Tag Archives: customer experience

Why to Invest in the Customer Experience

If you want to deliver a great customer experience, you better be prepared to pay up…  right? Maybe not.

Conventional wisdom suggests that with an enhanced customer experience comes greater expense. But that’s not always the case. The fact is, a better experience and lower costs can actually go hand-in-hand.

The origins of that unlikely pairing lie with a fundamental principle that many businesses fail to appreciate: Broken, or even just unfulfilling, customer experiences inevitably create more work and expense for an organization.

That’s because sub-par customer interactions often trigger additional customer contacts that are simply unnecessary. Here are some examples:

    • An individual receives an explanation of benefits (EOB) from his health insurer for a recent medical procedure. The EOB is difficult to read, let alone interpret. What does the insured do? He calls the insurance company for clarification.
    • A cable TV subscriber purchases an add-on service, but the sales representative fails to fully explain the associated charges. When the subscriber’s next cable bill arrives, she’s unpleasantly surprised and believes an error has been made. She calls the cable company to complain.
    • A mutual fund investor requests a change to his account. The service representative helping him fails to set expectations for a return call. Two days later, having not heard from anyone, what does the investor do? He calls the mutual fund company to follow up on his request.
    • A student researching a laptop purchase on the manufacturer’s website can’t see the difference between two closely related models. To be sure she orders the right one for her computing needs, what does she do? She calls the manufacturer.
    • An insurance policyholder receives a contractual amendment to her policy that fails to clearly explain, in plain English, the rationale for the change and its impact on her coverage. What does the insured do? She calls her insurance agent for assistance.

In all of these examples, less than ideal customer experiences generated additional calls to centralized service centers or field sales representatives. The tragedy is that a better experience upstream would have eliminated the need for these customer contacts.

There are both real and opportunity costs incurred as a result of these unnecessary inquiries.

Every incoming call, e-mail, tweet or letter drives real expense – in service, training and other support resources. Plus, because many of these contacts come from frustrated customers, they often involve escalated case handling and complex problem resolution – which, by embroiling senior service professionals, managers and executives in the mess, drives the associated expense up considerably.

Layer on top of that all of the associated opportunity costs: the diversion of company staff from more valuable, profit-enhancing activities, because their time is consumed handling customer inquiries that shouldn’t even exist.

Studies suggest that, at most companies, as many as a third of all customer contacts are unnecessary – generated only because the customer had a failed or unfulfilling prior interaction (with a sales rep, a call center, an account statement, etc.).

In organizations with large customer bases, this can easily translate into hundreds of thousands of expense-inducing (but totally avoidable) transactions. Take into account the additional opportunity costs, and it’s enough to make a CFO cry.

To avoid this profit-sapping outcome, consider these three tips:

    • Really understand why customers contact you. Whether your company handles a thousand customer interactions a year — or millions — don’t assume they’re all “sensible” interactions. Identify and drill into the top 10 reasons that customers contact you. You’ll likely find that, for some subset of those categories, these contacts can be avoided with upstream changes, in the form of streamlined procedures, simplified communications or revised marketing materials.
    • Drill the importance of ownership into all sales and service staff. How many of your customer contacts are really just follow-up inquiries – generated only because a staff member failed to keep a promise or honor a commitment to the customer? Absence of ownership drives customers crazy. Yet, with good training and executive support, it’s one of the easiest ways to improve service and reduce costs.
    • Promote a balanced orientation on quality and quantity. A single-minded focus on volume measures (e.g., how many calls you answered, how many sales you closed) can compromise quality. The resulting errors – by triggering unnecessary contacts and driving corrective re-work – will offset any productivity gains you thought you were realizing.

Great customer experiences can be powerful drivers for a firm’s top line. Even small improvements in customer loyalty, retention and repurchase can have a huge impact on revenues.

What gets far less attention, though, is the fact that better experiences can also translate into expense reduction and avoidance, given that poor customer interactions spawn lots of unnecessary work that consumes organizational resources.

