Tag Archives: customer feedback

Waves of Change in Digital Expectations

In the first of this three-part blog series, titled “Bringing Insurance Distribution Back Into Sync Part 1: What Happened to Insurance Distribution?”, we talked about the seismic shifts that have rocked traditional insurance distribution and about how insurance companies need to adopt a 2D strategy to thrive in this new environment.

There are four fundamental drivers of the seismic changes:

  • New expectations are being set by other industries—the “Amazon effect”;
  • New products are needed to meet new needs, and risks are distributed in new channels;
  • Channel options are expanding;
  • Lines are blurring between insurance and other industries.

In this blog post, we’ll discuss how the final three fundamental drivers have contributed to an environment of challenges and great opportunities. Those who adopt a 2D strategy will be better-prepared to seize the opportunities:

  • First, by optimizing the front end with a digital platform that orchestrates customer engagement across multiple channels
  • Second, by creating an optimized back end that effectively manages the growing array and complexity of multiple distribution channels beyond the traditional agent channel

New Products

Customer expectations, behaviors and risk profiles are evolving thanks to technology, social trends and other changes happening around us. These are driving the need for new insurance solutions and, consequently, new distribution methods, such as:

  • We all know about autonomous cars and increasing car safety technology. Autonomous cars have created questions about where liability lies in the event of an accident involving one of these vehicles. Volvo has laid down a challenge to the auto and insurance industries with its recent announcement that it will assume liability for crashes of its Intellisafe Autopilot cars.
  • The sharing economy—whether it’s for transportation, lodging, labor or “stuff”—has created a multitude of questions regarding coverages. People have realized they don’t need to buy and own cars or pay for hotel rooms when they can use someone else’s stuff for a cheaper price. People who own these items can monetize them when they’re not being used.
  • Cyber risk has been around for a long time, but numerous high-profile hacks have made it a hot topic again.
  • And, finally, the Internet of Things: Connected cars, homes and personal fitness trackers are generating lots of data with tremendous potential to improve pricing and create products and services, while at the same time reducing or eliminating risk.

The seismic impact has resulted in companies developing and offering new products to meet the changing needs, preferences and risks being driven by consumers. There are several relatively new peer-to-peer companies that have entered the market, such as Friendsurance, insPeer, Bought by Many and the recently announced start-up Lemonade. Metromile addresses the sharing economy trend with its product for Uber drivers, and addresses the niche market of low-mileage drivers.

Google Compare, with its focus of “being there when the customer wants it,” has rapidly expanded from credit cards (2013) to auto insurance (early 2015) and now to mortgages (December 2015), all the while expanding to new states and adding product providers to its platform with a new model that leverages customer feedback.

John Hancock is using Fitbits as part of the company’s Vitality program, which started in South Africa and which uses gamification to increase customer engagement and lead to potential discounts. Tokio Marine Nichido is using mobile (in an alliance with NTT Docomo) to distribute “one-time insurance” for auto, travel, golf and sports and leisure. HCC, which was recently acquired by Tokio Marine, has a new online portal for its agents to write artisan ontractors coverage for small artisan contractor customers.

The overarching theme in all these examples is that each company is pioneering ways of distribution, not just new products or coverages. Many companies are direct e-commerce because they are low premium, quick turnaround/short duration and potentially high volume; they are not well-suited for agent distribution.

Expanding Channel Options

Channel options and capabilities for accessing insurance are expanding rapidly. New brands are entering the market, giving customers new ways to shop for, compare and buy insurance.

Comparison sites, online agencies and brokers—such as Bolt Insurance Agency, Insureon, PolicyGenius, CoverHound, Compare.com and the Zebra—are relatively new to the market and are gaining significant market interest and penetration. There are also new brands in the U.S. selling life and commercial direct online, like Haven Life, Assurestart and Hiscox. Berkshire Hathaway will jump into the direct-to-business small commercial market in 2016, a potential game-changing move for the industry.

Finally, there are some intriguing new players that are focusing on specific parts of the insurance value chain.

  • Social Intelligence uses data from social media to develop risk scores that can be used for pricing and underwriting.
  • TROV is a “digital locker” with plans to use the detailed valuation data it collects to create more precise coverage and pricing for personal property.
  • Snapsheet is the technology platform behind many carriers’ mobile claims apps, including USAA, MetLife, National General and Country Financial.

