Tag Archives: customer experience

Striking a Nerve: Google and Insurance

To say we struck a nerve in the industry with the Google and Insurance: Far Reaching Implications research is an understatement! It was picked up by all the major industry media – in some cases multiple times. It has set a record for downloaded and purchased SMA research, generating a torrent of follow-up calls and discussions. It has been shared and used by executive teams for discussion and strategic planning. The companion blog for the research had nearly 10,000 views – and continues to be posted, tweeted and retweeted a month and half after it was published! 

So why has there been such a strong interest and reaction in the industry?

Well, one reason might be that there is a fascination and admiration for the competitive drive in Google’s transformation from a search engine to an innovator of technologies and solutions like Android, Google cars, Google glasses, wearable devices and others. And then there is the fact that Google is securing a strong, growing (and enviable) customer loyalty. Don’t overlook the challenge to other innovators like Apple, Amazon and Microsoft – it’s impossible to ignore, just like Google's impressive growth and financial results! But the appeal that underpins all of this is Google’s unwavering vision of making information universally accessible and useful. Having a huge imagination that is spearheading innovation in multidimensional ways doesn’t hurt either! 

As Google drives innovation, offering an integrated and seamless customer experience and making available the use of its ground-breaking technologies to people in their everyday lives, the levels of customer intimacy and loyalty continue to increase. In the opposite direction, the vast amount of data becoming available via some of these technologies concerning individuals and their cars, homes and bodies is breath-taking. The change will be transformative! 

This is why the implications for insurance are so great. Google is bringing an outside-in, customer-driven approach to innovation that is causing insurers to rethink, reimagine and reinvent their visions of a technology-enabled future. Google is organizing data, technology and location around people, creating a level of customer empowerment and -centricity unheralded in any industry, let alone insurance. Not only is this powerful, it is fundamentally changing the business of insurance!   

Innovation is no longer just a nice-to-have initiative. It has become a must-have, strategic, core mandate that will define a new era of winners (and losers). Why? Because the increasingly rapid pace of change is challenging decades of business traditions and assumptions and demanding a response. This is unprecedented in the history of the insurance industry. All the while, the changes just keep coming: new technologies, the mash-up of technologies and new uses for these technologies.

These changes are highly disruptive, but they are also transformational. One industry innovation leader whom we recently spoke to about innovation noted that: “There is an outrageous level of individualism – from devices, data and components that will break the traditional infrastructure, culture and systems of traditional insurers.” Companies like Google, Apple, Uber, Zipcar and others, as well as next-gen and emerging technologies, are intensifying this level of individualism. 

Many insurers, large and small, are struggling to get their heads around a comprehensive view or a full understanding of the impact that these influencers will have on the disruption and transformation of the insurance industry. That is why the Google and Insurance research report has provoked such a response in the industry – because it provides insights and a glimpse of the challenges and opportunities for the industry. It also points to why, as an industry, we need to rethink how we respond to and embrace innovation as the core of a new culture and keystone of a new future. 

Other industries, from retail to books, music and movies, have experienced the same thing the insurance industry is now encountering: the very foundations of their businesses are being challenged, requiring novel thinking, experimentation, innovation and adoption of the new and emerging technologies. As one industry leader and CIO recently commented, “Insurers must build knowledge, a network and an ecosystem of outside-in relationships to reimagine and contribute to their company’s future.”

This persistent and continual disruption will necessitate a new way of embracing change and innovation. It will require a culture and model built around continuing collaboration and ideation that extends outside the traditional insurance organization. This is why an innovation mandate is critical.  

The innovation mandate must track and assess trends and influencers both inside and outside the industry, prepare plans and scenarios, experiment and collaborate to gain competitive advantage. Unfortunately, the day-to-day operational demands, time constraints and shortage of expertise or resources for evaluating the many implications for insurance will find most insurers unprepared or unequipped to respond to this level of disruption. More troubling is the way that many insurers are continuing to operate with the long-standing approach of wait-and-see or being a fast follower. With the accelerating release of next-gen technologies, eager competitors, new influencers and increasing customer demands, failing to adopt a culture of innovation and collaboration could create a potentially unsurmountable risk to survival of the business.