So the next time you’re looking to control costs, consider a counterintuitive approach: deliver a better customer experience. It’s a great way to turn customers (and CFOs) into raving fans.

Stop Tolerating Old Tech From Carriers

Waiting on hold. Faxing underwriting forms. Apologizing to customers for insurance-company errors. Sound familiar?

Up until now, you and your staff accepted this conduct as the status quo. Your customers did, too.

They won’t now! Today’s consumer expects a different experience. She expects to control her interaction with your agency on her terms, 24/7. This change in behavior occurred because of advancements in technology. Propelled by the Web and the computing power of the smartphone, consumers today expect to be able to digitally purchase a policy, make a change to the policy or file a claim.

Several forward-thinking carriers anticipated this trend at the turn of the century and started to upgrade their technology platforms. The goal: Speed transaction processing and reduce cost. Many executives complained, however, that the benefits of their technology improvements couldn’t be fully realized because agents refused to improve their technology.

Fast forward to today. Because of the advent of cloud computing, agile software development and more powerful processors, agencies can transform their customer experience quickly, at low cost. Leading management systems enable an agency to reconfigure its operations to provide a robust, up-to-date, real-time customer experience. This is one of the greatest advances for the independent agency system in many years. With agile technology and an online presence, successful independents are slowly but surely recapturing market share from less agile captive-agency behemoths.

Unfortunately, many agencies encounter a roadblock — their carriers’ outdated, inflexible systems. This creates a competitive disadvantage for the agency because it detracts from the customer experience.

In today’s market, it’s too easy for a customer to switch. Agency owners can no longer put up with a carrier’s antiquated business processes.

Remember that point the next time you are looking at two competitively priced quotes from two different insurers. Ask yourself, which one has the best technology interface that leverages your modern agency management system? It’s as important a question today as the commission rate.

What You Should Expect From a Carrier’s Technology Platform

Customer access: Does your system allow my customers to access your policy processing system from our agency website?

  1. Claims filing: Does your first-notice-of-loss system alert my agency by email or text when a customer files a claim? Does your claims system allow my customers to access your first-notice-of-loss process from our agency website?
  2. Data analytics: Do you have data analytics tools to allow me to determine the risks to target in my local community?
  3. Agency management system integration: Do you interface with my agency management system?
  4. Straight-through processing: How much do I have to interface with carrier personnel to issue a policy, make policy changes and adjust a claim?

A Report From MIT on the Next Revolution

Inspired. Extraordinary. Insightful. Transformative. Innovative. These are the words describing what I heard, saw and experienced at the recent MIT Sloan CIO Symposium, titled “Lead Your Digital Enterprise Forward:  Are you Ready for the Next Digital Revolution?” The symposium had more than 700 business and IT leaders, from  a wide range of industries, converging to discuss what was expressed by many panelists: We are at the forefront of witnessing the greatest disruption of every industry, the likes of which has never before been seen – the digital enterprise!

MIT leaders stated that the top issue expressed by executive boards and executive committees is the fear of the disruption of business models and the risk to revenue models because of new entrants, new technologies and new customer demands. Every industry is or will be affected, some sooner than others, and all will feel the pain of disruption. The degree of pain will depend on how well companies create new strategies; embrace innovation; fund transformation initiatives; and create a business that will be flexible, adaptable and valuable in the new digital future.

Sadly, only a handful of insurance executives attended the symposium. This stresses the danger we face and the challenge we have as an industry to recognize the disruption that is underway and our need to innovate and collaborate with leaders and thinkers outside our own industry. My observations align with SMA’s Top 8 Essentials for Preparing for the Digital Revolution, identifying critical elements that insurers must acknowledge and embrace as they rethink their businesses to become a Next-Gen Insurer.