Blurring Lines

The insurance industry is so valuable that outside companies are trying to capture a share. This has created a blurring of industry lines. Companies like Google, Costco and Wal-Mart are familiar brands that have not traditionally been associated with insurance, but they have offered insurance to their customers. The first time most people heard about these companies’ expansions into insurance, it probably struck them as unusual, but now the idea of cross-industry insurance penetration has become normal.

In addition, insurance products are blurring and blending into other products. For example, Zenefits and Intuit are considering bundling workers’ compensation with payroll offerings.

So, what does all of this mean?  There are two key implications from all of this for insurance companies.

First, multiple channels are now available to and are expected by customers. There are many ways for customers to research, shop, buy, pay for and use insurance (as well as almost all other types of products and services). Most customers demand and use multiple channels depending on what they want or need at the time. They are more ends-driven than means-driven and will pick the best channel for the task at hand.

Second, multiple channel options give customers the freedom to interact with companies anywhere, anytime, in just about any way.  But this only works if these channels are aligned and integrated. An organization can’t just add channels as new silos; they must be aligned, or they will do more harm than good.

So, while distribution transformation and digital capabilities promise an easier, better experience for customers, they actually result in increased complexity for insurers. Orchestrating all these channel options is hard work and can’t be done with legacy thinking, processes or systems. This expansion of channels requires insurers to optimize both the front end and the back end of the channel ecosystem.  In my next blog post, we’ll discuss these in more detail.

Creating a Customer-Insight Strategy

Too few companies have a customer strategy, let alone a customer-insight (CI) strategy. At least, that’s my experience.

In fact, many business strategies that I’ve seen, which seek to pepper their presentation with customer language, are really channel strategies or product strategies that reflect the silos in that business.

This is unfortunate, as most CEOs would acknowledge the critical importance of having their business understand, acquire, satisfy and retain customers (ideally, converting them into advocates). But perhaps the lack of customer insight in strategies reflects that may boardrooms have not had an empowered and articulate customer leader (or, better still, CI leader) to identify the need and drive the change.

As a small contribution to fill this gap, let me share a few reflections on what I have found helpful to consider when creating a customer-insight strategy.

At its simplest, strategy is just a series of decisions about “what you are going to do.” This mindset can help avoid too much theorizing with pretty diagrams and ensure your strategy leads to an implementation plan that can be executved. As a simple framework, it can help to consider three overlapping sets that you need to consider for a CI strategy:

Strategic Alignment: Although a CI strategy can inform and guide business and marketing strategies (from an understanding of consumers, your target market, their perceptions, unmet needs and channel usage), normally those exist prior to creating a CI strategy. So, a first priority is to ensure alignment.

How can customer insight help achieve the goals of the business strategy? What does the business need to understand better to deliver the marketing strategy? How can the work that aligns best with top strategic priorities be prioritized for the CI function. Is there other work that the CI function is doing that can be stopped or reduced given its low alignment with strategic priorities? All these elements should be thought through to decide what is included within CI strategy.

Your business and marketing strategy have likely been shaped, at least in early stages by PEST (political, economic, socio-cultural and technological), SWOT (strengths, weaknesses, opportunities and and threats) and other tools to analyze internal and external factors. Similarly, in summarizing what the CI strategy should be (aligned to business and marketing strategies) it is useful to see what use of CI is working for others businesses (here, lessons can often by learned outside your sector) and summarize what CI work has been most effective previously for you (on the basis of commercial return and improved customer feedback).

Both of these approaches should help identify priority work areas where CI can make a difference and help deliver the business and marketing strategies.

Operational Effectiveness: This is all about organization and processes. How does the CI function operate?

Once again, it is useful to both look internally, capturing what has really happened already, and externally (this time for best practice models). Given the relative immaturity of CI in academic terms and lack of common language or focus from “marketing experts,”‘ it can be hard to find the textbook answer for the customer insight best practice model. However, I have found a few of the benchmarking models used by technology research companies and marketing professional bodies useful and have produced my own (on the basis of 13 years experience in creating and leading such functions).

