This year has not been kind to the insurance industry. According to the 2020 Allianz Global Insurance Outlook Report, premium income is expected to shrink by 3.8% globally, mostly due to the global COVID-19 pandemic. So, it’s all hands on deck to find ways to stem the losses, and one of the highest priorities is customer retention. Winning new customers is critical to recovering from the economic shocks caused by the virus, but these new customers will only make a difference if carriers can hold on to the customers they already have.
Happy customers generally remain customers, and one of the best measures of customer satisfaction is the Net Promoter Score (NPS). It’s a simple measure that’s calculated by subtracting the percentage of customers who would not recommend your product or service to friends from the percentage of those who would. But don’t be fooled by its simplicity. It’s a powerful metric.
In the Harvard Business Review article that introduced NPS to the world, the authors found that, “remarkably, this one simple statistic seemed to explain the relative growth rates across the entire [airline] industry; that is, no airline has found a way to increase growth without improving its ratio of promoters to detractors.” Further research showed that this finding applied across most industries. The takeaway is this: If carriers increase their NPS scores, they will also accelerate growth.
Of course, improving customer satisfaction is no small feat. But with the right technology and the right partners, insurers will see their NPS scores rise. Here are a few of the technologies and strategies we’ve used at my company, HONK Technologies, to achieve a high NPS scores for our carrier clients.
Customers appreciate it when they receive fast service, and nothing speeds service like automation. The insurance industry has made a lot of progress on this front. According to the 2019 J.D. Power U.S. Auto Claims Satisfaction Study, customer satisfaction with the auto insurance claims process hit a record, as the amount of time that passed between filing a claim and the return of a vehicle was 12.9 days, half a day less than it took the year before.
But there’s still room for improvement, particularly on the claims intake side. For example, instead of sending an adjuster to inspect the vehicle or other property and make a report, the carrier can have the customer send photographs of the damage electronically, perhaps using the carrier’s mobile app. The claim can then be audited by a remote adjuster or even artificial intelligence.
See also: 10 Tips For Using Net Promoter Score
It’s a good idea to undertake a full audit of the claims process and then identify where emerging technologies can automate tasks. It’s not a simple project, but if it’s conducted at regular intervals and management acts on recommendations, the long-term benefits to customer satisfaction and cost efficiency can be substantial.
Analytics, AI and machine learning:
It’s not always obvious what changes could improve customer satisfaction and increase NPS scores, especially because many of the obvious measures, such as speeding up claims processing, are already underway at many carriers. Carriers will need insights into customer behavior that aren’t evident even to an experienced insurance professional. Advanced analytics, artificial intelligence (AI) and machine learning (ML) can help provide these insights.
But these technologies require a lot of data, so insurers should collect as much information about the customer experience as is ethical and legal. No data point is too small to collect. Everything from demographic information and customers' interactions with your website, to recordings of customer service calls and interactions with third-party service providers could be important. Just as the HBR author, Frederick Reichheld, was surprised to find that the simple NPS score correlated with business growth, you may be surprised to discover that something as mundane as the layout of the claims intake form could make an enormous difference to customer satisfaction.
The more information you gather, the more likely you are to uncover unexpected insights about your customers that can help you increase their satisfaction.
These days, ecosystem services are just as important as claims for creating happy customers. According to a report from Bain, additional services beyond traditional insurance — such as assistance with buying or selling a vehicle, home security advice, healthy living consultations or roadside assistance — can make a big difference in customer loyalty. Bain found that carriers that offered three or more ecosystem services had an average NPS score that was more than 3.5 times higher than those that offered none.
After all, customers are likely to interact far more often with one of these services than they are to file a claim (unless they are very unlucky, indeed). These services are not nice-to-haves; they’re must-haves, and, if they’re poor quality, that will reflect on your brand. So as you work with ecosystem partners, require them to provide data on each customer interaction, and regularly evaluate their performance. Set up key performance indicators (KPIs) and, if they’re not being met, find a new partner. Your NPS score and future growth are at stake, after all.
See also: COVID, and How to Pivot to Innovation
It’s a difficult environment right now for insurance, but as anyone who has been in the business long enough knows, even the worst cycles eventually come to an end. Insurers that lay the groundwork now will be well-positioned to grow once the public health crisis finally passes and the economy recovers.