Tag Archives: customer satisfaction

How to Boost Loyalty in Auto Insurance

In any industry, customer loyalty is a precious commodity. That’s no less true in the world of auto insurance. As Bain puts it: “Loyalty improves a carrier’s economics and leads to sustained, above-market growth.”

But what does it take to make customers stay with an auto insurer for the long term?

Customer retention isn’t just customer satisfaction.

When customers choose to stick around because of the benefits an insurer provides, their actions are driven by positive experience. You could say, then, that the key to customer retention is customer satisfaction.

You’d be mistaken. A new survey released by Accenture Global found that while 86% of insureds who filed a claim were satisfied with how it was handled, 41% of those customers are still likely to switch insurers in the next 12 months.

In fact, the data shows that the very act of filing a claim makes a customer more likely to switch insurers, even when they’re completely satisfied with how it went.

It’s not to say customer satisfaction in the claims process doesn’t matter – speed and transparency being the two most important factors, according to 94% of Accenture survey respondents. Having access to digital channels also ranks high in satisfaction requirements.

However, if having a claim tends to trigger the insurance shopping process, the most important question may be how to prevent the claim altogether.

Use UBI as a tool to prevent claims and build the relationship.

By harnessing usage-based insurance data, insurers can define strategies to help customers manage risks and even reduce the number of claims they file. As a result, insurers not only lower claims costs, but may gain an advantage in customer loyalty, Bain says.

However, usage-based insurance isn’t just about data collection. It offers insurers the opportunity to go far beyond information gathering, and to nurture the relationship. UBI provides a chance to communicate with customers every time they drive, in a constructive manner. UBI is the ultimate digital connection – not hinging on potentially negative touch points like claims or billing, but rather facilitating quality, helpful coaching.

And here’s the great thing: The relationship-nurturing capabilities start immediately. Insurers can provide helpful driving tips as soon as UBI policyholders install the app and take their first trips. Insurers don’t have to wait for data, actuaries and new rating tables. They have an instantaneous ability to provide coaching and thereby start a new kind of insurance relationship.

They say that when you teach a man to fish, you feed him for a lifetime. What happens when you teach a man, or a woman or their teenagers to drive more safely and avoid the pain of accidents? They appreciate it and remember it. And, greater loyalty, retention and referrals just might ensue.

Click here to learn how usage-based insurance works for insurers.

Best Way to Track Customer Experience

Many commentators have recently debated the relative merits of customer effort score (CES) vs. net promoter score (NPS). As a leader who remembers the controversy that surrounded NPS when it first came to dominance, I find the debate concerning. I still recall the effort people wasted trying to win the battle against NPS, pointing out its flaws and the lack of academic evidence for it, when we were really looking a gift horse in the mouth because of NPS. I would caution anyone currently worrying about whether CES is the “best metric” to remember the lessons that should have been learnt from “the NPS wars.”

For those not so close to the topic of customer experience metrics, although there any many different metrics that could be used to measure the experience your customers’ receive, three dominate the industry. They are customer satisfaction (CSat), NPS and now CES. These measure slightly different things, but are all reporting on ratings given by customers to a single question. Satisfaction captures emotional feeling about interaction with the organization (usually on a five-point scale). NPS captures an attitude following that interaction, i.e. likelihood to recommend, against a 0-10 scale. Detractors (those providing a 0-6 score) are subtracted from promoters (those with 9-10 ratings) to give a net score. CES returns to attitude about the interaction, but rather than asking about satisfaction it seeks to capture how much effort the customer had to put in to achieve what she wanted or needed (again on a five- point scale).

The reality, from my experience (excuse the pun), is that none of these metrics is perfect. Each has dangers of misrepresentation or simplification. I agree with Professor Moira Clark of Henley Centre of Customer Management. When we discussed this, we agreed that ideally all three would be captured by an organization. This is because satisfaction, likelihood-to-recommend and effort required are different lenses through which to study what you are getting right or wrong for your customers.

That utopia may not be possible for all organizations, depending on volume of transactions and your capability to randomly vary metrics captured and order of asking. But my main learning point from “the NPS wars” over a couple of years is that the metric is not the most important thing here. As the old saying goes, “It’s what you do with it that counts.”

After NPS won the war and began to be a required balanced scorecard metric for most CEOs, I learned that this was not a defeat but rather that gift horse. Because NPS had succeeded in capturing the imagination of CEOs, there was funding available to capture learning from this metric more robustly than was previously done for CSat.

So, over a year or so, I came to really value the NPS program we implemented. This was mainly because of its granularity (by product and touchpoint) and the “driver questions” that we captured immediately afterward. Together, these provided a richer understanding of what was good or bad in the interaction, enabled prompt response to individual customers and targeted action to implement systemic improvements.

Now we appear to be at a similar point with CES, and I want to caution about being drawn into another metric war. There are certainly things that can be improved about the way the proposed CES question is framed (I have found it more useful to reword and capture “how easy was it to…” or “how much effort did you need to put into…”). However, as I hope we all learned with NPS, I would encourage organizations to focus on how you implement any CES program (or enhance your existing NPS program) to maximize learning and the ability to take action. That is where the real value lies.

Another tip: Using learning from your existing research, including qualitative, can help frame additional questions to capture following CES. You can then use analytics to identify correlations. Having such robust regular quantitative data capture is much more valuable than being “right” about your lead metric.

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?

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.