However you come by a best practice model with which you are comfortable, your next step should be the familiar approach for gap analysis. Summarize your current practice, compare and contrast with the best-practice model and then prioritize the gaps you find. Prioritization here needs to be informed by what you will be using your CI function to achieve (as summarized in the strategic alignment section). This review and gap analysis should consider not just the processes for getting different items of work delivered but also the organizational structure of the team. Despite some leaders claiming the structure does not matter if you have a unifying vision and the right attitude, all my experience teaches me that it does. Human beings are inherently tribal, and the quality of CI output is strongly affected by inter-disciplinary cooperation.

People Leadership: That mention of departmental structure brings us neatly onto focusing on the people in your CI team(s). Too often, strategy documents, even if they manage to translate the conceptual into the practical, fail to then consider the people side of change. To deliver the priorities identified in your strategic alignment review requires not just appropriate structures and effective processes but also the right people and culture. A good place to start can be a review of the current people in roles, comparing them with the ideal roles and skills required to deliver the work needed. Such a review should seek to consider people’s generic competencies and wider skills than they may be asked to use in current roles, as well as critically assess their attitude and fit with the team.

But beyond just the right individuals, success will depend on those people coming together to form effective teams, and that is more about culture than what is written down. I like to think of culture as “what happens ’round here when people aren’t being watched.” Various approaches have been tried to impose or encourage the culture wanted in a team, but I’ve found little works as well as empowering the people themselves to create the culture in which they want to work. An effective people leader is needed, who can communicate a clear vision and make decisions, but the leader will often be most successful when working with suitably skilled individuals to together define the team culture they want and how that can be encouraged. Truly listening to the wisdom of those doing the work, recognizing and rewarding the behavior sought and giving time to developing people and fixing environmental irritants will all encourage this.

None of this is easy. But being in a position to articulate to your team and your boss and the board a coherent customer-insight strategy (which explains how it enables business objectives, operates effectively and gets the best out of the people in the function) can be powerful.

A CMO’s IT Dream Team

Dear CIO and my partner-in-creating-the-future:

I came across this great quote from Rita McGrath that makes me laugh but also wince because it’s such a painfully accurate observation, especially as I think about how many of these barriers we could overcome by transforming the way marketing and IT work together:

“All of our innovation barriers are self-inflicted.”

As the CIO, you lead a function that must demonstrate ever-greater value and impact. The pressure is on to shift away from being a utility provider to an enterprise strategic asset — an active creator of value and a collaborative contributor — a function driving, and driven by, innovation.

Guess what? Marketing feels a similar set of pressures, and I believe the keys to our success lie in how we work together. Not because there is strength in numbers, so much as because value creation in the new economy will happen at the intersection of three of the hats our functions influence, shape and lead within the organization: customer insight and analytics + user experience + implementation capability.

Years ago, I co-led a big initiative alongside one of my all-time favorite CIOs. We were assigned an audacious multi-year, IT-based effort. The CIO gave me a great piece of advice that has stuck with me through many assignments. “Amy,” she said, “you just have to chunk it.”

Chunking complex projects down into bite-size and digestible parts has become one of my personal core operating principles, and is relevant to the challenge of reinventing what we do for a digitally powered world. So herewith are six “chunks” I’d like you to embrace as elements of the answer.

  1. Connect the future path of the IT organization to the company’s vision. This sounds obvious. Nonetheless, taking the time to confirm that there is a vision, that it is clear and defensible and that it is understood by all constituencies may expose opportunities to get the IT foundation to be as air-tight as possible.

By the way, this advice applies equally to marketing. With all of the intense pressure to generate marketing return on investment (ROI), step one has to be a connection to business priorities.

  1. Empower IT team members with customer insight. An example of this would be to package and leverage ethnography, including artifacts coming out of in-home/on-site visits and day-in-the-life tag-alongs with customers – and by packaging I mean not the typical, mind-numbing Powerpoint slides, but video and other highly visual, interactive media that bring insights to life and make it easy to draw connections to development decisions.

I’d be happy to conduct workshops with members of the IT team to translate field learning into actions for business performance improvement and potentially disruptive business models.

  1. Insist upon and work actively to foster collaboration between IT and other functions … abolish the “order-taking” role. I’ve never met an IT professional who enjoyed being an order-taker, but it’s hard to redefine a role that for now-irrelevant reasons is often defined as such. Think like a start-up. How to change? Start by establishing processes grounded in business priorities and customer insight that foster collaboration between IT and other functions. Work with marketing to set the example. Demonstrate your role as a source of value.

