Upload
others
View
5
Download
0
Embed Size (px)
Citation preview
The journey toward greater customer centricity
Ernst & Young The journey toward greater customer centricity2 3
01 Executive summary
03 Introduction: evolving consumer dynamics
•Consumerdemandsandexpectations
•Influencingpersistencyandretention
•Insurersarenotmeetingcustomers’expectations
05 Coreprinciplesforredefiningcustomerrelationships
07 Protectingthecore:becomingmorecustomer-focused
•Customer-centricmodels
•Dataforcompetitiveadvantage:advancedsegmentationanddataanalytics
•Harnessingthepowerofdigitalaspartofanintegratedchannelstrategy
15 Customer-centricinnovation
•Asignificantculturalshift
•Developacultureofinnovation
16 Practicalstepsonthejourney
19 Conclusion
Contents
Ernst & Young The journey toward greater customer centricity4 1
Executive summaryAdvancesintechnologyandcommunication,combinedwiththeexplosivegrowthindataandinformation,havegivenriseto amoreempoweredglobalconsumer.Recenteconomicandpoliticaleventshighlighttheneedforinsurerstounderstandhowconsumersviewtheworldandthemostimportantattributesfortheirpurchasingdecisions.
Ourdiscussionswithglobalinsuranceexecutives,non-executivedirectorsandregulatorscorroboratethisviewanddemonstrate,withoutexception,thatthechallengeofrespondingeffectivelytorapidlychangingconsumerneedsisoneofthetopstrategicagendaitems,alongsideregulatorychangeandtalentmanagement.
InourErnst&YoungGlobalConsumerInsuranceSurvey2012report,Voice of the customer,1welearnedaboutthevalueofcustomercentricityandwhyitissoimportanttoaninsurer.Oursurveyprobedcustomerattitudesandbehaviorstodeterminehowcustomersviewandinteractwiththeindustry,aswellastheirexpectationsforthefuture.Ourfindingsconfirmedthatthoseinsurerswhorespondbesttowhatcustomerswantnowaremostlikelytosucceed.Aclearunderstandingofcustomerneedsandbehaviorsacrosstheorganizationwillhelpdriveprofitablegrowthstrategiesandprovidetheconfidencetoinvestinopportunitiesatatimewhenstayingwithinbudgetisextremelydifficult.
Inthispaper,weexplorehowtechnologyischangingconsumerdynamicsandshowhowinsurershaveanopportunitytoinfluencepersistency,retentionandexpectationsthroughimproved
customerengagement.Wediscussthestrategicparadigmandoperationalareaswhereinsurerscanbecomemorecustomer-focused:developingcustomer-centricmodels,applyingadvancedsegmentationanddataanalyticstodesignaneffectivecustomerexperience,harnessingthepowerofdigitalinanintegratedchannelstrategy,andshiftingtoanewcultureofinnovationthatwilldrivegrowthandcompetitiveadvantage.
Thejourneytocustomercentricitywillnotbeaneasyendeavor.Inbuildingastrongfoundationforthefuture,insurerswillneedtofocusonanewsetofcoreprinciplestoredefinerelationships.Therewillbemanychallengesindevelopingthecriticalnewcapabilitiesthatalignobjectives,targets,rewardsandrecognitionwithcustomerneeds.
Weofferpracticalstepsforinsurerstoconsideralongthewayastheybuildmomentumforcustomercentricityacrosstheirorganizations.Someofthetopicswillbepresentedingreaterdetailinthemonthsahead.Lookforadiscussionofhowinsurerscanharnessdigitalmoreeffectivelyinanupcoming2013report.
Advancesintechnologyandcommunication,
combinedwiththeexplosive growth in data
andinformation,havegivenrisetoamore
empowered global consumer.
Inthispaper,weexplorehowtechnology ischangingconsumerdynamicsandshowhowinsurershaveanopportunitytoinfluencepersistency,retentionandexpectationsthroughimproved customerengagement.
1. Voice of the customer: time to rethink your relationships,Ernst&Young.Downloadatwww.ey.com/insurance.
Ernst & Young The journey toward greater customer centricity2 3
Introduction: evolving consumer dynamicsTechnologyisgrowingatanexponentialrate,influencingconsumerbehaviorandinsurancemarketingstrategies.By2020,80%oftheglobalpopulationwillhaveaccesstomobiletelephonyandmorethan60%tosmartphonesorlow-costtabletcomputers.Itisanticipatedtherewillbemorethan50billionconnecteddevicesglobally,withmobilebeingtheprimaryinternetdevicefor mostindividuals.
