How Social Media Can Increase Revenues

There’s been a groundswell of interest – even excitement – over the prospect of social networking as a tool to help businesses engage with their customers. There are plenty of possibilities for insurance companies as well – but how can managers sell this new way of doing business to the executive suite, especially within the typically conservative insurance sector? 

It will take time before the profitability of approaches to social media – in which both companies and customers collaborate and share information through online venues – are well documented and tested in the insurance industry. But in the meantime, Forrester analyst Natalie L. Petouhoff, Ph.D. has crunched the numbers on return on investment (ROI) for social media, and determined the ways social media can deliver positive results within customer service environments – relatively quickly. Customer service centers, of course, are a huge cost center – and an essential part of the business – for the insurance industry.

In the latest Forrester report, Petouhoff estimates that a typical business with 500,000 customers and approximately 30,000 calls per month could see up to $500,000 more a year as a result of investments in social media approaches. Where is this return coming from?

There’s the increased productivity seen as a result of customer service representatives being tied up with fewer complicated or vexing matters – as many issues will be resolved within the online community. “Having access to the community answers increases the agent’s ability to solve more complex issues quicker and more completely,” Petouhoff says. “This results in higher first-contact resolution, increases customer satisfaction, and reduces the propensity for customers to vent their displeasure at agents.”

In fact, every online community tends to have a core of “super users” that are outspoken about the company’s products and services and are regarded as trusted, non-biased sources of information. Many inquiries and issues formerly handled by paid customer service or tech support representatives, in fact, can be offloaded to these super users.

The measurable benefits identified by Petouhoff include a reduction in agent-assisted interactions, an increase in first-contact resolutions, increased agent productivity, a reduction in agent-assisted email, an increase in product ideation, an increase in relevant Web site content and reduced search engine optimization (SEO) costs, an increase in customer retention and customer lifetime value.