One process I’ve seen work uses a repeatable approach to tapping into market insight and customer analytics to formulate hypotheses for growth, vetting and prioritizing them, putting the best ones into a test-and-learn cycle with working user prototypes, reading results and moving to next steps: kill, test again or roll out. This model demands design, analytics and technology skills, along with openness, a collaborative mindset and agility. With these conditions in place, it works.

  1. Implement an organization structure that enables digital transformation … and transcends the usual silos and politics. Challenge the norms and at least nudge your approach to accelerate IT’s impact on the digital transformation. There is always an “ideal scenario,” and then there’s the reality of anchoring to the company’s history, culture and business environment. These are all part of the context for a pragmatic organization solution that is both future-focused and rooted.

A good starting point is a fresh approach to a user experience capability. To be done right, this unit taps into a range of skills that would traditionally be distributed in marketing, IT, potentially finance or operations. Don’t overlook the impact on performance of co-location and a unified structure, what skills are really needed and how to close existing gaps. Consider the role of external resources who can jumpstart efforts, whether design agencies, big data analytics partners or maybe mobile app developers. IT should have a seat at the table to form this capability but may not be its organizational home.

  1. Take a clean-sheet approach to what is internal vs. external. Today the questions around what should be internal vs. outsourced, and how those outsourced relationships should be structured, have become more important and more complex. As with internal roles, external providers who know their stuff are more likely to walk the talk on a more multi-functional approach than traditional providers.

For both organization and external capabilities there is no right answer, except to be driven by the business vision and priorities, to be open-minded to new ways to execute and to expect external partners to collaborate, not just take orders.

  1. Enable a real prototyping capability … not just to see if code will run, but to get continuous and actionable customer feedback on the experience, either live in-market, or minimally in a simulation. This capability should enable speed, iteration and low cost.

On this recommendation, I have seen more examples in larger regulated institutions of what won’t work than what will. Live prototyping remains a challenge in regulated sectors, where there is no room for the downside of risks that might hurt a user, but where businesses are foregoing the upside of user-centered design.

Disruptors make the choice to frame business models that can advance without the permissions and burdens of a regulated entity. Creating infrastructure that assures compliance and predictability while also enabling agility is by itself an innovation opportunity.

Let’s work together on progress toward the Dream Team vision.

Who Owns the Customer Experience?

Who owns the customer? For insurance companies that work through intermediaries, it’s a controversial question that often stirs spirited debate between carriers and producers. But there’s another question that’s even more important: Who owns the customer experience?

Regardless of who insurers think owns the customer, the reality is that key parts of the policyholder experience are shaped by external parties—the agents, brokers and financial professionals who distribute insurers’ products.

This presents a difficult challenge for insurance companies, many of whom have kicked off customer-experience improvement initiatives in recent years. After all, how do you holistically manage the customer experience when you don’t control it in its entirety?

Some carriers skirt the issue by focusing on what they do control—customer touchpoints such as billing, correspondence, 800-line interactions, etc. That’s a reasonable approach to start with, but it has its limits.

Consumers don’t always know where the lines are drawn between carrier and agent, where the handoffs occur between the two parties. Their experience, and overall brand impression, is shaped by a wide array of touchpoints spanning pre-sale to post-sale, field office to home office.

For this reason, it’s neither practical nor prudent for carriers to ignore those elements of the customer experience that are administered by their field producers.

But how can a carrier insert itself into aspects of the customer experience that are clearly overseen by the producer? How can the insurer propagate customer-experience best practices beyond the walls of its headquarters and into its field offices, where so many significant consumer interactions occur?

Whether the company works with captive agents or independent brokers, this can be a thorny issue. Many financial professionals consider themselves to be entrepreneurs, and they have strongly held opinions about how to run their businesses.

Overcoming that sentiment requires some diplomacy. If producers sense that the carrier is encroaching on their territory, dictating the “right” way to do business, then friction will ensue, and the insurer’s customer-experience improvements will be relegated to the home office—a poor outcome for carrier, distributor and their shared customers.

So, if you’re an insurer looking to engage your field force in a constructive effort to improve the customer experience, consider these five tips:

1. Acknowledge shared ownership

Disarm territorial sensitivities by readily acknowledging that you don’t own the whole customer experience. Neither the carrier nor the distributor can claim such ownership, because each plays an instrumental role in shaping policyholder impressions.