  1. Digitalization is everywhere. And it is necessary for winning and retaining customers. We live in a world that is digitally charged and connected, and it is growing exponentially more so. This change is driven by new technologies and the customer experiences that have been reshaped by the use of these technologies, creating an increased preference for digital in the process. In response, modern technology and digitalization must now change how companies view themselves – no longer as value chains but rather as enterprise ecosystems that must be connected.
  2. Digitalization is dramatically destructive. A disruptive, foundational change is taking place in the way all businesses are approaching value creation. The ubiquitous connections of people via the Internet and emerging technologies (such as social media, the Internet of Things, crowdsourcing, mobile and cloud) are disrupting traditional business assumptions – from how to engage customers, to the products and services offered and, ultimately, to business and revenue models. The barrier to new entries into all industries is falling or is already gone, creating more risk to existing business and revenue models. New entrants are finding it easier to build, launch and sell much more rapidly.
  3. Data and information are the new currency in the digital world. And it is critical to the acquisition of insights about customers, the offerings of products and services, the creation of new products and services and more. Increasingly, data is being connected to the cloud, allowing data to be available anytime, anywhere and in any way.
  4. A massive paradigm shift in how we view and understand the world has occurred. The necessity to view businesses in a bigger frame of the world must follow suit, otherwise the view will be too small and detrimental. Align around a vision, projecting possibilities and outcomes. Spend to achieve an opportunity or possibility, not to complete a project; otherwise, you will find yourself trailing the competition. Just think big.
  5. Operational excellence is table stakes, and innovation is the price for future success. The absence of action and innovation creates significant business risk and a potential for lack of relevance. Innovation is the price for strategy enablement and the creation of possibilities. Life-long learning, creativity, an entrepreneurial spirit and the understanding of computer science, math and data are critical characteristics for future success.
  6. Innovation and collaboration are mandatory for future success. These are critical components for digital companies today, but the success with which they are employed will separate out the market leaders of tomorrow. The flow of information to engage collaboration through a network of resources and communities is vital to developing new products and services. The collective intelligence of ecosystems promotes entrepreneurship, provides a greater understanding of new technologies and stimulates the learning and creativity that together are key characteristics for future success.
  7. Customer empowerment defines new engagement models. We used to shape customer experience; now it is shaped for us by the rest of the world. As customers gain market power, are increasingly comfortable with technology, have a stronger voice and demand collaboration, companies must reinvent themselves and have a unified digital strategy that enables customer experience consistency and connectivity.
  8. All technology must be viewed as customer-touching. Social, mobile, analytics, cloud, wearable devices, robotics, the Internet of Things, telematics, driverless vehicles, biotechnology and much much more all influence and define customer relationships. Technology is super-connected. It’s creating new outcomes, new experiences and new products and services. And the future will be the cloud of things, with a world of distributed data, devices, technology, intelligence, computing and more that are highly connected.

Many insurers indicate they are on the journey to becoming a Digital Insurer, a key characteristic of a Next-Gen Insurer. Others are tactically investing in new websites, smart-phone apps or social media presence, but without a framework that can bring together a unified digital strategy and an omni-channel experience for driving consistent, connected customer experiences. But far too many others have yet to begin the journey. SMA’s coming digital insurer framework will help insurers to develop a strategy that brings together all of the critical components, recognizing that all  technology touches the customer in some way and at some level.

Yes … it is a brave new world. But, unlike the world of AD 2540, envisioned by Aldous Huxley in his 1931 book, Brave New World, we can envision and anticipate how the rapid growth and use of technology can bring about good and positive changes, and how the explosion of data and customer expectations can profoundly change each and every business for the benefit of everyone. The industrial revolution disrupted and transformed our world in the early 1900s, and the information age in the mid- to late 1900s. We are now in a new age of disruption and transformation. Rather than being cynical and afraid of these changes like Huxley was, we can welcome them. Embrace the digital revolution. Re-envision, reinvent and change the business. Be brave. Become a Next-Gen Insurer.

Become a Brand Behemoth — Locally

Suppose you walked into a store to look for a new television. If the store only carried one brand, would you shop there? Of course not, but that’s just what today’s insurance behemoths want you to do when you buy insurance.