Socialmediaandunprecedentedaccesstoinformation,suchaspeer-to-peerproductandservicereviews,aregivinggreaterpowertoconsumers,creatingmoreinformedanddemandingcustomers.Theseexperiencesareshapingconsumerexpectationsacrossallsectors,includinginsurance.
Consumer demands and expectations
Althoughtechnologyischangingthewaycustomersengagewithinsurers,oursurveyindicatesthatpersonalinteractionisstillhighlyregarded.Thecomplexnatureofinsuranceproductsandcustomers’needforadvicemeanthatsomelevelofpersonalinteractionwillremainanimportantcomponentofoverallchannelstrategy.
Customerspreferproductstobesimplerandmoretransparent,soitiseasiertomakeinformedchoices.Thishasimplicationsfortheroleofinsuranceagents.Inanindustrywheremarginsarecomingunderincreasingpressure,insurersneedtochoosewheretheyinvestacrossthevaluechaintoavoidaddingextracostwhilestillpayingagentsforservicescustomersmayprefertodothemselves.
Thesechangesareforcingadramaticchangeinthebusinessoperatingmodel,asinsurersneedtofocusonwheretheirsaleschannelsaddvaluetotheendcustomer.Thiswillbehelpedbygreatertransparencyinthesalesprocessandinproductdesign.
Overall,customersarelookingforvaluetobeclearlydemonstrated,reflectingabalanceofprice,productfeaturesandservicetailoredtotheirneeds.Theyprefertobuymoreproductsfromcompaniestheytrust.Oncetheyhavemadetheirchoiceandestablishedarelationshipwithaninsuranceprovider,theyexpecttheprovider’sproductsandservicestomeettheirexpectations—andthroughtheirchannelofchoice.
More demandingIncreasedexpectations: convenience,flexibilityandpersonalizationareagiven
More diverseGlobalgrowthofwomenintheworkforce
More sophisticatedEmergingmiddleclasseswantmorefinancialservices
More hedonisticIt’sallaboutme
By2020,itisanticipatedtherewillbe
morethan50 billion connected devices
globally,withmobilebeingtheprimary
internetdeviceformostindividuals.
Ernst & Young The journey toward greater customer centricity4 5
Influencing persistency and retention
Recognizingthevalueofthecustomerrelationshipisvital—atthepointofinitialsaleandoverthecustomerlifetime.Customersegmentationmodels,whichidentifythosewhohavethehighestpropensitytopurchase,canimprovecustomersatisfaction,comparedtotraditionalunfocused“productpush”cross-sellefforts.
Insurersalsohaveanopportunitytoinfluencepersistencyandsupportretentionthroughimprovedengagementwithexistingcustomers.Thismustbebackedbyflexiblydesignedproductsthatrespondtochangingcustomerneedsandfinancialincentivestorewardcustomerloyalty—overthecustomerlifecycleratherthanjustatthepointoflapse.
Butthekeytoimprovingpersistencyisremovingthereasonswhycustomersconsiderleavinginthefirstplace.Useofpredictivemodelscantargetcustomersbasedonlikelihoodoflapseandthevalueofretention,but“testandlearn”approachesareessentialtodeterminewhichinterventionsaremosteffective.
Customersarewillingtobuildlong-termrelationshipswiththeirprovidersandpurchasemultipleproducts.However,insurersmustimprovetheeffectivenessoftheircommunications,aswellasrecognizeandrewardthevalueoftherelationships.
Insurers are not meeting customers’ expectations
Our Voice of the customer surveyindicatesfourdimensionswhereinsurersarefailingtomeetcustomers’expectations:servicequality,rewardingloyalty,communicationandproducttransparency.
Consumershaveastrongsensethatinsurerscoulddomoretoearntheirtrust.Theytendtojudgeinsurersagainstotherconsumerindustries,expectingcomparablestandardsofserviceandrewardsforloyalty.Yet,inourclientexperience,insurerstypicallybenchmarkthemselvesagainsttheirpeersintheindustry.That’s
abigdisconnect.Insurersneedtocontinuallyevolvecustomerpropositionstomeetchangingneedsandexpectations,particularlybyimprovinginformationandtransparency,andtheyneedtolookoutsidetheindustrytodothiseffectively.
Theneedforclarityandtransparencyisalsodrivenbyregulatorsprotectingconsumerinterestsmorethaneverbefore.Insurersthatalignthemselvestoacustomer-centricmodelofoperationwillfindthetransitiontothenewregulatoryenvironmentlesspainful,andtheymayevengainacompetitiveadvantage.
Inthisfast-changingenvironment,insurersneedtofocuson anewsetofcoreprinciplestoredefinerelationshipswith customersandtransformbusinessmodels.Toachievethis newstrategicparadigm—andthefirststeponthejourneytocustomercentricity—insurersneedtotakethefollowingsteps.
