Keep Customer Relations Personal: Study

Would customers react less negatively if their insurance company informed them about rate hikes personally over the phone versus a written letter? A new white paper by The Forum: Business Results Through People suggests that customers are less inclined to perceive a business negatively if price increases are communicated in-person, over the phone rather than through the mail.

The Forum is a not-for-profit trust affiliated with the Medill Integrated Marketing Communications (IMC) graduate program at Northwestern University that conducts business research with the goal of helping businesses better design, implement and manage people-based initiatives inside and outside an organization.

In its white paper, "Technology and the Human Touch: Moderating the Negative Impact of Price Increases with Outbound Personal Communication," The Forum focused on a large regional insurance provider that instituted a program in which some agents were notified first by the insurer about pending price increases and decreases, enabling the agent to personally phone the customer with the news.

"Results show a significant, positive relationship between the percent of customers being contacted about price changes and the level of satisfaction with the agent," Forum Academic Director and author of the report Dr. Frank Mulhern of Northwestern University says. "The effect is twice as large for communications about price increases compared with price decreases."

In a similar study conducted by The Forum last year, "What Drives the Quality of Customer Experiences in Service Marketing? Employees or Corporate Brands?," the same insurance company experienced a higher level of customer satisfaction with their agents than the insurance company brand itself, reinforcing the importance of "people behind the product."

"Research in marketing has long shown that personal communications, whether in person or by phone, are more positively perceived by consumers than written communications," Mulhern says. "This is no better exemplified than by consumers' abhorrence of automated telephone answering systems for customer service or service reservations."

According to The Forum President Keith Fenhaus, who is also president of Hallmark Business Connections, there are important lessons to be learned from this study. "Organizations should consider not using technology to replace human beings and instead use it to enhance the human touch. Technology can make personal communications more relevant and improve the performance of employees in serving customers. Replacing personal communications with automated ones has the opposite effect."

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