With an abundance of information just a few key strokes away, today’s consumers demand choice. From automobiles to zucchini, consumers do research online before they make a purchase. Today’s policyholders no longer accept a single company quote. It’s hard to satisfy this consumer demand if you’re an agent who can only offer one product. It’s why the era of the captive agent is coming to an end. Only independent agencies that “meet” their customers online by leveraging their customers’ desire for information and choice will succeed.

The rise of digital media—the web, social media, the smartphone and other mobile devices—has leveled the playing field and even tilted it toward independents. Independent agents can now compete against the industry’s brand behemoths by making their brand even more powerful in their area. They can become local brand behemoths.

Digital tools enable you to provide a better experience to existing clients. Online lead generation allows you to more efficiently find new clients.

Improving customer experience

In a commoditized industry like insurance, the only way you can differentiate yourself is to provide excellent customer service. In the digital age, that means providing your customers with the opportunity to interact with your agency whenever and however they want. From policy changes to evidence of insurance, customers today would rather do things themselves online than have to wait to call your office when it’s open.

One of the most surprising things is how much people love self-service. Surveys show that companies of all types, including insurers, consistently get better service scores when they let consumers manage their account themselves.

Does your website allow customers to make policy changes, track their claim, get a quote or review their policy limits? Consumer tastes also require that your website be mobile-compatible. The smartphone has replaced the computer as the device of choice for consumers. A mobile-compatible site must be clean, because smartphone screens are small. Users must be able to navigate and read your site quickly on a smartphone. Is your company’s website easy to use on a smartphone?

Your website can’t be static and one-dimensional. People don’t want to read gobs of copy online. Your site should give visitors interactive experiences. For instance, display the icons of the companies you represent instead of listing them.

Attracting new customers

Use online resources to expand the reach of your marketing efforts.

LinkedIn provides a great example. Start by identifying people on LinkedIn whom you are connected to indirectly (i.e. through an existing contact but not directly) or are members of the same business group as you. These are your LinkedIn prospects. Next, go through your existing business network and identify a service provider like an accountant, photographer or other small-business owner. Ask if they would be willing to provide a discount to customers you refer to them. If they agree, send an email to your prospects identified from LinkedIn letting them know they can receive a discount. This creates a win-win for both of you.

Here’s a real-life example: I received an email from an executive coach introducing herself and offering me a 75% discount on professional executive photographs. All I had to do was contact the photographer, mention the promotion and schedule a time for my photo shoot. At the end of the email, the executive coach asked me to add her to my network on LinkedIn. While I didn’t need a professional photo taken, I was intrigued by this online joint venture.

It turns out that one of the executive coach’s referral sources is a professional photographer, and they created a photo day for the executive coach’s clients and prospects. The photographer could give a deep discount because he only had to set up once for all of the photos that day.

Thirty people set up appointments. Existing customers of the executive coach were impressed with the value she brought in addition to her coaching. Prospects were introduced to the executive coach in a positive way – you just saved me a lot of money and introduced me to a quality photographer. The executive coach attended the whole day and used the time in between photo shoots to introduce herself or reacquaint herself with past clients. It was a win-win situation for both the coach and the photographer.

Digital giveaways

No one gets excited about a birthday card from his agent. Instead, how about giving away a mobile app so your business can stay top of mind? An app that gets your name on a client's phone is a great way to stay in touch—and provide something of real value.

Facebook, Twitter, Tumblr and more….

You need to be on social media. Although engaging with social media takes time, what you learn online provides you with valuable customer insights. It’s like getting the questions to a test in advance. You have a real advantage.

Social media isn’t just about following people. Post or tweet information about how to prepare for catastrophes unique to your area so people can prepare for them. The more you engage digitally, the more relevant you become online.

You’re probably thinking: “I don’t have time for this!” You’re right! Find someone who uses these tools everyday – a student or a young person in your office and put that person in charge.

All the pieces have fallen in place for independent agents. Seize the digital moment now and prosper!