Protect business against disintermediation:Insurersunabletounderstandordeliveragainstcurrentandfutureconsumerneedsandpreferencesfacetheprospectoflosingtheconnectionwithorbeingpushedfurtherawayfromtheendcustomer.Insurersneedtomakesuretheyretainastronginfluenceonhowcustomersviewtheirproductsandservices,regardlessofoverallchannelstrategy.
Redefine customer relationships:Insurancehastraditionallybeenaproduct-centricbusiness,focusedondevelopingthebestproductsforagivenriskanddeliveringthoseinthemostcost-effectivemanner.Nowinsurersneedtobetterunderstandthetrueneedsoftheircustomersinordertoredefinetheproductsandservicestheyofferandthewaysinwhichtheyinteractandservethem.Theyneedtoknowtheircustomersbetterthaneverandusetheinformationandknowledgeasasourceofcompetitiveadvantage.
Increase productivity to gain a competitive advantage: Historically,productivityimprovementswereviewedasaresponsetoadversemarketconditions.Insurerstypicallycurtailspendingintimesofshrinkingrevenueorincreasingcostpressures.However,thoseinsurerswhoareabletoviewproductivityenhancementswiththeduallensofimprovingtheexpensepositionwhilegrowingthetoplinewillachieveacompetitiveadvantage.Asconsumerexpectationsforbetterlevelsofcustomerservicegrow,insurerswillneedtonavigatethechallengesimposedbylarge-scale,paper-basedlegacysystems.Thosecarriersthatareabletoincreaseproductivitythroughstreamlinedbusinessprocessesandtechnologyimprovementswillbeabletoenhancetheirexpensepositionsandincreasethequalityoftheircustomerservice.
Diversify sources of revenue:Insurancebynatureiscyclical.Non-lifeinsurersfacehardandsoftpricingcycles,whilelifeandpensionsalesandprofitperformanceareaffectedbyinterestratemovementsandequitymarketvolatility.Insurersneedtodiversifytosustainstabletop-linegrowthandearningfluctuations.Thisalsoaffectscustomercentricity,asitrecognizesthatproductperformanceandconsumerneedsshiftwithmarketconditionsandlifeevents.
Collaborate with new partners across the value chain:Theshiftfrompushingproductstodeliveringsolutionsoftenrequiresinsurerstodevelopnewcapabilitiesorprovideproductsoutsidethecurrentportfolio.Inaddition,theadoptionofnewtechnologies(SOA,webservices,etc.)isopeningopportunitiestooutsourcenon-strategicfunctionstoimprovetheefficiencyandeffectivenessofbusinessfunctionsacrossthevaluechain.Successfulinsurerswillbethosethatdevelopcapabilitiestoidentifyandmanagestrategicbusinesspartnerships.
Byfocusingonthesecoreprinciples,insurerscanbuildastrongfoundationforthefuturewhileimprovingtop-linegrowthandprofitabilityoverthenearterm.Totrulysucceed,theymustembraceandembedtheconceptofinnovationwithintheirorganizations.Futureindustrywinnerswillbenimbleandabletorespondquicklyandeffectivelytochangingmarketconditions,newconsumerdemandsandemergingregulations.
Coreprinciplesforredefining customerrelationships
Customersarewillingtobuildlong-termrelationshipswiththeirprovidersandpurchasemultipleproducts.However,insurersmustimprovetheeffectivenessoftheircommunications,aswellasrecognizeandrewardthevalueoftherelationships.
Ernst & Young The journey toward greater customer centricity6 7
Withthesecorestrategiesinplace,thefocuscanshifttooperationalissuesthatwillenablechange.Insurancecompaniescandrivegrowthinrevenueandprofitbyimprovingtheirbusinesses,attractingcustomersandstrengtheningrelationships.However,implementationisnoteasy,particularlywhereinsurershaveextensivelegacysystemsandoperations.Thechallengeishowtotransitionfromexistingproductandtraditionaldistributionmodelstothosethatdeliverwhatcustomerswant,aswellashowtodevelopthecriticalnewcapabilitiestoenablethistransformation.
Webelievetherearethreeessentialstepsalongthejourneytocustomercentricity.Insurersneedtofocusoncustomer-centricoperatingmodels,advancedsegmentationanddataanalytics,andharnessingdigitaltobetterengagewithcustomersatalowercost.
