Tag Archives: digital experience

Insurers Fail at Digital Experience

Despite the growth of digital channels, insurers seem to be stuck in an analog world, unable to respond accurately, quickly or consistently to customer queries asked via the web, email, Twitter, Facebook or chat, according to new research that we’ve done.

Insurers could only answer 28% of queries across digital channels, and 14% of companies failed to respond successfully on either email, social media or chat. While email was the strongest channel for answers, with a 37% success rate, the average time to receive a response was nearly two days (1 day 23 hours 38 minutes).

These are the top-line findings of the 2016 Eptica Insurance Multichannel Customer Experience Study, which evaluated 100 leading U.S. insurers, spread across 10 sectors, on their ability to provide answers to routine questions via email, the web, chat, Facebook and Twitter. Additionally, 1,000 consumers were polled on how long they were willing to wait for responses on these channels.

The study measured the ability of insurers to provide answers to 10 routine questions via the web, as well as their speed and accuracy when responding to email, Twitter, Facebook and chat. Questions were deliberately similar to those that consumers ask, such as around purchasing or administering policies online, discounts for multiple products and when cover would start.

Insurers provided answers to 30% of questions on their websites, 23% in response to Facebook messages and 12% to tweeted queries. There were big differences between particular sectors – pet insurers answered 57% of questions online, compared with 16% among long-term care providers. One dental insurer responded to an email in 13 minutes – yet another took more than 6 days to answer the same question.

The insurance industry is at a crossroads, with the rise of digital disrupting traditional ways of doing business. To succeed in this new world, insurers need to prioritize the digital customer experience, yet the Eptica study shows that they are struggling to adapt and move away from analog channels. Digital doesn’t just benefit consumers, but also drives greater efficiency and enables innovation – it is therefore time for insurers to learn from their peers in other industries and apply best practice to their operations to meet changing customer needs.

See also: Answer to a Better Customer Experience?  

The research found that insurers are out of step with consumer expectations. While more than half of consumers (57%) expect a response on Twitter within half an hour, just 26% of insurers met this deadline, with the majority of replies not answering the queries. 61% of consumers complained that they could not find information on company websites half the time they looked for it.

On social media, speed varied wildly. One long-term-care insurer successfully responded to a tweet in less than two minutes, while 13 companies answered on Facebook within within minutes. Yet at the other end of the spectrum, 20 insurers took more than six hours to respond on social media, with three taking a day or more. There was little consistency between different channels, showing that many are taking a silo-based approach to customer service that pushes up costs and slows service.

Additional key findings included:

  • 68% of responses on email, Twitter and Facebook asked the researcher to change channel and call, even for the most basic queries
  • 47% of insurers failed to provide consistent answers between different channels
  • Just one company replied on all four channels of email, Facebook, Twitter and chat
  • 17% of insurers claimed to offer chat, yet only 5% had it operational when they were evaluated
  • Nearly half (46%) of consumers said they’d spend just five minutes searching for information on a company website before giving up and going elsewhere
  • U.S. performance trails the U.K., where insurers answered 54% of all questions, 80% of those asked via email and 45% of those made via the web.

Eptica Insurance Multichannel Customer Experience Study methodology

In total, 100 company websites across 10 different insurance sectors were evaluated in September 2016:

  1. For their ability to answer 10 basic, sector-specific questions via their website, such as, Can I purchase my policy online, or, How can I cancel my policy?
  2. On the speed and accuracy of their response via the email, Twitter, Facebook and chat channels.
  3. On the consistency of responses across the web, email, Twitter, Facebook and chat.

Consumer research on channel expectations was conducted by Toluna with 1,000 American insurance buyers in September 2016.

See also: How to Redesign Customer Experience  

The full 2016 Eptica Insurance Multichannel Customer Experience Study, which includes a full listing of companies evaluated, a detailed sector by sector breakdown of performance and full analysis, can be downloaded from http://www.eptica.com/insurance-multichannel-customer-experience-study.

An infographic illustrating the results is available from:

PDF: http://www.eptica.com/infographic-insurance-multichannel-cx

JPG: http://www.eptica.com/infographic-2016-insurance-eptica-multichannel-cx

I’m Spending a Fortune on Digital…So Where Are the Profits?

I doubt any readers of this post work with a CFO who is measuring Return on Empathy. Empathy? How can something as soft, as emotional, as seemingly non-quantifiable as identifying with people’s feelings, thoughts and emotions translate not only into hard-core financial benefit but also value to customers, patients, agents, employees or other participants in your digital experience?

