Tag Archives: customer relationship management

How to Unlock a ‘Customer 360’ View

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

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

Why Data Accuracy Is Key to Achieving Customer 360

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

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

See also: Why Customer Journey Mapping Is Crucial

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

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

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

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

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

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

See also: Managing Customer Opt-Ins in New Normal

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

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

The Insurer of the Future – Part 5

The previous articles in this series can be found here.

The Insurer of the Future will be class-leading in customer relationship management (CRM) and marketing.

CRM was always a challenge in the past because, unlike banks and retailers, insurers had only small numbers of interactions with their end customers. That made it hard to gather data on the customers’ needs and wants, and limited the ability to build relationships.

See also: The New Agent-Customer Relationship  

But the Insurer of the Future has access to enormous quantities of data about its customers, available from a wide range of external sources. So it ports this data into its own systems, fueling more powerful and accurate analytics. It uses the insights gleaned to reach out to customers — not just to sell them products but to provide genuine value-adds.

Providing value adds to customers, free of charge, enhances customer relationships. So when the Insurer of the Future makes an occasional offer to a customer, it’s the right offer, at the right time, through the channel and device of the customer’s choice. As a result of the Insurer of the Future’s expertise, the customer is significantly more likely to buy.

Compared with its predecessors, the Insurer of the Future has a loyal customer base — driving lower lapse/churn rates, a greater share of wallet and higher Net Promoter Scores.

Roadblocks to Good Customer Relations

For many small to medium-sized insurance carriers, government risk pools and captives, providing personalized customer service continues to be a priority. If your organization or your partners leverage digital technologies, you may have customers who expect that personal touch across channels.

For these carriers, having a solid client relationship management (CRM) strategy is a priority. And while in theory a strategy is a great start, execution on that strategy often hits a couple of roadblocks, especially when it comes to finding the right technology to organize and standardize records related to better management of customer service, marketing and sales. After all, customer data is a lifeline to success for any business, but not having all of your customer data in one easily accessible place is usually a challenge faced by insurers that are on a growth path.

See also: Yes, Personalize — but Get it Right!  

This is complicated when insurers’ functional business units operate in silo fashion. For example, consider this workflow scenario: If underwriting can’t access a policyholder’s payment history or other financial records held in accounting, underwriting must email the accounting department to obtain it. Meanwhile, the customer, impatient for his quote, calls the carrier and is connected to a customer service representative who should be able to view all customer transactions, interactions, renewals, cancellations and other changes being made to the policyholder record, yet is unable to view data that reflects any issues that would affect the underwriter’s delays.

Another roadblock relates to a common complaint among small to medium-sized insurers with limited or frozen budgets—the feeling by employees (users) of having to “do more with less.” Here we have a difficult and potentially negative cycle: If the insurer is operating with outdated technologies and processes and its spreadsheets and email platforms are overwhelmed by a growing customer database, the employee is unable to meet the customer’s needs and, over time, experiences burnout. The customer, meanwhile, is already shopping for another insurance carrier.

For companies responding to these challenges by moving beyond a customer service excellence strategy and on to actual execution of a solution, an integrated CRM system is the next logical step.

This type of technology puts the company in control—and requires rethinking of existing processes and creating process efficiencies. The inclusion of collaboration tools in the CRM help make this task possible, and creates a “team” effect even with the smallest of customer service departments.

By their nature, CRM systems are rules-based, so customer data and records can be made available to the employee who needs it, when they need it. For example, consider the importance of receiving an automated alert of policyholder suspension, which triggers an audit trail, or the ability to build out custom fields to include additional categories, contact types based on demographics, channel partner status and more.

The CRM should automate contacts, quotes, sales, tasks, calendar scheduling and more. But remember, this data automation doesn’t take place in a vacuum; it needs to be insurer-driven and should map to the policyholder’s unique requirements. It also should map to the distribution channel’s requirements, yet another source of critical customer data and the key to a better understanding of the policyholder’s existing status and changing needs.

See also: Distribution: About To Get Personal  

Let’s face it, digital technologies are with us to stay and can provide a powerful means to interact with a growing customer base. For small to mid-sized insurers on a budget, an integrated CRM system—once only an expensive pipe dream—today can be a reality. As your company grows and you have more policyholders than you can relate to personally, a CRM system makes it possible to “keep it personal” while providing superior customer service.

Why Small Carriers Need Insurtech

Effective customer relationship management (CRM) is key to successful business, especially when it comes to smaller insurance carriers, where the focus is on the client relationship. But smaller insurance carriers are falling behind on efficiency and speed. Larger carriers are gaining market share because of innovative digital tools and techniques, ranging from new data sources, robotic process automation (RPA), advanced data analytics such as machine learning and cognitive computing, to IoT (Internet of Things).

For instance, larger carriers can deliver quotes (whether personal or commercial lines) in real time and allow binding and paying online.

For small and mid-sized traditional insurance carriers, to stay relevant, and increase their growth and profitability, they need to partner with insurtechs and firms providing technological infrastructure to insurance firms.

Here are three reasons why this is necessary:

1. Competitive Edge

Insurtechs have a natural competitive edge over traditional insurance carriers, because of their lack of legacy systems and typically narrow focus. This leads to a much quicker service delivery model. What customers have expected traditional insurance carriers to deliver in weeks, insurtechs are now delivering in minutes or hours. To reduce the gap in service delivery models, smaller insurance carriers can partner with insurtech startups to yield innovation and improve efficiency.

