Tag Archives: terry buechner

Much Higher Bar for Customer Service

“It’s all about the customer.” How often have we heard that statement?  More times than we can count, Yet it is more relevant than ever as we exit the “pre-digital” age and enter an environment where survival will be measured by rapid adaptability (see our recent blog post An Ocean Apart: Pre-Digital and Post-Digital Insurance Models).

In our prior posts, we focused on two areas of the insurance value chain that likely are not top of mind when thinking about digital transformation — billing and claims.  In this post, we’ll cover policy and customer serving, which is certainly a higher-profile area for digital enhancement. Policy and customer servicing should be near the top of insurers’ “to do” lists when it comes to embracing the digital shift and transforming into a digitally optimized, customer-focused enterprise.

While many insurers express the desire to become more digitally enabled, most are struggling to catch up, let alone position themselves as leaders. Technology is evolving, and customer demands are growing faster than most companies can deal with. Add to this the challenge that insurers are often saddled with legacy systems, siloed data and product- (not customer-) focused processes that make anticipating and adapting to these changes all the more difficult.

A McKinsey survey from earlier this year reported that most insurers in the U.S. and Europe focus their digital attention on sales and marketing, in particular on the earliest stages of the lifecycle — research and quoting. While these two areas are important, the survey noted that insurers were lagging in their ability to service customers digitally after they were on-boarded.

See also: Key to Digitizing Customer Experience  

Improving Customer Service Is a Great Way to Differentiate

Majesco’s primary research studies on consumers and small-medium businesses showed that, compared with other industries, insurers are pretty bad at service. Life insurers are ninth out of 10 in terms of “ease” of servicing (of the industries shown in comparison, only streaming TV/video/music gets poorer marks for service), while P&C insurers are in fifth place (behind online banks, local retailers, national retailers and online retailers). All small-medium businesses (SMBs) ranked life insurers and employee benefits providers no higher than eighth out of 10 different industries they use as suppliers. P&C insurers also ranked low (fourth out of 10) among the smallest SMBs (those with fewer than 10 employees), but fare much better among larger companies, rising as high as third and second.

Furthermore, our research noted that poor marks have a demonstrable effect on success. If a respondent reported that any one of the aspects surveyed (research, purchase, service) was “not easy” then their Net Promoter Score dropped significantly. And NPS is recognized as a key predictor of a company’s growth and profitability.

According to Celent research, even agents, who are understandably worried about digitally enabled self-service reducing their importance in the sales process, recognize the need for digitization of insurance service processes. The research notes that agents are asking insurers to invest in technology enhancements to, among other things, improve online policy changes.

But It Isn’t Easy (of Course)

At first glance, policy and customer service appears to be an important and straightforward – if not particularly sexy – way to apply digital capabilities to improve outcomes. But looks can be deceiving.

Some of the basic tenets of good service – a 360-degree view of the customer, for example – can be difficult and expensive to implement. Regulatory barriers may prevent streamlining how policy changes are implemented online, varying significantly from state to state and country to country. Legacy policy management systems may not be able to connect to digital front ends in a direct way.

But all of these challenges provide an opportunity to focus on a customer journey-map-based approach to digital transformation! By starting with a vision for digitally enabled customer service (what you want the service experience to be, what business goals you are trying achieve, what key performance indicators you will measure for success) and then creating customer personas and journey maps, you will be able to create a transformation road map. That road map will include people, process and technology changes that you will make over time to reach that vision, allowing for incremental change (instead of taking a riskier, big-bang approach to changes).

Don’t Ignore the Shiny Objects

Just because we recommend an incremental approach doesn’t mean it can’t be fun! There is a lot of cool and interesting insurtech investment in this area, which can (and often should) be leveraged to roll out needed functionality without having to build it yourself.

For example, having e-signature (and as per this blog post on digital billing) and multiple e-payment capabilities can make a policy change paperless and seamless for the customer, something that has been shown to improve service “ease of use” scores. Chat capabilities (human or chatbot) to walk customers through basic to tricky processes is a boon to customer service, with leaders like Lemonade and Geico leveraging them at almost every step of the customer lifecycle. Co-browsing options can be used to help customers navigate particularly tricky process steps. Customer analytics can be used to identify customers at risk of leaving, help them manage their risks and even identify cross- and up-sell opportunities.

Even artificial intelligence (AI) shows promise in customer service, and far beyond just chatbots. IBM’s Watson is assisting customer service efforts in dozens of industries, and all indications are that it will be especially useful in insurance, where matching customers to products and services can help generate revenue and improve customer satisfaction. An excellent non-insurance example is the work Watson is doing with H&R Block. Watson is used to feed appropriate question prompts to tax professionals during client consultations. Bill Cobb, H&R Block president and CEO, said, “Watson is learning more and more as it does more tax returns.” According to a recent IBM blog, “Watson has learned 600 million data points relevant to the industry as well as the U.S. tax code.”