For insurers, the coming years promise unparalleled opportunity to increase their value to their customers. Those that are best able to capitalize on the key technology influencers will reap the most in rewards. In contrast, those that do not prepare for the future will find themselves falling behind, losing both competitive position and financial stability. To capture the full potential, insurers must determine to create and participate in an ecosystem of outside experts and resources; inspire their leadership; and enable their journey of change, transformation and innovation. Why will this be so important? Because the ecosystem will integrate new ideas and thinking from outside the organization, and provide that outside-in perspective needed to break legacy assumptions.  

The innovation journey toward rethinking, reimagining and reinventing the business of insurance has started. Strategy Meets Action has joined the journey. Have you?

Dare to Be Different: New Ways to Communicate With Customers

Two insurance industry surveys for 2014, released by J.D. Powers (Auto Purchase and Property Claims), conclude that timely and relevant communication is the dominant factor in customer satisfaction. The studies show the intrinsic value of communication in building trust with customers, resulting in retention and in growth.Roughly 45% of insurers cited customer-experience levers as top business goals in research on customer communication released by Forrester in November 2012. So we would expect insurers to tap into the opportunity to engage customers in ways that drive renewals, deepening relationships and brand affinity. Obvious, right?The reality is a far cry from this.Instead, insurers have been focusing on the very obvious savings from the reduced need to print and mail the communication documents, by pushing the customers to digital channels.Here comes the second paradox.You would hope that customers are now far more engaged through the digital platform. But a survey conducted by Nationwide Insurance reveals that 60% of customers have not read their policy in full in a year, and only one in five customers believed that they completely understood their policy. The top two reasons cited are that documents are too long and too complicated.

The Consumer Bill of Rights in Texas is nine pages long — even those who receive it won’t read the full document. For most, buying insurance is like buying a car without knowing if it will accommodate your two wonderful kids, wife, the bags from your normal shopping trips and a stroller.

Nearly 85% of communications with a customer after a sale are in categories covered by regulation: contracts, endorsements, notices, amendments, bills and statements, notifications, follow up notices, reminders, etc. According to the Forrester study, two out of three insurers are worried about avoiding noncompliance rather than focusing on communications that can deliver far more measurable returns from better customer engagement.

Meanwhile, more than half of customers who file a claim don’t understand how to do so and can have a bad and emotional experience, while those who don’t file a claim are never given a way to visualize the protection they enjoy.

Are insurers too focused on regulatory issues and not engaged enough with the customers whose hard-earned money they hope to keep receiving? Can insurers build trust with customers and sell more and faster?

Our research suggests that some insurers have taken the lead and have implemented communication capabilities that are delivering benefits in silos. But the industry as a whole has not yet unlocked the value of service communication to generate lower-cost relationships and build trust faster, replacing expensive strategies led by marketing. We believe the starting point is to have a good understanding of contact strategy and its nuances, mapped to what customer value at different stages.

Here is what insurers can do to go from Regulation to ROI.