Customer–centric operating models
Acustomer-centricorganizationbuildsanoperatingmodelaroundadeepunderstandingofitscustomers,whattheyvalueandthecontributioneachmakestotheprofitabilityofthecompany. Thisrequires:•Designingbusinessprocessesthatrecognizedifferentcustomer
segment needs•Deliveringapositiveandseamlesscustomerexperienceat
everytouchpointacrossthecustomerlifecycle•Maintaininganactivedialoguewithcustomers(andacting
onfeedback)• Fosteringaculturethatplacesthecustomerattheheartofthe
decision-makingprocess
Maturity model assessment
Assessinganorganizationagainstacustomer-centricmaturitymodelmayprovideabetterunderstandingoftherelativematurityofkeycapabilitiessuchassegmentationorlifetimevaluemanagement,aswellasofferguidanceonwheretoinvest.Throughourworkwithclients,wehaveaclearviewofwhatconstitutesdifferentstagesofmaturity,fromundevelopedtoleadingpractice.
Protectingthecore:becomingmorecustomer-focused
Figure1:Compareshowfourmajorglobalinsurersarecurrentlypositionedinthefivestagesofdevelopment.Definingandunderstandingwhatitmeanstobe“emerging”versus“advanced”canbeaprocessinitself,evenbeforemappingyourcompanyagainstthesecriteria.
Indeed,understandingandcommunicatingthescaleofthechallengeaheadisthefirststepofanyjourney.Itisimportanttoberealisticaboutexpectations—leadingcustomercentricity(thefarrightofthematuritymodel)maybeunattainable.However,theprocessofconsideringhowtobalancecustomer-centricprincipleswithfinancialconsiderationsiscritical.Forsome,thetrade-offsbetweenthelevelofinvestmentrequiredandrealizedbenefitswilldeterminehowfartheyprogress.
Thejourneytodeliveramatureoperatingmodelmaytakeyears.Suchasignificantorganizationaltransformationmustbebrokendownintoamanageable,phasedimplementation.Focusingon quickwins,keytechnologydecisionsandtargetedimprovementsinitiallycanhelptoprovethecaseandgarnerorganizational buy-in.Prioritizing“hightouch,lowtech”changesthatimprove thecustomerexperiencerelativetothecostandimplementation effortwillfurthergeneratemomentumformoreextensivetechnology-enabledchange.
Barriers to successful transformation
Typically,mostinsurerswillencounterchallengesinherentintheircurrentoperatingmodelsduetotechnologicalandoperationallimitations,aswellasculturalconstraints.Amongthemoreobviousarestrongorganizationalsilos,whichcreateaninabilityorunwillingnesstosharecustomerdataorcooperateacrossbusinessunitsandfunctions.
Thisisparticularlycommoninbusinessesthathistoricallyhavebeensegmentedalongdistributionchannels,e.g.,intermediaryanddirect.Infact,thetraditionalinsurancecustomerengagementmodelpresentssignificantbarriers:inmanycases,initialcustomercontactandongoingadvicearecontrolledbyanintermediaryoragent—andoften,providerengagementatthisstageispurelyadministrative.Legacysystemsandprocesses,andpoorqualityorinsufficientend-customerdata,constrainmanyorganizations
The challengeishowtotransition
fromexistingproductandtraditional
distributionmodelstothosethat
deliver what customers want.
Ernst & Young The journey toward greater customer centricity8 9
inmanagingtheend-to-endcustomerrelationship.Evenwhencustomersare“orphans”(theynolongerhaveanactiveagentorintermediary),manyorganizationsdonot,orcannot,seizethisopportunitytore-establisharelationshipdirectlywithadviceandserviceofferings.
Oneofthegreatestbarriersforinsurersisthebusinesscasethatoftenrequiressubstantialinvestment.Culturally,traditionalindustryfocushasbeenonnewbusinessandmarketshare,ratherthanderivingvaluefromthein-forcebook.Whenviewedwithanarrowlensandashort-termfocus,manyinvestmentsdonotmakeitpasttheplanningstage.Thekeyforinsurersistoshifttoalonger-termperspectiveandtorecognizetheopportunitytoreducecostswhileimprovingcustomercentricity.
Executivemanagementownershipandcommitmenttodrivingcustomercentricityisimperative.Thismustbesupportedbyclearlydefinedcustomer-centricobjectivesandmetricsacrossallbusinessunits,withperformancemanagementandcompensationalignedwithcustomer-focusedbehavior.
Insettinggoalsforcustomeroperatingmodeltransformation,insurersneedtoaskthesestrategicquestions:
• Whydoyouwanttobecustomer-centricandtowhatdegree?
• Isthereaclearstrategicimperativefromtheboardofdirectors?
• Howincrementalorrevolutionaryachangeisrequired,andhowmuchchangeistheorganizationpreparedtoundertake?
