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October 13, 2020

How to Unlock a ‘Customer 360’ View

Summary:

Why do so many insurance companies fail to deliver on their customer-centric objectives? It almost always boils down to inaccurate data.

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Any internet search on the phrase “Customer 360” brings up thousands of products, articles and research on how companies can achieve a complete, holistic view of their customers across all of the various systems that store data about them. In these articles and white papers, huge promises are made about dramatically improving revenue by deepening the customer experience. As such, Customer 360 has become a cliché. 

But, as with any cliché, there is a grain of truth. Building a Customer 360 program can indeed transform the customer relationship, leading to higher revenues through cross-sell and upsell opportunities and improving customer retention. With all the software products and know-how available, why do so many insurance companies fail to deliver on their customer-centric objectives? Hint: It almost always boils down to data. 

Why Data Accuracy Is Key to Achieving Customer 360

If an insurance company does not know who the proverbial John Doe is, there is no way to effectively achieve a Customer 360 view. Because most insurance companies have multiple back-end systems to manage their business operations – and heavily use third-party data to assess and manage risk – golden records management, the creation of a unique record as an index, is even more important. This is because there is no way to connect and enrich data without an index, so simply throwing customer relationship management (CRM) systems and databases on top of sloppy data will not fix the underlying issues.

Without golden records management, the struggle to identify and understand John Doe will persist, which limits underwriting effectiveness. Because the underwriting databases and risk models populated from third-party data sources and internal company data cannot easily be linked together or to the policy management systems, underwriting loses visibility. It becomes difficult to determine systematically not just what the John Doe in question has purchased but if the risk has been properly priced.

See also: Why Customer Journey Mapping Is Crucial

If John Doe has an auto policy and is a good risk for another policy, insurance companies can offer him a discount through his agent on a bundle for a renters policy; they know he’s a renter and not a homeowner because they know his address and other demographic information. With this example, which should be seamless with a well-integrated Master Data Management (MDM) solution, the insurance company has managed to optimize the channel and cross-selling in one campaign. 

The example above is for property/casualty. However, the same logic applies to life, health, workers’ comp or any line of insurance. Customer 360 is particularly important for multi-line insurance companies because it only makes sense to extend the product portfolio to as many customers as possible, assuming the risk and pricing are good.

Reaping the Benefits of Your Customer 360 Efforts How MDM Can Help

Because insurance is such a brutally competitive industry, taking care of the customer is not optional if an insurer wants to grow profitably. Competition simply does not stop, particularly when the playing field is being leveled with the rapid adoption of new technologies. However, many of these solutions only reinforce barriers to Customer 360 because of disconnected siloes of data. But what constitutes master data?

Master data is the static or slow-moving data referenced by business processes to carry out transactions. Policy, insured, agent and other dimensional data elements that rarely change are examples of master data and are used to issue a policy, send out bills, collect revenue, open and settle claims, pay commissions and conduct the business of an insurance company. MDM is more than a specific technology, it is also a function and discipline around a technology to ensure the uniformity, accuracy, availability and governance of data. A less understood capacity for MDM is its ability to set up custom hierarchies to relate and associate data. 

By having unique identifiers, an insurer can connect and enrich data, efficiently and cost-effectively, in ways that were previously not thought possible. Reference data, the data used to categorize and classify information, can be brought in from third-party data providers, internal insurance data or both to better reflect the business landscape, such as who makes up the household. This capability to structure and relate accurate and trusted data is why MDM is so important to enabling Customer 360.

See also: Managing Customer Opt-Ins in New Normal

Insurance has always been a data-intensive operation. Traditionally, the focus has been on policy-level detail, not an aggregated customer account view. Efficiently and effectively managing master data is the critical step needed to build a foundation for Customer 360. Correcting, connecting and unifying data is the path to achieve the true view of the customer. The goal with MDM is to make sense of the huge amounts of data being collected, and if an insurance company cannot see who John Doe is, at the person level, then it cannot relate all of the data, from all the systems, for John Doe to John Doe. Core insurance systems do not do a good job of locating and defining John Doe. Without the golden record, an insurance company cannot achieve a complete view of the customer. 

Mastering data is important for an insurance company to stay agile, to put it into a position to take advantage of market opportunities. MDM is one technology that connects all this data together to help companies build competitive advantages. The benefits are real, and they can be substantial. Revenue, margin and profits can all be significantly improved.

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About the Author

Harbert Bernard leads the global value consulting practice at Profisee, a market leader in master data management (MDM) software.

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