  • Produce a blueprint of customer communication touch-points across the product lifecycle. The important factors are: business process, event, frequency, emotion, customer segment, channel and interaction sequence. It’s crucial to define the right performance indicators and establish a tracking mechanism. The blueprint will unlock the value of relationship through continuous engagement. Today, communications operations mainly take a “stay out of jail” approach.
  • Make communication proactive, not reactive. Several surveys show that timely communication can limit escalation to 6% of customer issues, whereas delays and unclear communications increase complains by as much as a factor of three. Billing presents the best opportunity to engage customers, through snippets of communication before and after the billing transaction. The same approach can be used to prepare customers for changes in premiums, rather than going through several painful calls around renewals that erode trust. For example, Allstate communicates “reason for premium change,” which reduced the call volume and cost of contact drastically.
  • Make a meaningful channel shift — Of the increasing number of customers who own a smartphone, 90% want the option of buying and obtaining service through mobile apps. The importance of mobile is demonstrated by the fact that 95% of text messages are opened within seven minutes of being received; insurers should look into using push notification through this low-cost channel. To avoid customer pushback about SMS cost, insurers should look for free-to-end-user (FTEU) SMS, which is cheaper than print-and-mail. An integrated communication center should be developed that spans across digital channels and other communication options, including paper. Investigate the possibilities of social media. Include capabilities for e-signatures.
  • Provide a digital policy with intuitive drilldown into all features. Mobile policy download, catastrophe alerts, billing alerts, claims alerts, mobile ID cards and a digital locker all drive up channel adoption and communication effectiveness, and there is opportunity to go much further in treating a policy as a mobile app.
  • Produce creative content. AT&T’s smart video bill directly addresses the population that wants information on-the-go. Smart video is customized for individual customers and helps in visualization of benefits. Allstate’s “Mayhem” advertisement provides this sort of visualization, albeit from a marketing perspective. The same investment can easily be used to address the accessibility requirements for ADA (Americans with Disability Act). GEICO’s coverage coach is an animated tool used for educating the customers as to what coverage can be right for them. Imagine if this visual approach was applied to claims, at the filing stage; it would help customers understand their coverage and reduce complaints. Progressive, GEICO and USAA send periodic news through print and emails that are relevant to the season; for example, something explaining ways to protect a boat or motorcycle during winter. This communication improves customer engagement across the life cycle.
  • Leverage emerging approaches, such as in-car-entertainment, wearable media and the “connected home.” Gamification — using techniques like those for Angry Birds, rather than like a traditional insurance policy — is another emerging approach that can be used. The customer can also be provided virtual assistance to simulate an accident scene, which will help with an assessment while greatly reducing fraud. Gamification should be used to provide customers a visualization of the claims process and the roles they play, which will improve the experience and increase retention.
  • Understand the customers better – Most insurers deliver marketing messages often but do not see a corresponding lift in their results. This is simply because they aren’t taking advantage of today’s data and analytic technology to understand customers as well as they could and to deliver more-individualized, relevant messages. Effective use of all available information about the customer is the cornerstone of this approach. Retailers tend to lead the pack here; insurers can learn from them. Try to sell when the customer is happy; if he is not happy, then create happiness in him and sell. This approach has delivered proven results.

With evolving customer needs and emerging channel and content technologies, insurers have a great opportunity to improve their communication to build trust with their customers, deliver much better returns on their sales efforts and contain most preventable costs, while providing an experience that customers value. Are you up for the challenge?

Biometrics and Fraud Prevention: Seeing Eye to Eye

As more consumers opt for the flexibility of serving themselves, it has become essential for businesses to deploy strong systems to authenticate identity. The challenge is how to reduce fraud without frustrating consumers or compromising the customer experience.

Biometric technology has been seen increasingly as a solution in industries such as financial services, but is there a useful place in insurance? As technology becomes more convenient –and more secure — many are saying yes.

What’s What in Biometrics

By identifying individuals through their unique physiological or behavioral patterns, biometrics offers a higher level of security, ensuring that only authorized persons have access to sensitive data. Physiological biometrics include fingerprint, face, iris and hand geometry recognition. Behavioral biometrics identify signature and voice verification, including keystroke kinetics that identify a person’s typing habits.

As consumer-centric channels such as mobile and online applications continue to expand, so will the risk of fraud. And while many industries, including insurance, continue to deploy new technologies to stave off attacks, the reality is that the tools and methods by which professional fraudsters operate are becoming increasingly sophisticated.