• Whatarethemainbarriersandkeystrategicimperatives?
• Whereandhowwillyoustart—bytargetingspecificfunctionsorbusinessunits,orwithanenterprise-widephasedapproach?
Data for competitive advantage: advanced segmentation and data analytics
Manyinsurersgrasptheconceptofsegmentingandtailoringtheirservicepropositions.Thisisoftendonebasedonsocioeconomicfactorsandproductholdings.Leadinginsurersaregroupingcustomersbasedonbehaviorsandvalues.
Creatingamicro-segmentationmodeltounderstandcustomersandaligningthiswithamodulardistributionmodelthatallowscustomerstoaccesstheorganizationthroughmultiplechannels(whenandhowtheyprefer)willoptimizecustomers’experience.
Dataanalyticshasbecomecriticaltodesigninganeffectivecustomerexperience.Insurersneedtounderstandthetruedriversofcustomersatisfaction—foreverysegment.Whatattributesoftheirexperience(price,personalattention,responsetime,servicecalls,claims,etc.)willhavethemostimpactondeliveringapositiveexperience?Equally,insurersmustidentifywhatisnotdrivingvalue,asthispresentsanopportunitytoreducecosts.
Stage 1: Undeveloped
Brand and market positioning
Customer segmentation
Distributor management
Propositions
Service delivery
Customer lifetime value management
Culture
Stage 2: Emerging
Stage 3: Developing
Stage 4: Advancing
Stage 5: Leading
Company 2
Company 1
Company 3
Company 4
Figure 2: Customer centricity maturity assessment of four global insurersFigure 1: Customer–centric maturity model
Brand and market positioning
Lowbrandequityamongtarget customers—knownbutnotvalued
Highbrandrecognitionandstrongpositiveassociationsamongtargetcustomers,basedonrealevidenceandreputationforcustomerfocus
Customer segmentation
Broad,undifferentiatedoffering,not specifictoanydistinctcustomersegments
Clearlydefinedtargetsegmentsbasedonrobustunderstandingofcurrentandpotentialcustomer lifetimevalue
Distributor management
Distributorrelationshipsdrivenbyvolume, littleornoproviderinvolvementinsaleor post-salecustomeractivity
Highlyselectiveapproachtodistributorsdrivenbycustomeranddistributorprofitability;partnershipapproachwithselecteddistributorswithjoinedupcustomers engagement model
Propositions Broadrangeoftraditionallifeproducts:complex,inflexible,opaque,capital–intensivewithprovider-financedcommission
Focusedproductrangebasedoninsightintoneedsofprofitablecustomersegments;flexibledesignwithtransparentpricing,supportingfee–basedadvise and/orcustomerself-service
Service delivery
Transactionalandadmin–driven,reactivetocustomeranddistributorrequests;low-touchapproachwithnoproactivecontactorvalueadded interaction
Relevantandvalue-addingcustomercontactthroughvarietyofmediaincludingphoneandonlineself-servicetoolsandinformation
Customer lifetime value management
Noattempttomanagecustomerlifetime valuebeyondstandardservicemodel
Explicitunderstandingofcustomerlifetimevaluewithvalue–addinginterventionsatkeystagesincludinglapse,life-stagechanges,maturity,retirementetc.,tailoredtoneedsandvalueofspecificcustomersegments
Culture Newbusinessvolumeandmarketshareare keymetrics;enforcethosecustomersnotactively managed or measured
Customerlifetimevaluemanagementiskeymetric:clearfocusonmeetingneedsofprofitablecustomersegmentsacrosstheirwholelifecycle
Process Productpushapproach;littleornocustomer segmentation;productsdevelopedadhoc; “Onesizefitsall”servicefootprint
Tailoredproductofferingbasedondiscretecustomersegments;real–timecustomerinsightsupportspersonalizedinteractions;predictiveanalyticsemployed toadjustoffersandserviceactionsaccordingly; multi-channelapproachbasedonbehaviorsand buyingpreferences
People Noownershipofthecustomerwithinthe organization;compensationdrives inconsistentbehaviors;customer–facingemployeesnotsupportedbybackofficefunctions;lackofauthoritytoresolve customerissuesatpointofcontact
Customer–centricculturepervasiveatalllevelsoftheorganization;customerinsightisakeycomponentofthecompany’sstrategicagenda;employeestakeclearownershipforcustomerproblemsandmanageissuesthroughtoresolution
Technology Technologystrategynotalignedwith customer–centricculture;legacysystems limitabilitytomeetcustomerrequirements;customerdatatrappedinorganizational silos;lackofenterprise–widedatastrategyhampersintegration
Unifiedvisionfordatamanagementacrossbothenterpriseandbusinesspartners;masterdataismanagedasacorporateasset;proactivemeasures areinplaceorongoingdataqualityimprovements; theorganizationembracescustomer–facingtechnologiesasintegraltochanneleffectiveness
Stage 1: Undeveloped Stage 5: Leading
Stag
e 2:
Em
ergi
ng
Sta
ge 3
: Dev
elop
ing
Sta
ge 4
: Adv
anci
ng
Ernst & Young The journey toward greater customer centricity10 11
onlinetoolsandcalculators,combinedwithcustomeraccountinformation,canenablecallcenterrepresentativestodeliverpersonalizedadviceandservice.
