps to anticipate customer behaviour, as well as to develop targeted and personalized offerings.

Flexibility and the smart use of analytics are central to succeeding in all of the aforementioned areas. The world has never been as complex and full of constant and rapid change as today — and the evolving preferences of tomorrow’s consumers are part of an increasingly competitive environment.

The insurer who employs insights derived from data to put the customer at the centre of the value chain will secure a strong competitive advantage.