Imagine Watson in insurance, rolled out to give agents prompts based on both individual knowledge and “learned” experience. Watson will help insurers translate regulatory requirements and improve relationship management. Cognitive customer service will give real depth to the possibilities. The Future Today Institute has stated in its 2017 Tech Trends Report that artificial intelligence will soon be integrated into nearly every facet of work life. In a detailed look at industries covered in the report, AI is the #1 trend in every industry.

But Keep an Eye Out for Pitfalls

One potential pitfall is to think this service mentality applies to just personal lines, which, as I’ve highlighted in my other blog posts, is far from the truth. Commercial carriers have a lot to gain from digitally enabled servicing, particularly in the SMB market, where margins can be thin on a per-policy basis. Commercial carriers may be very amenable to service outreach that includes risk-mitigation advice as well.

See also: ‘It’s the Customer Experience, Stupid’  

Insurtech is not just for personal lines, either: A recent SMA study highlighted more than 400 insurtechs targeting the commercial space, and the carriers themselves are interested in leveraging them for, among other things, customer servicing.

Other pitfalls include trying to do too much at once or taking a scattershot approach to service improvements. These dangers reinforce the critical importance of leveraging customer journey mapping to create a disciplined approach to capability deployment.

How to Start

As we have consistently advocated, start with a vision of what you want to achieve. Check this against other investment priorities and pain points for your customers and other stakeholders (for example, if the biggest area of complaint is with the claims process, you may want to consider starting there). Create personas and journey maps to guide your decision-making.

Digital Transformation in Billing

The word “digital” is most commonly associated with front-office transformation – client-facing activities, often in the service of acquiring business. This is for good reason, of course. Driven by their experience in other industries such as retail and banking, customers are demanding digital capabilities from their insurers, as well. Customers – individuals and companies both – expect that everything from access to information, to the ability to bind a policy, to initiating and managing a claim, to paying the bill should be easy to do and available digitally. Our consumer and SMB research reinforces this, indicating that net promoter scores (NPS) can swing 60-70 points when the entire journey is easy.

With that in mind, I’m continuing on my promised theme of looking at all of the steps in the value chain to explore digital transformation across the customer journey. This month, I’ll take a look at billing and payments, an area that, at first glance, might not be an obvious choice for digital reinvention. But it is a great way to engage with customers, optimize a process that is often manual and present additional selling opportunities, as well.

Not coincidentally, we also have a recently published thought leadership paper, The New (Digital) Face of Billing: Defining Multi-Line Insurance Billing Excellence, that takes a deeper look into digital billing.

Thinking Beyond Transactions

In my previous posts, I have talked about the need for a service mentality instead of the siloed, transaction-focused approach insurers have traditionally taken since the automation of business processes 50-plus years ago. To drive value from digital investments, insurers need to expand their thinking beyond transaction processing. Any interaction should be taken as an opportunity to develop and enhance the relationship with the customer, not as simply a means to an end.

In other words, billing is not just about getting the premium paid, although that must be done efficiently and effectively. Billing is one of the rare opportunities insurers have to interact with their customers in a relatively benign situation (as opposed to the stressful, often contentious interactions associated with claims), and it must be embraced as such.

See also: 4 Rules for Digital Transformation  

This does not just mean cross- and up-sell, although that can be an element. Customers will be wary of this, particularly if done in a clunky way, particularly when offering a product that does not match the customer’s unique needs. The overall approach must expand from a basic indemnity mentality to one of service – and the billing approach must evolve beyond simply accepting a customer’s premium. It’s important to keep in mind that the customer engagement mentality is needed across all customer types – from individuals, to businesses, to agents, to third parties and other partners.

The Customer Journey

Digital transformation must always begin with mapping the customer journey. Identifying key touchpoints and “moments of truth” in billing is the first step to mapping interactions and defining the required capabilities. Journey mapping allows you to consider how to roll out capabilities incrementally, giving you the chance to experiment with different services for unique groups and to quickly see what works and what does not.

Understanding your customers and their needs is key. Not every customer will benefit from an in-depth engagement at the time of billing. Some customers may be only interested in a hands-off billing experience, with, for example, a credit card being charged automatically on a monthly basis. Building an automated, paperless process for these customers is likely the right approach, while spending time and effort on building a deeper relationship may not result in a strong ROI. But even these customers can benefit from clear, natural-language explanations of such things as changes in their premium or renewal options.

Other customers may benefit from a deeper interaction. The moment of truth for these users can be providing opportunities for them to lower their premium through product bundling or identification of local risk factors that they may be able to address. Although lowering premium payment may seem at first glance to be a negative, the improvement in customer engagement and satisfaction – with associated Net Promoter Score (NPS) – will more than pay for the difference.

