Faced with the current soft market and mounting pressure to keep their books in the black, insurers have focused more and more on growing organically. In order to do so, many of these carriers have identified improving the customer experience as a way to retain old business as well as attract new business, and, as seen in a new report from Watermark Consulting, this strategy seems to be paying off.

Based on its analysis of stock market returns for companies that deliver "very good" customer experiences versus those that deliver "very bad" ones, the firm finds that companies delivering excellent customer experiences are reaping rewards.

"From 2007 to 2009, through the best and worst of times, customer experience leaders outperformed the broader market, generating total returns that were 41% better on average than the S&P 500, and 145% better than customer experience laggards," said Jon Picoult, founder of the customer experience advisory firm. "Some business leaders are skeptical about the return on customer experience investments," he added. "They're reticent to invest in improving and differentiating their customer touchpoints because it can be difficult to quantify the resulting bottom line benefits."

Picoult cautions that the study was not meant to preclude attempts to cost justify customer experience improvements on a case-by-case basis. However, the analysis does demonstrate that, at a macro level, businesses that deliver positive, memorable customer experiences are rewarded in the form of better financial performance and increased market value.

"These companies' operational excellence and attention to detail, their simple and straightforward communications, their well-equipped and genuinely helpful customer service staff—the sum of these parts pays off in the end, even if the precise impact of individual components is uncertain."

Watermark's research focused on the 10 highest- and lowest-ranked public companies in Forrester Research's 2007 Customer Experience Index study, which included life, property/casualty and health insurers.

For Picoult's take on the study, click here.

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