The fact is, the more you demonstrate empathy for your digital-experience participants, and connect that experience to your key performance indicators (KPIs), the more value you will uncover.

I’ll share an example of how the credit card industry established a transformational industry practice by showing empathy via an innovative digital experience. It started with the simple insight that, by relieving customer stress, debt repayment rates could be improved.

Here’s the story:

We all have an image of how credit card companies collect past due balances. Late payers get a “friendly” phone call from the Collections Department, followed eventually by more persistent calling from collections agents to whom severely past due accounts are outsourced. These guys make pennies on the dollar extracting and following through on what the industry calls “promises to pay.”

From the customer’s perspective, this is a confrontational and embarrassing situation. It’s full of stress that is probably only adding to what got the customer into a financial pickle to begin with.

The reality is that most people don’t plan to find themselves at the other end of a phone call from a debt collector. But life happens. Medical emergencies, job loss, other surprises simply overwhelm cash flow and savings. In an industry where the interests of the institution and the customer may not necessarily be particularly well-aligned, the standard was historically an adversarial approach.

Using digital technology, innovators within the industry were able to prevail against the belief that collections could only happen through outbound calling. Innovators advanced the notion that collections rates could be improved by providing late payers with the means to set repayment terms online. Good for the customer. Good for the company.

Avoiding the confrontation of the phone call, and providing a private way to work through the issue, actually gave the customer a new opportunity to strike a deal. This led to meaningful increases in recovery of past due balances. So meaningful that the capability to set repayment terms online went from being an outlier, crazy idea to an industry standard that is spreading globally.

Online collections didn’t arise from spreadsheet analysis or financial engineering. It started from the simple insight that relieving stress – showing empathy by giving the customer a private way to settle up – would tap into people’s real needs. This simple insight, based totally on emotion and flying in the face of industry practices and beliefs, opened a big opportunity that leveraged digital technology to improve the customer experience and by so doing created a whole new source of value for credit card issuers.

Where is the learning transferable within the insurance and wealth management sectors?

The way I see it, we are operating in categories where emotion plays a big role. And where there is emotion, there is potential for Return on Empathy.

There are numerous opportunities to translate empathy into experience design using digital capabilities that will translate into results. Here are three starting points:

  1. Look for broken “moments of truth.” Across the opportunities for improved revenue cycle management, examine the “moments of truth.” Which ones are working and not working for your constituents? What are your constituents worrying about in the larger context of their lives, not just within the insurance transaction? Tiny adjustments can have a large impact. Testing and learning is required to tease out the benefits. Consider that application submission and processing, billing, payments, account management, servicing, inbound inquiries and outbound communications are all areas to explore. Within the healthcare category, these same principles may apply more specifically to population health management efforts.
  2. Focus on the bottom three dissatisfiers with your experience. Some very successful brands build their value story around addressing areas of dissatisfaction. Capital One is one example. What are the three worst areas of dissatisfaction with your experience based on your customer satisfaction tracking studies? What is the emotional basis for the dissatisfaction? How can you fix the experience by leveraging digital, mobile and social capabilities to close gaps? Can your team develop some quick mockups and share them in a usability lab?
  3. It isn’t always about pricing. I know some readers are thinking, “well, my customers just care about price; none of this emotional stuff really matters.” My rule of thumb is that one-third of the market for insurance and financial products may be truly, truly price-driven. But for most people there is a “value for the money” calculation that will readily trade off price for perceived additional value. That value is often in intangible, emotional connection to the brand and offering. Just ask all the people who willingly pay more for Apple products: “Better feature functionality at lower price” will not come up as an answer. And even where price is a heavier factor (say, in P&C, where pricing is more transparent and where the industry emphasize low-cost offers) emotion rules more heavily inside the experience than may appear at first look. That means the potential for Return on Empathy is high.

I’m Spending a Fortune on Digital…So Where Are the Profits?

The “consumer-ization” of healthcare and threats to the long-established business model of the life insurance industry are just two examples of how traditional players are facing intensifying pressure to be more purposeful about their digital strategies.

No doubt about it, digital investments will continue to grow. To turn these investments into marketplace advantages, insurance brands can  embrace what has worked in other sectors. As one of my favorite CEOs used to say, “steal shamelessly.”

I am constantly struck by how well the tried and true techniques of seemingly old-fashioned direct marketing can be applied to uncover how to make digital investments work harder. The discipline of direct marketing is all about having a continuous learning process that allows you to identify the leverage points for any brand engaging with its constituents. This applies to both B2B and B2C relationships. Such continuous learning leads to better focus on putting resources where the business payoff can be achieved. It also creates a fact basis for important, often high-stakes decisions.

