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October 24, 2016

How to Get Broader View of Customers

Summary:

A concept called Customer 360 is giving insurers much better insight into customers. The change will bring major benefits.

Photo Courtesy of Pixabay

Historically, many insurance companies spent so little time thinking of customers as flesh-and-blood people and were so limited by their information systems that they referred to customers as policy numbers. But insurers are developing much fuller pictures of their customers for two reasons: because they have to, and because they can. The change will provide major benefits.

The “have to” part of the equation comes because customers’ perceptions are changing and their demands on companies are increasing. Amazon lets whole families track all their purchases in one place and makes smart recommendations for possible purchases, based on purchase histories. Why shouldn’t insurers? Facebook knows so much about users that it can guess when you’re thinking of buying something and put a link to, say, a couch in front of you when you move into a new place and somehow indicate you’re in the market for furniture. Why can’t insurers be that smart and sensitive?

In general, the group known as GAFA – for Google, Amazon, Facebook and Apple – has provided such a good customer experience and has so shaped our daily activities that every other company is increasingly held to their standards. That’s true even for insurers, which have always felt they were just being compared against each other and which have had to change little about their basic approach since Edward Lloyd set up his coffee shop near the wharves of London in 1688 and began facilitating the writing of insurance contracts for ocean voyages.

The “because they can” part of the change comes through a concept known as Customer 360 that is taking hold in the industry. The approach relies on advancements in technology that knit together existing systems, which have traditionally been managed as independent silos. As part of the change, companies like Saama pull together all kinds of data – both structured and unstructured – and cover all aspects of the customer and of the customer experience.

See also: How to Bottle Great Customer Experience

Customer 360 provides so much fuller a view of customers that it produces four clear benefits:

  1. Rates for customer acquisition increase because analytics allow for more targeting and personalization. At the same time, customer acquisition costs decline.
  2. The customer experience improves, which both reduces customer churn and creates opportunities with potential new customers as Net Promote Scores climb.
  3. Opportunities to cross-sell and up-sell arise. As a result, key metrics improve, including share of wallet, policy premium revenue and multiline penetration.
  4. Insights about the competition and the market increase, because you know more about what rivals are doing and how customers are responding.

The analytics involved in Customer 360 may also let you push the data and produce additional uses and insights. If a hurricane is approaching Louisiana or a tornado appears in Texas, you can advise clients on how to prepare and then how to get quick service if they need to file a claim — the claims process becomes faster for customers, in any case, because once you have a few claims filed about a storm you no longer need to gather the basic information about it.

Customer 360 works by understanding a full household, rather than treating each member as an individual. The approach then pulls together data in six areas that historically have been hard to coordinate:

  1. Products, whether personal lines such as auto, homeowners and life or whether commercial lines.
  2. Preference management. Does the customer want to be contacted by phone or email? Do those preferences vary based on where the customer is in the process (billing, claims, etc.)
  3. Interaction management. Have you contacted someone with marketing materials, phone, etc.? Have you detected some activity on social media? Has something changed about a customer’s credit?
  4. Life events and decision management. Does government data tell you something new about a customer? Does a change in age suggest a new course with a prospect?
  5. Extended data. What can you learn from Lexis-Nexis, from the census, from other third parties?
  6. Performance management. How can you keep improving your understanding of the customer and grow your relationship?

Right now, most insurance companies aren’t actually sure who the customer is. The company knows who the agent is and works with the agent to make sure the customer gets the kind of customer he wants, but most of the data they have is on the agent.

With Customer 360, if someone’s history suggests she is looking into baby names or includes an Instagram post about being pregnant, you know it’s time to offer them life insurance policy options. Someone starts looking at houses? Time to offer new house insurance. And so on.

With Customer 360, insurers have a dashboard on the customer that looks like this:

All policies are grouped together, even if they are in different names in a household or at different addresses – no more trying to sell a policy to a husband that the family already has one in the wife’s name, for instance. Preferences are there to be seen, meaning an agent won’t do something that annoys a customer. All interactions are logged in one place. And analytics generate insights that suggest opportunities for up-selling or cross-selling.

See also: Want to Enhance Your Customer Experience?  

While the sort of integration required for Customer 360 used to take as long as five years, many of these projects can now be tackled in seven or eight months. The speed comes partly because we begin with 70% of the components for Customer 360 pre-built; the client builds its competitive advantage with the final 30%.

Recently, for instance, Saama helped integrate more than 15 legacy systems, automated data ingestion, integration and integrity checks and added a role-based, secure dashboard with new key performance indicators (KPIs) and self-service capability for end users. In all, more than 20 years of data was loaded into the model.

Many insurance companies have talked about Customer 360-type integration for a while, yet they’re still missing out on the opportunity. With this approach, it’s possible for companies to have a broader view of their customers than ever before. And that only means good things both for customer satisfaction and for a company’s bottom line.

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About the Author

Sanjeev Kumar is vice president, head of insurance, at Saama. He is responsible for delivering innovative data analytics solutions for the insurance industry and strongly believes that today’s next-generation business intelligence in the form of advanced analytics will revolutionize the insurance industry.

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