Why Customer Surveys Are Passe - Insurance Thought Leadership

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July 12, 2021

Why Customer Surveys Are Passe

Summary:

There's now a better way. And it's especially important at a time when so many insurers are trying to reinvent the customer experience.

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Ever since a college statistics class in which I learned about the polling debacle in the 1936 U.S. presidential election, I’ve cast a wary eye at surveys. The respected Literary Digest got fully 2.4 million people to respond to a poll on their preferences that year and reported that Alf Landon would easily defeat incumbent Franklin D. Roosevelt. Or maybe not. While the poll found Landon leading 57% to 43%, in fact, FDR won 61% of the popular vote. He pitched a near shutout in the Electoral College, winning 523 to eight.

It’s not that consumer surveys don’t have value. They do, especially as long as we’ve all learned to avoid pitfalls such as the wild sampling bias that led Literary Digest so far astray. The surveys can be especially valuable when they track changes in attitudes over many years or even decades.

But customer surveys have always been rather crude. They’re highly sensitive to how questions are phrased, and they’ve always operated at a remove from what we really care about: Surveys tell us what customers say they’ll do, not necessarily what they’ll actually do.

There’s now a better way. And it’s especially important at a time when so many insurers are trying to reinvent the customer experience — they need to know what really matters and what doesn’t, in fact, affect customer behavior.

This article from McKinsey provides a smart look at that better way: using the increased digitization of customers and of the industry to monitor in a detailed way how customers behavior in the wild.

The article points to three steps:

–Starting with a “data lake” that pulls together all the digital data possible both on aggregate behavior in a market and on individual customers. That massive amount of data provides the raw material for understanding what determines customer journeys.

–Bringing machine learning and other forms of analytics to bear, to sort through all that data and detect what specific events matter in customer journeys. That information will let companies assess investments in customer experience and tie CX initiatives to business outcomes.

–Sharing the insights with front-line employees so they know how to personalize customer experiences in ways that improve business outcomes. Timely insights can spur swift action.

As the article says, it’s “possible for CX leaders to create an accurate and quantified view of the factors that are propelling customer experience and business performance, and [that view becomes] the foundation to link CX to value and to build clear business cases for CX improvement…. Leaders who have built such systems are creating substantial value through a wide array of applications across performance management, strategic planning and real-time customer engagement.”

Again, traditional approaches have value. I recall vividly the insight that the team that developed the original Apple Macintosh got from a video of a focus group. One of the original developers once told me that that they had decided to take a hip approach and put the words “Do It” on what had to that point been an “Enter” key on a personal computer. But as they watched people in a focus group, they saw a woman going through all the steps in a process, and then, right before hitting the “Do It” button, she hesitated and then unwound all her work. When they turned up the volume, they heard the woman saying “Dolt? I’m no dolt.” And that was the end of the “Do It” button.

But all our digital interactions with customers have created a better way, so it’s time to deemphasize customer surveys, focus groups and other traditional means and start taking advantage of the extraordinary insights that customers are increasingly willing to provide us.

Cheers,

Paul

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About the Author

Paul Carroll is the editor-in-chief of Insurance Thought Leadership. He is also co-author of Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years and the author of a best-seller on IBM, published in 1993. Carroll spent 17 years at the Wall Street Journal as an editor and reporter; he was nominated twice for the Pulitzer Prize. He later was a finalist for a National Magazine Award.

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