See also: Insurtech: Unstoppable Momentum  

2. Internal Efficiency

Legacy insurance carriers have slow internal processes, i.e. the long cycle between brokers, carriers, underwriters and customers, and lack of digitization of customers’ requirements or customer files. If all the file work is still actually on paper and not digital or in the cloud, then searching for and acting on information does not take seconds but takes minutes or even hours. Thus, the more digitized carriers win again. The small and mid-sized insurance carriers can overcome this gap by strategically partnering with insurtechs in a very cost-effective manner.

3. Effective and Improved Service Delivery

Smaller insurance carriers need to have an effective service delivery model, which reduces the dependence on long communication channels and is completely customer-oriented. To do that, traditional smaller carriers need to show a willingness to adapt and innovate. They need to start by identifying and then partnering with startups that can improve their service delivery model.

Recommendation

Small and medium-sized insurance companies should start to track investments and advances that are emerging within the insurtech community and consider partnering with insurtechs to move from a traditional service delivery model to an innovative customer-centric and technologically enabled model. Such partnerships will be mutually beneficial — the carrier will benefit from new techniques and digital infrastructure such as cloud-based services in a very cost-efficient manner while the insurtech will benefit from the carriers’ legacy customer base and industry knowledge.

See also: Insurtech: The Approaching Storm

Missed Opportunity for Customer Insight

Customer insight (CI) teams can take different forms in different businesses (partly rightly, to reflect the needs of that business). One such variation is reporting line. Some CI teams report into operations, sales, IT or even finance. However, by far the most common reporting line is into marketing.

See also: 3 Skills Needed for Customer Insight  

That makes sense to me, as over the years I have seen more and more applications for customer insight across the marketing lifecycle. Increasingly, marketing teams are realizing that use of data, analytics, research and database marketing techniques is part of their role. Sadly, these technical teams are, too often, still separated. But at least there are signs of collaboration.

Marketing Automation:

Companies and leaders also recognize different applications of insight to marketing. Some focus on early-stage roles in strategic decisions, some on proposition development and some on campaign execution or marketing measurement. Very few appear to use customer insight in all they do.

Meanwhile, one of the trends of recent years has been the adoption of marketing automation systems. In some cases, the term has almost been used to replace the infamous customer relationship management (CRM) system. But, for many businesses, it is more about bringing a structured workflow, resource management and quality controls to the work of marketing teams. Talking with consultants who specialize in helping businesses implement marketing automation systems (none appear to work straight out of the box) reveals a sadly lacking focus on customer insight.

This is such a missed opportunity. The marketing workflow needed by today’s business requires input, validation, targeting or measurement at almost every stage. But it seems that marketing automation designs are not routinely embedding customer insight deliverables into marketing processes.

Regulation:

It is perhaps surprising that more focus has not been put on automating routine use of insight in marketing, given the regulatory environment.

Whether you consider certain vertical markets (like the role of the Financial Conduct Authority), or the higher hurdles coming to all data uses (with the adoption of general data protection regulation, or GDPR, principles), marketers will need more evidence. Those data marketers keeping up-to-date with their professional responsibilities will realize they need to evidence suitability of their offerings, targeting of their communications and appropriate use of data.

Where’s the gap?

So, in what parts of the marketing lifecycle are marketers neglecting to use customer insight? Where are the most important gaps?

Based on my consultancy work, often helping companies design their customer insight strategy, I would identify the following common gaps:

Participation decisions:

  • Either not having a clear understanding of market segments, or not making participation (product categories or distribution channels) based on segment fit or size of appeal.

Communication design:

  • The use of insight generation has grown for product design (as per our recent series), but too few marketing teams also use that same insight generation to design their communication.

Communication testing:

  • Quite often this is left to ad hoc qualitative research, with insufficient use of techniques like eye-tracking or quantitative experimentation at concept stage.

Event triggers:

  • Identified as important to targeting in two recent research reports, from the DMA & MyCustomer/DataIQ, event triggers deserve to be more widely used in targeting marketing campaigns. For further thoughts on why you don’t just need propensity models, see previous posts on both events and propensity models.

Holistic marketing measurement:

  •  As more and more marketing directors are expected to report on their return on investment (ROI) or return on marketing expenditure (ROME), once again insight can help. Not just the traditional role of database marketing practices, in reporting incremental return against control groups, but also, increasingly, the design of holistic measurement program (converging evidence from brand tracking, econometrics and other data sources). This previous post shares some more detail on that.

Will you be insightful or ignored?

In closing, I’d encourage all customer insight leaders to get closer to those leading marketing in their businesses. Marketing will become increasingly challenging over the next 12 months. CI leaders have the potential to become trusted advisers who can support marketing directors in navigating those choppy waters.

See also: The 4 Requirements for Customer Insight  

To return to the theme of regulation. I once more advise readers to not underestimate the potential impact of the EU’s general data protection regulation (GDPR) on their businesses. Despite Brexit, every commentator seems to agree that this regulation will affect U.K. businesses. The most eye-catching element may be the scale of potential fines (as much as 4% of global annual revenue), but the changes to consent may affect marketers more. The new hurdle will be proving positive unambiguous consent. Many businesses may conclude they need to move to opt-in for all marketing content.

So, going forward, the biggest threat to marketers (those not embedding insight into their processes) may not just be losing customers. It may be losing the right to talk to them!