November 11, 2014
I’m Spending a Fortune on Digital…So Where Are the Profits?
by Amy Radin
Part two of a series on the Digital Experience: Return on Empathy is the new ROE.
I doubt any readers of this post work with a CFO who is measuring Return on Empathy. Empathy? How can something as soft, as emotional, as seemingly non-quantifiable as identifying with people’s feelings, thoughts and emotions translate not only into hard-core financial benefit but also value to customers, patients, agents, employees or other participants in your digital experience?
The fact is, the more you demonstrate empathy for your digital-experience participants, and connect that experience to your key performance indicators (KPIs), the more value you will uncover.
I’ll share an example of how the credit card industry established a transformational industry practice by showing empathy via an innovative digital experience. It started with the simple insight that, by relieving customer stress, debt repayment rates could be improved.
Here’s the story:
We all have an image of how credit card companies collect past due balances. Late payers get a “friendly” phone call from the Collections Department, followed eventually by more persistent calling from collections agents to whom severely past due accounts are outsourced. These guys make pennies on the dollar extracting and following through on what the industry calls “promises to pay.”
From the customer’s perspective, this is a confrontational and embarrassing situation. It’s full of stress that is probably only adding to what got the customer into a financial pickle to begin with.
The reality is that most people don’t plan to find themselves at the other end of a phone call from a debt collector. But life happens. Medical emergencies, job loss, other surprises simply overwhelm cash flow and savings. In an industry where the interests of the institution and the customer may not necessarily be particularly well-aligned, the standard was historically an adversarial approach.
Using digital technology, innovators within the industry were able to prevail against the belief that collections could only happen through outbound calling. Innovators advanced the notion that collections rates could be improved by providing late payers with the means to set repayment terms online. Good for the customer. Good for the company.
Avoiding the confrontation of the phone call, and providing a private way to work through the issue, actually gave the customer a new opportunity to strike a deal. This led to meaningful increases in recovery of past due balances. So meaningful that the capability to set repayment terms online went from being an outlier, crazy idea to an industry standard that is spreading globally.
Online collections didn’t arise from spreadsheet analysis or financial engineering. It started from the simple insight that relieving stress – showing empathy by giving the customer a private way to settle up – would tap into people’s real needs. This simple insight, based totally on emotion and flying in the face of industry practices and beliefs, opened a big opportunity that leveraged digital technology to improve the customer experience and by so doing created a whole new source of value for credit card issuers.
Where is the learning transferable within the insurance and wealth management sectors?
The way I see it, we are operating in categories where emotion plays a big role. And where there is emotion, there is potential for Return on Empathy.
There are numerous opportunities to translate empathy into experience design using digital capabilities that will translate into results. Here are three starting points:
- Look for broken “moments of truth.” Across the opportunities for improved revenue cycle management, examine the “moments of truth.” Which ones are working and not working for your constituents? What are your constituents worrying about in the larger context of their lives, not just within the insurance transaction? Tiny adjustments can have a large impact. Testing and learning is required to tease out the benefits. Consider that application submission and processing, billing, payments, account management, servicing, inbound inquiries and outbound communications are all areas to explore. Within the healthcare category, these same principles may apply more specifically to population health management efforts.
- Focus on the bottom three dissatisfiers with your experience. Some very successful brands build their value story around addressing areas of dissatisfaction. Capital One is one example. What are the three worst areas of dissatisfaction with your experience based on your customer satisfaction tracking studies? What is the emotional basis for the dissatisfaction? How can you fix the experience by leveraging digital, mobile and social capabilities to close gaps? Can your team develop some quick mockups and share them in a usability lab?
- It isn’t always about pricing. I know some readers are thinking, “well, my customers just care about price; none of this emotional stuff really matters.” My rule of thumb is that one-third of the market for insurance and financial products may be truly, truly price-driven. But for most people there is a “value for the money” calculation that will readily trade off price for perceived additional value. That value is often in intangible, emotional connection to the brand and offering. Just ask all the people who willingly pay more for Apple products: “Better feature functionality at lower price” will not come up as an answer. And even where price is a heavier factor (say, in P&C, where pricing is more transparent and where the industry emphasize low-cost offers) emotion rules more heavily inside the experience than may appear at first look. That means the potential for Return on Empathy is high.