Still others may be interested in an interactive experience that doesn’t require them to speak with a human. AI and chatbots are becoming increasingly sophisticated in providing a human-like experience in a mobile setting, which can be a powerful way to prevent relatively costly calls into the call center as well as provide an engaging way to interact with customers.

But only by taking the time to understand your customers through journey mapping will you be able to make the right investment decisions. And don’t just rely on your own experience – you need an outside-in perspective to do it right.

End-to-End Journey

The customer journey for billing does not end at billing. Billing is an enterprise process – it touches on many different parts of the business. For the advanced capabilities I’m highlighting to work, it may require a wider transformation to take place first. A 360-degree view of the customer – all of the policies, correspondences, claims, etc. – is needed to offer bundling options. Customer analytics will provide cross-sell options. Core system replacement may be needed to offer paperless processing. These are just a few examples.

This is another reason why mapping the customer journey is key – it allows you to see where the process breakdowns and bottlenecks exist that need to be addressed to create an engaging customer experience.

Our research shows that all generations (including the younger “digital natives”) use a variety of touchpoints for questions and service requests when it comes to billing. This is important to map in your customer journeys and important to build into your operating model – the people, processes and technology around billing that make it work. People may still want to pick up the phone and ask why their premium went up (our studies show at least 30% of calls are billing-related). But by providing clear information to customers around the billing process you can prevent a certain amount of those calls from coming through in the first place.

Do It Right

Billing is an opportunity to engage customers, but an occasional one at best. It is of primary importance to know how customers want to be billed and how they want to pay (electronically, with a paper check, via bank transfer, etc.) and how they will want to interact if they have a question or concern (self-service, call center, etc.). But the most fundamental need is to make sure the bills themselves are accurate. Cross-sell or risk management exposed through the billing process will not have much effect if the client is double-billed or if the payment was not correctly recorded. As Novarica sums up succinctly in a recent report The New Normal for P/C Insurers: 100 Data, Digital, and Core Capabilities, “errors can be costly.” And those errors are not only costly in the sense of having more people call into your call center, but also making it far less likely that those customers will become advocates.

See also: 5 Cs of Transformation in Insurance  

Mind the Gap

In our thought leadership from earlier this year, Insurance in the Digital Age: Transforming from the Outside In, we mentioned the growing gap between customer expectation for digital services and the ability of insurers to provide them. Billing is a moment of truth for customers and a real engagement opportunity for insurers. While this makes it an excellent place to get started with your overall digital transformation, it is important to remember that you need to look at the end-to-end process as billing flows through many systems and data stores. This should not dissuade you from tackling billing, but don’t be surprised if there are some basic things that need to be done with the underlying technology (including considering retirement of old, inflexible core billing systems) and processes.

It may seem intimidating, but the benefits in terms of longer-term cost savings, efficiency and customer engagement will be worth the effort … while bringing billing into the digital age.

How to Transform: From the Outside-In

The insurance industry has not been historically known for innovation. Given that the industry is steeped in risk-avoidance, evolution is fine, while revolution, with rapid change and disruption, creates uncertainty and potentially increased risk. At the heart of this revolution is a shift to the digital age. Unfortunately, many insurers do not fully understand or embrace this shift, creating a gap between insurer capabilities and market expectations.

Insurers sitting on the digital sideline waiting for a clear winning approach that they can copy in a “fast follower” mode are allowing the gap to grow, giving existing competitors within the industry and new competitors from insurtech and outside the industry the ability to expand within the void. The year 2016 saw the revolution in full force with the rapid rise of insurtech that is creating tremendous disruption and innovation in insurance, with digital playing a leading role. From the emergence of startups like Haven Life, on-demand insurers like Slice and TROV and peer-to-peer insurance like Lemonade that have launched as “digital first” companies and solutions, traditional insurers are being increasingly challenged from both business model and market perception perspectives by new entrants.

And while some insurers can point to a few sporadic initiatives and say they’re already in the digital game, our experience is that most have done so in a piecemeal way, without an overarching digital strategy that aligns with and informs the overall business strategy. It requires business leaders to shed sacred notions and wake up to the possibilities of rebuilding on a new foundation while maintaining the old structure long enough to transition smoothly.  Meeting the digital revolution with real transformation demands an acceptance that nearly everything industry insiders have known about insurance no longer applies.

This requires a true “outside-in” view. Cultivating a deep understanding of customers’ needs and desires should be the first step any insurer takes as it begins or accelerates its own digital transformation.