Such an admission by carrier executives sends an important signal to the field, opening the door to a more collaborative approach for shaping the customer experience, from pre-sale to post-sale.

2. Make the case for action

Demonstrate to field partners, in a vivid and compelling way, why focusing on an improved customer experience is smart business.

The field may acknowledge that happy, loyal customers are good for business —but do they truly grasp how powerfully the customer experience can influence the top and bottom lines? Particularly in the insurance industry, given the economics of up-front commissions and long product tails, small improvements in retention can have a surprisingly significant impact on profitability. Even just from a sales standpoint, an increase in qualified referrals from positive word-of-mouth can be a game changer for any insurance agent/broker.

Perhaps one of the most convincing illustrations of how a great customer experience drives business results is an analysis of stock market performance for customer-experience “leaders” and “laggards”: For the past six years, customer-experience leaders generated a total return that was three times higher on average than the S&P 500.

This is the kind of head-turning data that insurers should put in front of field producers who are skeptical about investing time, energy or money into improving the customer experience.

Whether you’re a public or a private company, the message here is clear: A great customer experience pays off, paving the way for higher revenues, lower operating expenses and better overall financial performance.

3. Educate and equip

Given their entrepreneurial disposition, most agents and brokers won’t take kindly to having the mechanics of their organization’s customer experience dictated by some far-removed insurance company.

Instead of prescribing solutions, carriers would be better served providing tools and education to their field offices. In this way, the insurer can help equip its producers with the knowledge they need to effectively diagnose, and then differentiate, their organization’s customer experience.

That’s a much better solution over the long term, as it helps the field office embed customer-experience management best practices into its operations, as opposed to just tweaking a few isolated customer touchpoints.

Note that this is about more than just traditional “customer service” training. It’s about giving the field office a strategic understanding of the operating principles that customer experience legends rely on to create raving fans.

What great companies like Amazon, Apple, Disney and Costco have in common is an ideology around the design and delivery of their customer experience (see the sidebar that follows). Help your field understand and embrace a similar ideology, and you’ll influence their business practices for years to come.
4. Open the feedback spigot

One example of an ideological component that customer-experience legends share is a commitment to soliciting and acting on customer feedback.

Oftentimes, there is an arrogance in organizations— a belief among executives that they know what delights and what frustrates their customers, what will strengthen their brand experience and what will weaken it.

But as J.C. Penney learned during its recent meltdown, businesspeople can have a myopic view when it comes to understanding what truly makes customers happy.

Help your field offices avoid that pitfall by supplementing internal views with external ones. Carriers can use their purchasing power to bring robust “voice of the customer” survey programs to their affiliated agents and brokers. At the very least, they can offer field offices tutorials about feedback instruments.

Armed with these feedback instruments, your field offices can cultivate customer insights that will help them first shape, and then continually recalibrate, their experience improvement efforts.

5. Co-create the experience

For some parts of the insurance customer experience, field and home office interactions are so intertwined that it makes sense to tackle them with a united front (application and underwriting being a classic example).

This is perhaps the highest step on the customer-experience management maturity curve, where manufacturer and distributor work together to shape an experience that’s impressive and seamless.

Assuming all parties have been educated in the same customer-experience engineering principles, it can be valuable to bring field producers and home office representatives together to dissect, diagnose and redesign a particular piece of the policyholder journey.

By incorporating field and home office perspectives up front, a joint experience design effort is likely to yield a better outcome for all involved.

In today’s social media-connected, information-rich marketplace, customers are more empowered than ever. Nobody truly “owns” them.

But ownership of the customer experience is a different matter altogether. Great companies do take ownership of that, by very deliberately managing the many touchpoints that shape customer perceptions. Great companies even seek to influence parts of the experience that, on first blush, might seem out of their scope. (Consider how Amazon famously obsesses over the experience of physically opening a package once you receive it from their shipping partners.)

For insurance companies that don’t sell directly to consumers, the path to a differentiated customer experience must cross through their field offices—hence the importance of involving and influencing that key constituency. By deftly engaging distributors in the customer-experience improvement effort, insurers can make progress on two important fronts—creating a more positive impression not just on their policyholders, but also on their producers.