Dataanalyticsandpredictivemodelingcapabilitiescanalsobeappliedinotherwayswithinanorganization:
• Behavioralengineeringmodelstounpacktheexistingriskcultureanditsimplications,aspartofatransitiontoamorecustomer-centricandinnovativeculture
• Customerretentionanalysis—why,whereandwhenyouarelosing customers
• Customerleadsanalysistosupportdevelopmentofafullyintegrateddistributionmodel
• Financialmodeling(ofstaffand/orcustomerbase)toinformcustomerexperienceandadvisorconversationsonhowtoimprovefinancialclientwell-being
• Claimsmanagementandleakageanalysis
Harnessing the power of digital as part of an integrated channel strategy
Mostconsumerswantaccesstoamixofonlineandpersonalcontactthroughouttheproductlifecycle.Digitalisnotthepanacea,butitisacriticalenablertodeliveringtheexperiencecustomerswant.Thekeyinsurancechallengeishowtoharnessthepowerofdigitaltobetterengagedirectlywithcustomersandlowercosts.Digitaltechnologywillcomplicatetheprocessandfrustratecustomersifitisnotjoinedseamlesslywithotherchannels,recognizingthatexistingchannelsoraccesspointswillalsoneedtoadaptand,insomecases,playanalternativerolewithinthebusiness.
Theeffectiveintegrationofchannelsacrosssalesandserviceactivitiesiscriticaltodeliveringapositive,brand-reinforcingcustomerexperienceateverytouchpointinthecustomer
Applyingdataanalyticstothecustomerservicefrontlinecanbepowerful.Analysisofcallcentertransactions,combinedwithcustomerbehavioralinsight,canhelpinsurersbetterroutecustomerstotheappropriatetypeofsupport.
Ultimately,theobjectiveistoreshapestrategicdecision-makingbyprioritizinginvestmentinservicefactorsthatdelivervalueforeachsegment,channelandproductcombination.Withoutsuchanalysis,itisimpossibletomountasensiblebusinesscase.
Applyingdataanalyticstothecustomerservicefrontlinecanbepowerful.Analysisofcallcentertransactions,combinedwithcustomerbehavioralinsight,canhelpinsurersbetterroutecustomerstotheappropriatetypeofsupport.Innovativeuseof
High satisfactionDelighted
Low satisfactionDisgusted
AbsentQualityforperformancenotachieved
Fully implementedHighqualityperformance
Perform
ance
/ lin
ear
Perform
ance
/ lin
ear
Exciters and delighters
Threshold / b
asic (must haves)
Source:Kano
Figure 3: Customer experience analysis and design framework relationshiplifecycle.Asdigitalchannelscontinuetogrowinimportance,insurersneedtodefineastrategyforintegratingthesetouchpointsaspartoftheiroveralldistributioninfrastructure.
Insurersshouldfocusontwocriticalenablers.Forthoseutilizingthird-partychannels,engaging channel partners early in the process and communicating a clear value proposition are essential tosuccessfulintegration.Thiscouldbeintheformofleadsgeneratedthroughdigitalchannelsortime-savingcustomerserviceactivitieshandledbythecallcenter.Second,itisimperative that customer information be handed off between channels with limited consumer effort.Inadditiontoslowingresponsetimes,redundantstepscommunicatethattheneedsofthecustomeraresecondarytoinvestmentsincapabilitiesrequiredtostreamlinebusinessprocesses.
Ernst & Young The journey toward greater customer centricity12 13
Theoverallcustomerexperienceisinfluencedbycustomers’directandindirectinteractionswithanorganization—bothphysicalanddigitaltouchpoints.Bothmustbemanagedeffectivelyinordertomaximizetheexperience,asshowninFigure4below:
Callcenterswillcontinuetoplayacriticalrolethroughthelifecycleandmustbeadaptedwithinthebusinesstorespondtoevolvingtrendsanddrivegreatervalueatlowercost.Currently,callcentersoperateinatelephone-dominatedworldwithlittledataintegrationbetweenotherchannels,andtheyareviewedasanexpensivemechanismtoservicebasiccustomerqueries.Additionally,callhandlersarenotalwaysequippedwiththerightskillsetsandtoolstosupportamultichanneloffering.