See also: Insurtech: One More Sign of Renaissance

Defining Digital

What do we mean when we say “digital”? Defining this – or at least coming to some common understanding – is essential to wise decision making when it comes to digital investments. Wander the streets of any insurance enclave and ask every insurance company employee you run into what “digital” means in the insurance context, and you are going to get a lot of different answers, more than a few of them self-contradictory.

Definitions can range from narrow to broad, although, in our experience, most insurance company personnel stick with a narrow, capabilities-focused view of what digital is:  “Digital means a portal” or, slightly more broadly, “Digital means a tool or tools for enhanced customer communication.” From our perspective, these are too restrictive – because digital is not just about the technology. It’s about the people, processes and technologies that allow insurers to understand and interact with stakeholders – insureds, agents, brokers, partners, internal staff, etc. – in compelling, consistent and personalized ways.

Transforming From the Outside-In

So how do you create those compelling, consistent and personalized experiences for customers? The first step is widening the aperture on who a “customer” is. It is not just insureds, nor even agents nor brokers, which have been the focus of portal solutions. This narrow view leaves out a range of other stakeholders across the value chain that interact with the insurer and each other and are ripe for digitalization.

Digital initiatives of some kind are almost universal in the insurance industry. It is rare for a company in any industry to not have at least a simple Web page. But what insurers do not consistently consider is defining what they mean by “digital,” what they want to achieve and how all the pieces fit together holistically to get a solid return on digital investments.

Many insurers take a very tactical approach to digital strategy and investments, focusing on discrete capabilities rather than taking a business-need-driven approach. To make matters worse, the capabilities are too often based on internal stakeholders’ views rather than the external “customer” – the classic “inside-out” approach (aka, “build it and they will come”). The more effective approach is to deeply understand your customers by mapping their interaction journey across the value chain. This is the “outside-in” approach that will shape the digital strategy and priorities.

Creating a digital strategy includes key building blocks. Insurers must outline their objectives and map customer journeys as steps in a calculated progression of the insurer toward a continuum of integrated digital initiatives. But no matter what the strategy and priorities are, they need to be based on the customers themselves. Whether through surveys, interviews, workshops or some combination, it is essential to step outside of your company walls and view the process from the perspective of the customer.

It is also important to look outside of the insurance industry for guidance. Majesco’s own research studies with consumers and small and medium businesses revealed that insurance is in last place compared with other industries when it comes to ease of researching, buying and servicing products and services – even below the cable industry! The studies show that ease of use is very tightly connected to Net Promoter Scores (NPS), and we know from industry research that NPS scores are a key indicator of growth, profitability and customer loyalty. Insurance is clearly different in many ways from those other industries, but lessons and inspiration can and should be gained from their success.

Why Is it Different This Time?

You may think we;re just going through another fad. But there are key reasons why digital transformation is different than previous business modernization initiatives, such as e-business.

From our perspective, it comes down to two overarching reasons. First, customers are the drivers. Whether those customers are individual policyholders, small business owners, large business employees, insurance employees or distribution partners, they are people who use digital technologies every day. Their digital demands are driving this shift, often based on their digital experiences with other businesses and industries. This is often referred to as the “Amazon effect.”

And second, the digital revolution is led from outside of insurance. Relevant stakeholders experience high-end customer engagement from non-insurers on a regular basis To paraphrase Paul Papas, head of IBM’s Interactive Experience, the last best digital customer experience someone has anywhere is what they now expect everywhere, even from their insurance companies.

Where to Start

Given the range of things to consider, it can be difficult to know where to begin. Many insurers have started with sales, marketing and distribution. These are natural starting points. A host of insurtech startups have also focused on these areas, offering tremendous innovations and best practices from which insurers may derive their own transformational lessons.

But there are several other areas of the value chain that can capture needed efficiencies, value and improvement through digital transformation. Enrollment, claims, product development, policy issue and service are all great starting points for a digital transformation and can have a profound impact on customer satisfaction and efficiency.

In coming blog posts, I will explore each step in the value chain and the potential impact on each from digital transformation.

See also: 5 Cs of Transformation in Insurance  

Final Thoughts

If you’re reading this, you’ve probably already begun your digital journey, or are at least thinking about doing so. I hope so! The gap between what customers expect and what insurers are able to provide is growing daily and rapidly into a chasm that will be increasingly difficult for many insurers to traverse. And it is only going to get tougher. The pace of change is accelerating, and the gap is widening and becoming harder to bridge. Those who don’t make moves to bridge or at least slow the widening of the gap are going to be left behind.

It is a time of great change in insurance. A rebirth – a renaissance – of the industry is happening with the customer at the forefront. While it can be frightening, it is also exciting. It is time to embrace the shift and begin your digital transformation!

For a deeper look at this topic, please see our recently published white paper, Insurance in the Digital Age: Transforming from the Outside In.