Achieving 'magical' customer engagement in insurance

As we enter a new year, like many other industries, insurance is in the midst of a tipping point. New models, technologies, and competitive forces that rippled through the market over the years have now reached such an upsurge they are mandating change across the board. Industry experts note that 2019 will be no different, with an uptick in artificial intelligence solutions revolutionizing the way people and organizations interact with and use their data.

The message is clear: transform now or be left behind.

For consumers and businesses alike, new ways of interacting with insurance companies are disrupting the traditional client/broker relationship. These technology advancements, whether voice assistants, AI, analytics or robotic process engineering, open a world of possibilities for new types of competitors, which put pressure on traditional providers who fail to embrace the new norm.

Given the number of drivers effecting change in the industry, it’s not surprising how many companies are transforming to drive sustainable growth. Yet while many are in the midst of technology and data-led transformations, customer engagement-driven transformation holds the key to growth and competitive differentiation. In 2019, while technology must progress, insurance companies cannot lose sight of the customer experience.

What is Customer Engagement?

Customer engagement is the strength inherent in long-lasting, high-value customer relationships nurtured through quality offerings and experiences. It changes the customer-brand relationship from transactional to meaningful, creating a two-way relationship that delivers value at every touchpoint. Therefore, when customers interact with a company, they have experiences that reinforce their brand choice. In fact, the symbiotic nature of this relationship is what makes customer engagement a powerful tool in creating and sustaining growth. It prioritizes investments that create new value for consumers and companies.

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Commercial buildings stand in the central business district of Tokyo, Japan, on Monday, June 25, 2018. The Bank of Japan's (BOJ) Tankan quarterly business survey for June, scheduled to be released on July 2, is likely to show concerns about U.S. tariffs putting a dent in business sentiment. Photographer: Tomohiro Ohsumi/Bloomberg

A recent study conducted by Publicis.Sapient of 2,300 customers from nine leading insurance companies analyzed four levels of customer engagement within the insurance industry:

  • Functional: A customer’s relationship with the brand is transactional; the company meets the minimum standards of acceptance, yet the customer can be easily converted by a competitor.
  • Valuable: As customers move up the spectrum, they begin to have trust in the brand and confidence in their choice.
  • Essential: Customers begin to feel personally invested as the brand creates products, services, and experiences that adapt to their needs, reflect their values, and recognize their identities.
  • Magical: The relationship has become truly meaningful. The brand has become heavily integrated into the customers’ lives, essentially anticipating what they need next to enable success.

The most successful brands have achieved a “magical” status with customers. Consider Apple – with almost three quarters of a billion iPhone customers – which turned the cell phone from a functional to multifunctional product that makes people’s lives easier. Sure, iPhone customers can make calls, but they can also use their phone to take and store pictures, pay for goods and services, find businesses, and answer life’s most puzzling questions. A study by Fluent revealed that Apple has the highest loyalty of any smartphone brand, with 79 percent intending to buy another iPhone model as their next phone.

A Magical Opportunity for Insurance Companies

Can insurance companies achieve the same level of importance as Apple in their customer’s lives?

While this sounds like a tall order, it’s happening today. Among the nine brands, the Publicis.Sapient study found a range of success in achieving customer engagement with a few firms truly reimagining their business models by putting the customer first. The result? Customers that are two and a half times more likely to renew their insurance policies. One of the brands studied, a Fortune 500 financial services group, showed that putting customers at the center of their operations had yielded excellent results, with over 65 percent of customers scoring in the top two levels of engagement and 89 percent of them likely to choose or exclusively choose their current provider at the point of renewal. This level of relationship strength pays off for this organization, with their customers twice as likely to exclusively purchase from them in the future.

Achieving higher customer engagement requires a customer-centric approach to transformation that promotes continuous innovation and enables agility. Offering 24/7 access, providing hassle-free claims, employing quality service professionals, and trusting the customer during the claims process, as well as implementing service and technology that allows customers to interact in the way they prefer, were revolutionary constructs just a decade ago, but are now merely table stakes.

Today’s well-informed insurance customers require more. They want a personalized experience that’s integrated with their broader financial portfolio, giving them a more meaningful, holistic interaction. Ultimately, they want their insurance company to help them get the most from their policy.

The Journey from Functional and Valuable to Essential and Magical

Understanding what’s most important to customers is the first step to improving customer engagement. The survey identified themes that strongly contributed to high customer engagement for insurance customers:

  1. Omnichannel Interactions. While customers’ interactions are often driven by interactions with agents, the most heavily engaged customers turn to digital channels to interact. Winning with customers involves seamlessly integrating digital experiences across traditional channels.
  2. Winning in Claims. Many customers develop overall impressions of the brand based on how it performs in claims. Hassle-free claims with few interactions and no surprises throughout the process help retain loyal customers and digital tools enhance engagement in claims.
  3. Reputation is Key. Magical customers are three times more likely to select a provider based on brand reputation, customer service, and claims process. While cost is important, it’s clear that brands need to establish a relationship that rises above the transactional level.

For most companies, delivering on promises, ensuring fast response times and creating an integrated omni-channel digital experience requires significant changes in culture, process and technology. Some are addressing elements of these, often in isolation. Yet an incremental approach will only yield incremental results.

As the study shows, a transformation effort that keeps the customer at the center will have a greater impact on the business, improving retention rates, creating exclusivity and driving top-line growth.

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