Launchingdigitalchannelsformanyinsurerswithanagency-baseddistributionmodelisanenormouschallenge,requiringchangestoagentsegmentation,customermanagementandcommunicationprotocols,training,incentivesandrewards.Agentswillneedtobecomemoretechnologicallysavvyandconnected,astheywillbepositionedonthefrontlinetosupplytheunstructuredbutrichcustomerdatarequired.
Anagencyforcewiththe“listening”capabilitiesandagilitytoplaythisrolecanbecomeakeystrategicasset.Agentswhowereprimarilyproducingsalesvolumemaysoonbemorefocusedoninformationcollectionandrelationshipmanagement.Theywillproduceleadstothedigitalchannelsand,inturn,receivethemfromonlinebrowsersascustomersasktospeakwithanagent.
Callcenterswillcontinuetoplayacriticalrolethroughthelifecycleandmustbeadaptedwithinthebusinesstorespondto evolving trends and drive greater valueatlowercost.
Source:Ernst&Young
Education and awareness
Research and decide
Purchase Use and service Loyalty
Targeted advertising—directmail,telesales
Wordofmouth
Radio,TVandprint
Internet ads
Viralmarketing
Blogs
Socialmedia
Landingpage
Comparisonandthird-partysites
Tools and calculators
Intermediary agent
Interactive chat
Interactive video
Callcenter
Website
Mobiledevices Pushalerts
Instant messenger and chatapps
Email,paper
Callcenter
Rewardsandincentives communication
Figure 4: Overview of direct and indirect interaction flow
Ernst & Young The journey toward greater customer centricity14 15
Theseactivitieswillonlyprovideinsurerswiththeabilitytocatchuptotheleadingcompetitorsandto“protectthecore.”Togenuinelyleapfrogthecompetitionandgeneratesignificantgrowth,anewcultureofinnovationisrequired,alongwithasignificantchangeinapproachtostrategicdecision-making.
Embeddinginnovationthroughouttheorganizationwillinvolvetappingintoexternaldiscoverycentersandindustryresesarchlabstoregularlygaininsightsfromothersectors.Itwillalsorequireintroducinginternaltest-and-learnprocessesthatgenerateideas,testtheirfeasibilityandpilotinitiativesinarapidandagilemanner.
A significant cultural shift
Formanyinsurers,thisrepresentsasubstantiveandsignificantculturalshift.Therisk-aversenatureofmostinsurersisakeyinhibitortoinnovativethinkingandstiflestheexperimentallaunchofnewproducts,processesandotherbusinesschanges.Therequiredchangeinculturemustbedrivenfromthetopdown.Seniormanagementmustinstillandclearlycommunicateacorporatestrategyfocusedoncustomer-centricinnovationandrecognizeandrewardeffortstodeliverthis.Collaborationandempowermentofemployeestospotcustomerimprovements andactuponthemmustbecomethenewnorm,aswellas physicalspacessuchasinnovationcenterstohelpdevelopandincubateideas.
Oneofthemostsignificantculturalchangeswillbeashiftfromshort-tolong-termstrategicdecision-making.Thetraditionalindustryfocus(andonethatisembeddedinmostperformancemanagementandcompensationsystems)hasbeenaroundnewbusinessandmarketshareratherthanderivingvaluefromthe in-forcebook.Thisoftenmeansitisdifficultforcustomerproponentswithinanorganizationtosecureinvestmentinenablingcapabilitiessuchasdataanalyticsorlong-termcustomerrelationship-buildingactivities,asthesemaynotpresentthemostcompellingshort-termrevenue-generatingbusinesscases.
Customer-centricinnovationAchangeinmindsetisrequired.Ratherthanthetraditional“whatwillIget?”question,organizationsneedtoconsider“whatistheopportunitycostofnotdoingthis?”intermsoffinancials,competitivepositioningandcustomerexperience.
Aboveandbeyondcustomer-centricinnovation,someplayersarethinkingmoredisruptively,developingradicalnewcustomervaluepropositionsthatmovebeyondthetraditionalconfinesofinsuranceandaddresscustomerdemandsinotherindustries.Thisrequiresnewbusinessmodelsandcompetenciesbutcangeneratesignificantrevenuestreamsbytappingintonewprofitpools.Thereareuniqueopportunitiestoenterotherindustries,oftenbyestablishingalliancesandcollaboratingwithnewpartners.