“While insurers have applied some preventive measures against fraud, the industry as a whole needs to catch up,” says Steve Cook, director of business development, Facebanx. “They must be forward-thinking and recognize the benefits of biometric technology and how it can help in preventing fraudulent activities.”

Reducing Claim Fraud and Protecting Data

One area where biometrics has begun to take hold is healthcare insurance. A study by the Ponemon Institute found nearly 1.5 million Americans to be victims of medical identity theft. Healthcare fraud is estimated to cost between $70 billion and $255 billion a year, accounting for as much as 10% of total U.S. healthcare costs.

Many insurers are using biometrics to help reduce billing fraud by eliminating the sharing of medical insurance cards between patients, or by making it more difficult for a person to assume another’s identity. For example, as an alternative to paper insurance cards, a biometric iris scan can immediately transport proof of a patient’s physical presence at a healthcare facility.

Biometric technology is also assisting healthcare insurers with compliance and data integrity standards — in particular with those set by the Health Insurance Portability and Accountability Act (HIPAA). For example, in addition to adhering to requirements for automatic logoff and user identification, insurers must implement additional safeguards that include PINs, passwords and some method of biometrics.

Fraud Capabilities in Property and Casualty

According to a report by Aite Group, the war against fraud in property and casualty insurance is also escalating. The group estimates that claim fraud in the U.S. P&C industry alone cost carriers $64 billion in 2012 and will reach $80 billion by 2015. Customer contact centers have been hit particularly hard. While the focus on protecting consumer data has primarily centered on online channels, fraudsters are now targeting the phone channel, as well. Leveraging information obtained through social media networks, thieves are manipulating call center representatives and gathering customer information. 

For this reason, biometrics are being deployed. Representatives can cross-reference incoming calls against a watch list of known fraudsters, identifying unique voice prints. Advanced biometric techniques can also identify fraud patterns based on speech analytics, talk patterns and various “red flag” interactions.

Summary

The insurance industry is just beginning to scratch the surface when it comes to identifying areas of fraud management to which biometric science can be applied. 

“Insurance companies [that] are first to adopt this kind of technology will push the fraudsters over to the competition, because fraudsters don’t want their face or voice on a database that they can’t control,” Cook says.

Making the switch to biometric security measures can mean a substantial investment if done on a large scale. Even so, with the proliferation of online channels, consumer conveniences and ever-shifting tactics of fraudsters, deploying some degree of biometric technology will become a competitive necessity. And, as long as the insurance industry continues to expand consumer services because of e-commerce and m-commerce, no doubt new applications of biometrics will come about.

Lots of Energy Going Into Improving the Customer Experience

Over the last two years, we have witnessed executive appointments and many strategy projects related to improving the customer and agent experience. It seems like we’ve all been bombarded by banner ads, e-mail promotions, webinars and conference speeches on this topic (and I speak from personal experience, having participated in a number of these). All of this energy and activity will translate into more major initiatives and spending in 2014. The question is, “What will these initiatives look like, and who will be in the driver’s seat?”

There will still be many individual projects that will contribute to enhancing the customer experience. Insurers will roll out new mobile apps, customize customer documents, upgrade portals and provide new customer self-service options. All of these types of capabilities are important elements of the customer experience. 

But for insurers that are thinking ahead, there will be two overarching initiatives that set the stage for a differentiating customer experience.

One of these initiatives will be driven by business leaders – planning for customer interactions through the whole customer journey. In 2014, more insurers will map out their communications with customers and agents across the enterprise. This type of initiative is increasingly being driven by the CMO with the intent of improving brand consistency and customer satisfaction.

The second initiative is often driven by the CIO, and it is aimed at establishing a unified digital platform that integrates all types of digital communications with customers and agents – mobile, portals, the public web site, social media and collaboration technologies.