These same processes can be applied with strong impact to digital investments, including mobile and social. The processes are relevant across sectors. Skilled direct marketers have been adapting a proven toolset for digital decisions for at least the past decade, so there are well-validated ways to do this with discipline and control. Of course, digital experience is like direct marketing on steroids – there is lots more data and lots more complexity, and, of course, everything happens a lot faster. By integrating on to your team capabilities in (1) how to develop hypotheses, (2) how to set up effective test-and-control experiments, (3) how to conduct those experiments and (4) how to integrate learning for continuous improvement, you will be amazed at the progress that can be made, even over a few quarters, to understand where your digital leverage really lies.

To make the point, I’d like to share a story of how a major credit card company, over the course of just a couple of years, set up a structured process to do exactly what I am advocating. As a result, the company enabled the complete transformation of its sales and service model from being almost entirely mail- and phone-based, to having a true omni-channel model with robust digital capabilities. In the course of doing this, the company effectively maintained its relevance as customers embraced developing digital channels. It also recalculated the economics of the business for all of the key consumer behavior drivers of financial performance.

Here’s the story:

Most executives in this business knew that digital was going to bring changes to the customer relationship but also questioned whether there would be positive financial impact. Was this just a financial sinkhole? Would it be justified as a growth story, or was it just about playing defense? How would existing distribution channels for sales, servicing and relationship management be affected?

The digital team was full of believers. They saw digital as a big opportunity to improve all aspects of the customer experience. They saw opportunity to differentiate through the customer experience, to improve business economics and to redefine how new accounts were attracted and booked. But they lacked the evidence to justify scaling digital programs or to accelerate the pace of change.

The team decided to borrow from their accumulated expertise as direct marketers. Leverage the past, but not be bound by it. Present familiar approaches to colleagues in the organization, as a means of building internal engagement and buy in.

Here are the key steps the team took to get moving:

  1. The head of digital created a senior role leading “profit enhancement” within the team. This signaled to the organization that, indeed, a connection existed between digital and financial performance. There was focus and accountability to enhance profits with digital technology, and to measure what was happening.
  2. The team created a process that engaged cross-functional teams of thought leaders in brainstorming sessions to formulate hypotheses of how digital technology, tools and experiences might affect customer behaviors that were P&L drivers.
  3. Hypotheses were prioritized and tested in-market, or through off-line simulations, depending upon the complexity of the tech support required for live testing. Regulatory considerations also affected the live testing priorities.
  4. Results were continuously monitored, communicated throughout the organization and used to refine and advance further tests and decisions.
  5. Focus was placed on two specific areas of inquiry: first, identifying the unit profit model behind a particular hypothesis and, second, finding the path to scaling positive results.

Over the course of the next three years, but beginning with results generated within the first several months of establishing the profit enhancement team and process, the team was able to discover, test and validate the impact of digital applications on all of the core customer behaviors that drove the income statement and balance sheet of this significant business, including attracting and booking new accounts, statement delivery, self-service, payments, relationship management and even collections of past due balances.

What drove the success of this approach:

  1. A high level of rigor. The process borrowed from direct marketing practices, but always with an overlay of openness and flexibility to allow for the unexpected, unanticipated, surprising results that can easily be missed when an experienced team gets too caught up in past success. I call this “rigor, but not rigor mortis.”
  2. A collaborative and transparent mindset. This attitude fostered support and reduced resistance. By including people from all over the organization, particularly in the brainstorming and hypothesis-vetting stages, the digital team got new recruits to the “army of the willing.” The team started to make believers out of fence-sitters, and to reduce the impact of nay-sayers. Of huge importance was a tight collaboration built between the digital team and thought leaders in both risk management and decision management. These two teams were the analytic talent who drove modeling, pricing and product structures.
  3. Tapping into the culture of test-and-learn. By following frameworks familiar to a traditional direct marketing organization, people had an easier time relating to the digital efforts. This further contributed to winning people over to the cause.
  4. CEO sponsorship: necessary but insufficient. Winning the popular vote was a matter of the points I’ve made above regarding ways to get people on board. It was about everyday process, relationships, communications … and, ultimately, showing results.
  5. Acknowledging and assembling the right mix of skills. Essential skills, activated with the right leadership wiring, enabled the everyday process to be effective. A team of digital natives with limited business knowledge would have been alienating (and unhappy) in this very traditional business that was proud of its legacy. A team of traditionalists might have found it really difficult to separate from the status quo. Building a team with real diversity of thought, background, approach – with a common denominator of a belief in collaboration – enabled progress and ultimately tremendous success.

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!