No digitalization effort is complete unless it captures the entire “customer journey” – and there are multiple phases that need to be addressed. That’s the gist of a new report out of McKinsey & Company, which provides insights on what it takes to apply digital thinking to the journey’s many phases.
It's worth noting that for insurance companies, the customer journey is a much more extensive one than for, say, a consumer goods company or a utility. That’s because a customer’s needs evolve over the years, and there’s a good chance a customer may stay with a company during that progression. But even within the span of a particular transaction or product purchase, there are multiple phases involving many different moving parts, from the time a customer requests a quote to the application process to claims.
The study’s authors, Driek Desmet, Shahar Markovitch, and Christopher Paquette, all with McKinsey, note that “companies that want to win at digital adoption are therefore recognizing that they must reimagine and digitize entire customer journeys.” The authors define customer journeys as “beginning-to-end processes that customers experience in getting the product or service they need, across whichever channels they choose.”
The authors provide examples of such journeys, greatly enhanced by digital approaches. “Faster mobile-phone sign-ups raised a telecommunications company’s customer satisfaction by 20 percent and reduced costs by 30 percent. For a lender, time for account opening and loan approval fell from days to minutes, customer-engagement opportunities rose from once a month to three or four times a week, and IT became far more agile, delivering new releases in a month instead of a year.” For insurance companies, this could translate into faster and more expedient processing of new customer applications, changes in coverage, or expediting of claims.
How does an insurer begin to bring all the elements of the customer journey in line with digitalization? Here are McKinsey's recommendations:
Start with your story: “From the very earliest stages, the organization needs a consistent way to describe what customers should experience across all of the journeys that they may undertake with the company,” Desmet and his co-authors state. “This enterprise customer experience story will be unique to the company and will distill its strategy, brand, and positioning into practical guidelines that together support the rest of the transformation.”
Sequence your tech transformation: “Once the company has identified the core journeys it will digitize, it should choose its IT components and its sequencing so that the IT architecture changes naturally as the journeys build on one another,” Desmet and his team recommend. There needs to be an emphasis on bringing together multiple channels to share a common infrastructure and data sets, for example. “Similarly, standard components such as eSignature, authentication, or document scanning and data-extraction systems are easily reused across many different journeys and product types.”
Turn, shift, accelerate, and repeat: In the digital world, product refreshes are frequent and subject to adaptation. An insurance product once introduced in the physical world may have be designed, released, and kept on the market, unchanged, for decades. In the digital space, changes and adaptations may come at great frequency – even daily. “That rapid adaptation represents a fundamental cultural shift for incumbents in almost every industry, especially in heavily regulated fields in which perfectionism and caution are the default behaviors,” the McKinsey analysts note.
Build talent—and your digital ‘factory’: Factories aren’t usually seen in the insurance space, but the digital production facility that produces and manages policies may bear a close resemblance to that which oversees auto production. Both types of companies may even find themselves competing for digitally oriented talent and developing their capabilities,” the McKinsey team observes. “As many organizations discover, employees who combine business expertise, digital acumen, and the leadership skills necessary to lead a digital journey transformation are rare.” Approaches to acquiring talent may include everything from actually acquiring smaller tech companies to “setting up an internal academy to teach a combination of leadership, digital, and execution skills.”
Create a ‘game plan:’ Day-to-day operation requires a game plan, or set of “standard operating guidelines and methodologies that lay out the required deliverables, governance steps, and working processes—such as which decisions can be made by factory leadership and which require escalation.”
Track and measure: “Measuring the impact of a large-scale digitization effort is essential to ensure it achieves the dramatic business results that are usually possible,” the McKinsey team states. They add, however, that new forms of measurement are necessary. “Some measures, such as short-term return on investment, may unintentionally discourage the innovation digital requires by discouraging employees from taking risks. Others may impede collaboration. To allocate resources optimally, an organization should abandon promotion metrics that emphasize the number of reports a manager has and instead reward those who reassign team members to high-growth businesses.”
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