The 'Secret Sauce' of Customer-Experience Legends

Companies that do customer experience well tend to use a specific set of operating principles to help shape their customer interactions, from sales to service. The principles that elicit customer delight are remarkably consistent across industries and even demographics.

Below are three examples of such principles, which fans of Amazon, Disney and Ritz-Carlton are sure to recognize:

1. Make it effortless

Be it at point of sale or point of service, the less effort customers must invest to accomplish something with your company, the more likely they are to be loyal to your firm. Look for opportunities to minimize the amount of physical and mental effort that people must expend to, among other things, understand your value proposition, navigate your product portfolio, interpret your customer communications and secure post-sale service. (Case in point: Amazon’s patented One-Click purchase button, which makes it absolutely effortless to buy from them.)

2. Capitalize on cognitive science

Customer experience is about perception, and there are proven ways to leverage principles of cognitive science (i.e., how the mind works) to improve people’s perceptions about their interactions with your business. One example of this is giving customers the “perception of control,” because it’s human nature that we feel better when we’re in control of things and ambiguity is removed from our lives. Something as simple as clearly setting expectations for customers can make all the difference—e.g., how long will I be standing in this line, how many steps are in this purchase process, when will I next hear from you? (Case in point: DisneyWorld’s FastPass, which lets park guests avoid standing in line for popular attractions, making them feel like they’re more in control of their vacation.)

3. Be an advocate

It’s rare that people see companies paying more than lip service to the concept of putting customers first. For this reason, when people come across a company that truly advocates for its customers in a very tangible way, it cultivates stronger engagement and loyalty. One decidedly low-tech but highly effective way to accomplish this is by fostering a workplace culture of exceptional ownership. When your front line—the people actually delivering the customer experience—take personal accountability for owning every request that comes to them, it projects a refreshing sense of advocacy that will distinguish your firm from the “not my job… pass the buck” mentality that customers typically encounter. (Case in point: Ritz-Carlton, whose staff, when asked for directions within the hotel, will refrain from pointing guests in the right direction—instead, they personally escort them, to ensure the guest gets exactly where they need to be.)

This article first appeared in LOMA Resource.

Tigers, Pampers and Competitive Advantage

I am intrigued by the continuing trend of pursuing competitive advantage through early adoption of analytics, and the concept of “first mover advantage,” but was taken aback by a contrary view expressed at a recent round table on compliance and risk. There, it was suggested that, because of uncertainty about the requirements of insurance regulators, it might be better to wait before committing time, money and resources.

The participants talked of “last mover advantage,” and in their particular case perhaps they have a point. I wondered where else last mover advantage had been used and to what effect, and what the implication is in the insurance sector. Last mover advantage is a tried and tested strategy with our old friends, the retail sector. Own-label branding often relies on branded suppliers to invest in marketing to establish a new product, before retailers enter the market with a lower-priced version. It was suggested at the round table that “first mover advantage” is a myth. Chux was cited as an example–it entered the market ahead of Pampers but lost out.

Personally, I don’t buy into that idea. Effective innovation is no longer just about being the first to have a good idea, but being able to quickly execute on the idea in a sustainable way that meets the customer’s needs.

There's no doubt that innovation is speeding up. IHS Consulting cites a study showing that, of 46 major innovations in the 20th century, the average timespan between introduction and follow-on declined by 90%, from 33 years to 3.4 years, and that was in the pre-digital age. What does innovation look like at the speed of WiFi?

In a rapidly growing global marketplace, speed to market remains critical for insurance innovators and can mean the difference between success and failure of a new venture. Analytical accelerators can only increase that speed and provide greater certainty of a successful outcome. Incremental improvement that continuously differentiates, including customer and staff feedback obtained through social media analytics, allows insurers to keep ahead of their competition.

How insurers obtain and keep competitive advantage remains critical, and innovation is clearly a part of this. But I wonder, what is more important: the quality of the innovation, or the quality of the competition?

I am reminded of an old joke, which goes something like this:

Two hikers in the jungle came around the bend to find an enormous tiger up the trail. The tiger spies them and begins running toward them at a full speed, licking its lips. One hiker drops his backpack, sits down, throws off his boots and starts lacing up a pair of running shoes.

The other hiker says: “What are you doing? You’ll never outrun that tiger!”

The first hiker replies: “I don’t have to outrun the tiger. I only have to outrun you.”