Why A Lack of Customer Insights Means Lost Revenue for Insurance Companies
By Dave Nash & Laura Yorks
Mr. Dave Nash is a director in West Monroe Partners’ Customer Experience practice, based in Chicago. Ms. Yorks is the leader of West Monroe Partners’ Life Insurance practice, based in New York.
The customer experience – or the sum of a customer’s interaction across all touch points – is shifting the landscape of the insurance industry as empowered policyholders demand more customer-centered and solution-driven relationships with their insurance providers.
More than ever before, policyholders want to perform their own research, make independent purchase decisions and conduct a range of self-serve activities. Improvements in mobility and the expectation of nearly instantaneous service are driving a push for interactive, mobile capabilities, and the influence of social media in the purchase process is growing in leaps and bounds.
Combined, these factors are creating pressure for insurance companies to do a better job understanding the factors behind exceptional customer experiences – and in many cases, insurance providers are missing significant revenue opportunities simply because they haven’t leveraged customer insights for maximum advantage.
The Value of Customer Insights in the Insurance Industry
Customer insights play an important role in helping insurance companies better understand the behaviors and preferences of their policyholders. Without detailed insights from target markets, insurance providers are essentially flying blind and are unable to accurately align the customer experience with policyholders’ actual needs.
Surprisingly, the problem isn’t that insurance companies don’t capture policyholder data. The vast majority of insurance providers invest significant amounts of time and resources in collecting data from their customer base. Instead, the problem is that data is often captured inconsistently and is rarely converted into the kinds of actionable insights that shape the customer experience.
A 2013 Customer Insights & Experience Diagnostic Survey conducted by West Monroe Partners highlights shortcomings in the insurance industry and other market sectors, demonstrating the disconnect between data insights and the customer experience. More than four-fifths (80%) of insurance industry survey respondents indicated that they have missed revenue opportunities due to a lack of customer insights at key touch points. Yet the majority of respondents admitted that they do not have a formal customer data governance organization to oversee the exchange of information and address critical data issues.
Similarly, two-fifths (40%) of senior marketing and customer-related executives said their companies were not effective at leveraging customer insights for contact center interactions. In fact, 10 percent believed that their contact centers hindered the overall customer experience. When it comes to mobile and social, many companies are falling alarmingly behind the consumer marketplace. More than a quarter of respondents (27%) said that their companies do not have a social media strategy, and 40 percent currently have no mobile strategy. Finally, although 54 percent of survey respondents believe their firm is organized around the customer, only 40 percent feel that their firms align incentives accordingly – underscoring the serious gap that exists between insurance companies’ stated priorities and the real-world practices that define the customer experience.
The message for firms across the insurance industry is clear. Companies that prioritize the capture and conversion of data into actionable customer insights rise to the fore based on their ability to deliver a customer experience that is calibrated to policyholders’ needs and preferences. On the other hand, those that choose to ignore the value of customer insights will run the risk of becoming less relevant to their customers and losing potential revenue.
Customer Insights: Best Practices for Insurance Companies
Insurance companies have a vested interest in constantly improving the customer experience. But to do it, insurance providers need to become more adept at identifying the aspects of the customer experience that consumers value, and adapting the customer experience to more accurately reflect data-driven customer insights. The specific actions that are required to optimize customer experiences based on consumer insights varies by organization. But in general, there are several best practices that can help guide efforts to create a more effective and customer-based policyholder experience.
1. Strategy and Design
For most insurance firms, the process begins with the development of a unified vision and a blueprint of the customer experience that is consistent with the brand promise. Equipped with a strategic roadmap that is aligned with the company’s vision and differentiated brand proposition, key stakeholders have the information they need to develop a customer experience that is coherent to consumers across all channels.
More advanced insurance firms can also incorporate KPIs or other indicators for the customer experience into their strategies. In some instances, it may be appropriate to create agent incentive structures that are tied to performance on key customer experience metrics, ensuring that frontline personnel are motivated to consistently deliver on the customer experience across all interactions.
2. Information Management
It’s critical for insurance companies to follow the lead of multi-channel retailers by integrating policyholder data (including big and unstructured data) and platforms into a single view of the policyholder. This means that insurance companies need to create data governance organizations and processes that support the movement of data from operational systems into data stores and warehouses, paving the way for policyholder segmentation analysis.
Insurance companies also need to be able manage information culled from policyholder-generated content on social media channels and other unstructured data sources. By leveraging this data more effectively, insurance firms are able to achieve a 360-degree view of the policyholder, rather than the fragmented and disconnected view they currently rely on to inform their customer experience strategy.
3. Customer Insight Tools
Exceptional customer experiences hinge on the ability to translate data into actionable customer insights. Using advanced analytics and a data mining platform, insurance companies can perform sophisticated statistical analyses across large data sets, giving them the ability to develop insights for granular customer segments. These tools also allow insurance companies to perform analyses of policyholder profitability, lifetime value and other important business metrics. In some instances, insurance firms can even use advanced intelligence and analytical tools to predict policyholder behaviors like retention rates and cross-sell/up-sell propensities.
When used effectively, customer intelligence and analytics tools enable insurance companies to make sense of the mountains of data at their disposal – information that drives the company’s efforts to create a tailored customer experience and to forge more meaningful connections with policyholders.
4. Delivery and Execution
The final step in the process involves the optimization of the customer experience based on insights captured from advanced analytics. Equipped with granular insights, firms have the ability to perform multi-channel integration, policyholder journey mapping, and the development of engagement and loyalty strategies.
During the execution stage, insurance companies need to consider how customer experience improvements can be integrated with social and mobile channels, customer experience management solutions and traditional CRM applications. For most insurance firms, it will also be important to prioritize the translation of insight-based rules about policyholder behaviors into personalized offers and other tailored customer interactions.
One of the key takeaways for insurance firms is that policyholder perceptions aren’t shaped through a single interaction or a single moment in time. In today’s multi-channel marketplace, perceptions are developed through policyholders’ interactions across a vast and rapidly expanding range of channels and touch points. Actionable insights are foundational for the creation of relevant and engaging customer experiences across all channels. By properly managing disparate sources of data and following best practices in the use of analytics and intelligence tools, insurance companies can dramatically improve their ability to craft exceptional policyholder experiences and to leverage customer insights for additional revenue.