I expect to observe many different variations of these initiatives in 2014. Insurers that are able to combine these efforts will make the most progress in improving the customer experience and having an important impact on company results. The ideal scenario will be to establish a unified digital platform to support all digital customer interactions in a common, efficient manner and then optimize each interaction with an understanding of the overall customer journey. Individual projects for mobile, collaboration, portals or other technologies will be able to leverage the platform and produce consistent, personalized communications.

Dare to Be Different: It's the Only Approach That Works

In today’s dog-eat-dog business environment, it is essential that you develop a strategy to stand out in a crowded marketplace… to separate yourself from your competition.  Simply put, to be different! 

Theodore Levitt, the renowned economist, professor at Harvard Business School and editor of The Harvard Business Review, had the following to say in his 1991 book, Thinking About Management:

“Differentiation is one of the most important strategic and tactical activities in which individuals and companies must constantly engage.  It is not discretionary.  And, everything can be differentiated, even so-called commodities such as cement, copper, wheat, money, air cargo and insurance.” 

Price is the enemy of differentiation.  By definition, being different is worth something.  Consumers are willing to pay a premium, redefine the buyer/seller relationship, erect barriers to the seller’s competitors and establish the seller as a trusted adviser when a differentiated platform offers perceived value in the marketplace.

Research on Brand Differentiation

Even with all of the attention paid to branding these days, more and more companies are being commoditized.  In other words, fewer and fewer are able to differentiate themselves through the eyes of the customer.  Commoditization occurs when the focus of the consumer’s decision is on the offering rather than the quantifiable difference that you bring to the business.  You cannot see commoditization.  However, it can be felt with a negative impact on your confidence, reputation, time, money and relationships.  Brand Keys, a loyalty and engagement research consultancy, analyzed 1,847 products and services in 75 categories via its Customer Loyalty Engagement Index.  It found that only 21% of all the products and services examined had any points of differentiation that were meaningful to consumers.    

So what is missing?  A differentiated value proposition supported by a unique consumer experience.

Differentiated Value Proposition

Value proposition is the reason for your professional existence.  It describes how you create value for others.  It makes you stand out in a crowded marketplace.  Without a compelling value proposition, you are ordinary and disposable – a commodity.  With a distinguished value proposition, you are unique and indispensable. 

Your unique value proposition must summarize the reason why a potential customer should buy your particular product or service, how it exceeds that of your competition and why it is worthy of the price they must pay.  The ideal value proposition is concise and appeals to the customer’s strongest decision-making drivers.  It is an irresistible offer, an invitation that is so compelling and attractive that the customer would be out of his or her mind to refuse your offer. 

Customer Experience Journey

What is the Customer Experience Journey?  It is the sum of all experiences that the customer has with you and your organization … the actions and results that make the customer feel important, understood, heard and respected.  Each and every customer interaction molds and shapes the journey.  While you may take great pride in the “features and benefits” of your offerings, it is important that you assess the degree to which you are stimulating the emotions of those whom you serve.  To accomplish this, you must deeply engage your customer’s emotions in addition to, and even above, their intellect.  You will hit roadblocks unless you are able to form an emotional connection that transcends price and product. 

Emotional connections are essential components of the journey.  Research indicates that more than 50% of the customer experience is subconscious, or how a customer feels.  The self-conscious brain is a fertile garden in which to sow positive seeds.  The mind is highly selective, processing millions of pieces of information each second.  Whether you realize it or not, you are touching the subconscious in each step of the Customer Experience Journey. 

In designing and delivering a Customer Experience Journey, it is important that you have a plan to engage the consumer.  Emotional engagement is the foundation of the customer experience.  People rationalize personal decisions first but make decisions based on feelings.  A great experience transcends the rational attributes of a product or service (i.e., price). 

Cecil Beaton, the English Academy Award-winning costume designer, said: “Be daring, be different, be impractical, be anything that will assert integrity of purpose, emotion and imaginative vision against play-it-safers, the creatures of the commonplace, the slaves of ordinary.”

Dare to be different?  You bet!