Develop a culture of innovation
ThreestagesofinnovationaredepictedinFigure5acrossthedimensionsofbusinessmodelsandcompetencies.Protectingthecoreisaboutgettingthebasicsright,becomingmorecustomer-centricand,whereappropriate,adoptingtheleadingpracticesthatcompetitorsorotherindustrieshavedemonstrated.However,thisreliesonlargelyexistingcompetenciesandbusinessmodelsandcouldbeacatch-upstrategy.Onlygenuinecustomer-centricinnovationthatisembeddedintotheorganizationwillproducesignificantgrowthanddelivercompetitiveadvantage.
Embedding innovationthroughout
theorganizationwillinvolvetappinginto
external discovery centers and industry
researchlabstoregularly gain insights
fromothersectors.
Com
pete
ncie
sCu
rren
tNew
Business models
Insurance as a service andhybridmodels
Customer–centric innovation
Signifi cant growth
Protecting the core business
Disruptive growth
Current New
Figure 5: The stages of innovation across competencies and business models
Ernst & Young The journey toward greater customer centricity16 17
Practicalstepsonthejourney
Defineyourtargetcustomersandtheirneeds
Take a realistic look at your propositions(solutions,notproducts)—whatwillittaketodeliverwhatcustomerswantatapricetheywanttopayandstillmakemoney?
Generate customer engagementacrosstheirlifecycle—thisisvitaltobuildingloyalty
Involvedistributorsand,together,buildstrongerpartnerships
Learntobeadaptive—usedetailedcustomerinsighttotest,learnandactquickly,acceleratingtheprocesswithprototypes
Starttobuildaculturethatputsthecustomeratthecenterandalignsobjectives,targets,rewardsandrecognitionwithcustomer needs
Focusonsomekeyleversandbuildmomentumthroughouttheorganization
Thejourneytocustomercentricitywillnotbeeasy.Weofferthesepracticalstepstohelpyouunderstandtheprocessandguideyoualongtheway.
Focus
InvolveGenerate
Define
TakeLearn
Start
Ernst & Young The journey toward greater customer centricity18 19
Manyinsurersarenotkeepingpacewithchangingmarketandconsumerdynamicsandarefarbehindotherindustriesinmeetingcustomerexpectations.Tosucceedinthisfast-changingenvironmentandachievesustainabletop-linegrowth,insurersneedtofocusonredefiningcustomerrelationships,transformingbusinessmodelstoembracedataanddigitalandintroducinganinnovativecultureinsupportofstrategicdecision-making.
Achievingcustomercentricityislessaboutimplementingagrandvisionthanaboutbuildingcadencetoday,nextweek,nextmonthandnextyear.Butthetimehascomewhenthejourneyisastrategicnecessity,andallinsurersneedtobeclearaboutwheretheystandandwhatstepslayaheadforthem.
Conclusion
Many insurers are not keeping pacewith
changingmarketandconsumerdynamics
andarefarbehindotherindustriesin
meeting customer expectations.
Ernst & Young
Assurance|Tax|Transactions|Advisory
About Ernst & Young
Ernst&Youngisagloballeaderinassurance, tax,transactionandadvisoryservices.Worldwide,our167,000peopleareunitedbyoursharedvaluesandanunwaveringcommitmenttoquality.Wemakeadifferencebyhelpingourpeople, ourclientsandourwidercommunitiesachievetheirpotential.
Ernst&Youngreferstotheglobalorganization ofmemberfirmsofErnst&YoungGlobal Limited,eachofwhichisaseparatelegalentity.Ernst&YoungGlobalLimited,aUKcompanylimitedbyguarantee,doesnotprovideservicestoclients.Formoreinformationaboutourorganization,pleasevisitwww.ey.com.
©2013EYGMLimited. AllRightsReserved.
EYGNo.EG0117
1303-1050264
Thispublicationcontainsinformationinsummaryformandisthereforeintendedforgeneralguidanceonly.Itisnotintendedtobeasubstitutefordetailedresearchortheexerciseofprofessionaljudgment.NeitherEYGMLimitednoranyothermemberoftheglobalErnst&Youngorganizationcanacceptanyresponsibilityforlossoccasionedtoanypersonactingorrefrainingfromactionasaresultofanymaterialinthispublication.Onanyspecificmatter,referenceshouldbemadetotheappropriateadvisor.
EDNone
Authors: ShonaBurns InsuranceAdvisory [email protected] +61 7 3011 3333
ChristineDelany GlobalInsuranceCenter [email protected] +44(0)2079511733
PaulClark GlobalInsuranceCenter [email protected] +61282956967
DavidSterner Research,Global InsuranceCenter [email protected] +12158410213