Beyond price

What engaged customers wonÂ’t do for money

It would be no hard thing for any general insurer to argue that consumers are fickle and care only about price.  They need only point to the relentless growth of the aggregator market, which thrives on helping customers find the best (for ‘bestÂ’ read ‘cheapestÂ’) deals, and shrug.  So, perhaps we shouldnÂ’t blame them if they conclude that their only way to survive in todayÂ’s post financial crisis market is to focus on efficiency at all costs, drive prices inexorably lower, steel their nerve to keep walking the tight margin tightrope and hope not to get knocked off by the next surge in claims.  It doesnÂ’t sound like fun and nor, believes David Turner, CEO at Webhelp UK, is it the only possible option.  HeÂ’s firmly of the view that ‘engagedÂ’ customers wonÂ’t easily switch for money, that they have more than price on their agenda and that insurers would do well to find out what it is. 

A recent survey has demonstrated that customers who feel ‘engagedÂ’ by their insurance provider will accept a price differential of between eight and fifteen percent before they defect to the competition.  The more engaged they feel, the more theyÂ’ll be prepared to pay before jumping ship .  ThatÂ’s interesting and suggests a new strategic option for insurers, but what is an ‘engagedÂ’ customer and exactly what is it that they care about more than price?

In simple terms the research demonstrated that engaged customers are those who confidently concur with the following three statements:  My insurer describes and promotes its products honestly.  My insurer treats me like a valued customer.  My insurer stands behind its promises.  

Customers care about price, of course – nobody actively wants to spend money on insurance. But they also value the sense of security they feel when they are served well by organisations they trust and rely upon for reassurance and, after all, surely ‘reassuranceÂ’ is what insurance is all about.  And how is this sense of trust and engagement built?  Quite simply, by clear, consistent and compelling communication delivered at every one of eight lifecycle stages:

My insurer describes and promotes its products honestly

• One: The shopping experience:  Absolute clarity about what the product does.  Clear simple statements, not bamboozling small print.
  
• Two: The buying experience:  Simple on-boarding processes and reassurance about when and how the first premium will be taken.
• Three: Start-up experience:  Delivering the insurance policy and being available to answer initial queries.

My insurer treats me like a valued customer

• Four: Relationship building experience:  Providing helpful information (newsletters or similar) that demonstrate your care.
• Five: The growing experience:  Effective cross-selling based on an understanding of the customerÂ’s demographic and likely life-stage requirements.
• Six: The service experience:  Providing helpful assistance to solve problems – billing enquiries for example.
• Seven: The renewal experience:  Issuing timely reminders that recognise changing requirements and that identify caps in cover or potential savings. 

My insurer stands behind its promises

• Eight: The claims experience:  Giving speedy resolution and a clear explanation of the claims decision and process.

It may surprise some to hear that there are eight stages to the insurance customer lifecycle.  It has sometimes been assumed that insurance companies and their customers connect at only two points; when the insurance is purchased and a claim is made.  It is also assumed that at both of those moments the relationship is fraught with difficulty.  In the first instance, the customer doesnÂ’t want to buy insurance, itÂ’s a grudge purchase, and, when they are making a claim, they are in a state of stress.  The modern insurer recognises, however, that these two ‘difficultÂ’ but crucial moments can be made easier if a meaningful relationship is maintained between these two points.  Lifecycle stages four to six allow this engagement bond to be created and, of course, for the relationship to be deepened by cross-selling.

The omni-channel win-win

The insurance industry has done much in recent years to create clarity for the customer.  Mystifying jargon has been replaced by plain English and the small print on the policy no longer demands a magnifying glass to be read.  There can be little doubt that more will be done in this regard thanks to the regulatory new broom being brandished by the FCA.  

At the other end of the spectrum, the drive for efficiency has, in many instances, contributed towards helpful problem solving and swift claims resolution.  If a customerÂ’s issue can be solved at first contact, if a claim can be settled in one week instead of six, the customer is happy and the insurer saves money.  Efficiency meets customer responsiveness; the classic win-win.  

The development of digital and self-service channels provides ample opportunity to accelerate those win-win benefits.  I recently visited a general insurer in Europe whose deployment of digital channels is so advanced (the phone channel is used only during the claims process) that it has reduced its running costs to around 20% of annual premium income.  At the same time, its Net Promoter (NPS) and customer satisfaction scores (CSat) are the highest in its national market and its customer churn rate of 20% is well below the industry average.  Evidence if any were needed that efficiency and customer engagement can go hand in hand. 

The UK industry is starting to take this seriously. The 2013 Global Contact Centre Benchmarking Report suggests that top performing UK insurers are already handling 35% of customer interactions by digital channels and 11% have integrated social media into their overall channel strategies .  ThereÂ’s still a long way to go, however.   Imagine what scenarios like this could do for your customer engagement and efficiency:

Scenario #1: Buying a policy

Scenario #2: Making a claim

The bottom line 

That all sounds great, but the hard bottom line is that it doesnÂ’t matter how many communications channels you provide for customers it wonÂ’t help a jot unless the experience you deliver 

 across them is consistent, compelling and designed to encourage the sense of ‘engagementÂ’ that we talked about earlier – the one that will make customers less price sensitive and release you from the downward spiral price trap.  

Achieving that means understanding exactly which elements of the customer experience youÂ’re delivering today either create engagement or destroy it.  Then replicating the former and eradicating the latter.  

Doing that is no dark art; It simply involves the application of analytics to the customer journey itself.  Analytics technologies will allow you to see how customers are using the communications channels you offer.  You can see where they hit road blocks and remove them, see what is preventing a sale from being secured or a renewal completed.   In short, you can work progressively and relentlessly towards customer journeys that reinforce a sense of engagement and encourage customers to stay with you.  

Remember, the three qualities of engagement?  Analytics will help you secure each one: 

1. My insurer describes and promotes its products honestly – Analytics will help you see where the information you provide is confusing, misleading or contradictory.
2. My insurer treats me like a valued customer – Analytics will highlight opportunities to personalise your service in order to reinforce a sense of belonging.
3. My insurer stands behind its promises – Analytics will identify where you are failing to meet customer expectations and plug the gaps. 

There are those who believe that the insurance industry is irretrievably commoditised and that price can be the only source of differentiation always and forever.  WeÂ’re not among them.

By striving for customer engagement insurers can turn ‘a commodity’ into ‘a valued service’ that customers will almost certainly be prepared to pay a little more for.