Reimagining Insurance: More on AXA-Facebook

The reactions to the Strategy Meets Action blog “The Shot Heard Around the Industry: AXA and Facebook” have been enlightening. The blog has drawn polarized reactions … from some who envision the potential, and from others who only see today’s view of Facebook and insurance. The responses of this latter group explain a lot. They see the industry as risk-averse, steeped in tradition, lacking in creativity and slow to change, labels that inhibit an insurer’s ability to be imaginative. This time-worn outlook will need to change if insurers are to survive and thrive in this fast-changing environment.

Like it or not, the increasingly rapid pace of change is because of modern and major influencers: the customers' being in control; the new business models used by other industries and companies like Facebook, Google and Amazon; and next-gen and emerging technologies that are converging and challenging decades of business traditions and assumptions.

A new perspective is required that can inspire new directions for insurance.

Industries — including retail, books, travel, entertainment and pharmaceuticals — have found the very foundations of their long-held business and operational models challenged, necessitating innovation. Those that have not innovated … well, they are no longer the market leaders in their space, or maybe even no longer in existence. Just consider the iconic brands of Kodak, Blockbuster, Circuit City, Time magazine, Borders, the Boston Globe, CNN or JC Penney. Their inability or unwillingness to see and act has cost them greatly. Even companies that were recently considered innovative are challenged. Look at Yahoo, Blackberry and Nook.

Yet other companies are embracing innovation, new technologies and outside-in approaches. As noted by one response to our blog, automotive companies like Ford, BMW and GM focused on the “connected car.” Companies offering “shared car services” like Uber, Zipcar and Lyft are recognizing the importance of being customer-driven. And Facebook and Google keep expanding the realm of possibilities to grow and strengthen the customer relationships and experiences through acquisitions such as Facebook’s Instagram, Face and Oculus, or Google’s Nest, Titan Aerospace and Zagat, to name a few.

What separates those who innovate from those who don't? It’s the vision of leadership. Leaders who can innovate can define a future vision, create a culture of innovation, identify and understand the influencers of change and embrace an outside-in approach.

The insurance industry must learn and respond fast, because it is facing the same types of challenges that have reshaped other industries. The strategic partnership of AXA with Facebook is a game-changer, distinguishing their leadership and their willingness to take an outside-in approach. We are not likely to see the inner workings for competitive reasons, but AXA has taken a bold step toward becoming a next-gen insurer. By leveraging a company like Facebook with massive expertise in understanding the digital experience and the changing expectations of customers, AXA is being transformed to a digital insurer in terms of brand presence, customer experience and customer loyalty.

Being a digital insurer is so much more than just having a website, more than using channels like social media to sell or advertise and more than having a mobile app to report claims. A digital insurer is a powerful integration — of the website, mobile platforms, social media, mobile messaging, location services, crowdsourcing, business and customer applications, online video, content management, customer communications, sales enablement, branding and marketing – that creates a seamless, engaging customer experience. And the digital insurer is underpinned with sophisticated data and analytics that know, influence, anticipate and engage the customer in a way that creates a next-gen customer experience.

After all, in today’s world it really is all about customer experience and customer loyalty. AXA’s bold move in taking an outside-in approach — by partnering with a company that has been a leader in redefining the customer experience, redefining the digital experience, embracing new technologies, and using data and analytics — has created an opportunity for AXA to do different things that will position it as a leader in this new digital world.

The coming years hold the promise of unparalleled opportunity for insurers to increase their value to their customers. Those that remain tied to tradition and the past, choose to ignore the key influencers or wait too long to react will risk losing relevance. Those that are willing to take the bold steps forward will stand to gain the greatest rewards.

Yes, there are lots of details to be defined, piloted and implemented over the next few years in the AXA-Facebook partnership. And there will always be naysayers. But this bold move and others like it are ushering in the dawn of a new future that is full of possibilities. This is transformation and innovation. This is what will define winners and losers. And that is what is so exciting!