Data & Analytics

01:51 PM
Mark Breading, SMA
Mark Breading, SMA
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Can Insurers Achieve Customer Engagement?

You will never truly engage the customer until they at least have a favorable impression of the company based on their experiences.

Forget customer experience. Forget the customer journey. The real payoff is customer engagement — the latest buzzword to hit the business world. But what does this really mean? How does it relate to insurance, an industry that is a more recent convert to the customer experience approach? And who is it we are trying to engage – the agent or the policyholder? These are important questions to investigate because they are vital elements of many insurance company's strategies to differentiate and succeed in the new digital, mobile, social world.

The Customer

To many it seems bizarre to ask who the customer is. The customer is the one that pays for and uses the product. Customers expect to use direct channels so they don't have to rely on and pay extra for an agent, right? Well, yes and no. More direct, self-service options are being offered by insurers and used by customers, but I believe there will be a role for agents for a long time to come. Fast forward to 2025: there will still be many segments of individuals and businesses that value the advice of professionals who understand how to plan for and manage risks and investments, and how to select the best products for each situation. By then, half the population may buy auto insurance, term life, or other simple products via the Internet. But high-value whole life, annuities, workers' compensation, and large commercial accounts will still be sold by intermediaries. Thus, the policyholder should always be considered the primary customer, but in many lines of business the agent or producer is still an important customer to influence and will be for some time to come.

Mark Breading, SMA
Mark Breading, SMA

The Experience

Improving the policyholder and producer experience is a good place to start. Even as the emphasis shifts to customer engagement, the starting point is still understanding and managing the customer experience. You will never truly engage the customer until they at least have a favorable impression of the company based on their experiences. All the effort being poured into mapping the customer journey, investigating individual customer interactions, and seeking ways to improve the overall experience is still highly valuable. Enhancing capabilities to result in a well-orchestrated set of customer touchpoints and customer satisfaction will still require a lot of focus. In addition, the bar continues to be set higher by competitors and other industries so improving the customer experience will take ongoing, sustained initiatives.

The Engaged Customer

Many people now believe that achieving true customer engagement is the Holy Grail. But what does that actually mean? Customer engagement is about more than providing a good experience. It requires long-term thinking and the desire to create loyal customers – customers that are so loyal that they recommend your company to others. The demands of quarterly earnings, individual commissions, and employee performance reviews often lead to an emphasis on optimizing individual transactions. While improved conversion ratios and increased cross-sell/up-sell rates are important, they can sometimes be at odds with building customer loyalty. Sometimes the best advice for the customer is not to buy a product or to purchase a less expensive one. Sometimes spending more time on the phone or in face-to-face conversation is the best way to build a relationship and loyalty, even if it hurts the efficiency metrics.

[Previously from Breading: CCM and ECM in the Age of the Customer Experience]

Engaging customers can only be achieved by companies that are willing to reexamine and rethink their businesses – including the processes, metrics, and expectations of employees. In short, it requires innovation. Thinking of new ways to leverage mobile and social media technologies, new ways to train agents and front line employees, and new ways to measure and incent long-term relationships is the key to customer engagement. Ultimately, the goal is to move customers beyond satisfaction toward becoming advocates that actively promote the company to their family, friends, and social circle. And as those people become customers of the insurer, it cements the loyalty of the original customers and strengthens their intent to remain with the company for a longer time. So is it possible for insurers to truly engage customers? Absolutely! Is it easy? No – but then it is never easy to be an innovator and leader.

For more insights on customer engagement, attend the SMA Summit: The Innovation Journeyin Boston on September 15, 2014. The Summit will investigate insurers' innovation journeys, including how they are rethinking the customer experience and striving toward true customer engagement.

About the author: Mark Breading, SMA partner, is a recognized expert in advanced technologies and their implications for the insurance industry. He has exceptional knowledge of data and analytics, customer communications in insurance, enterprise content management, and advanced technologies including mobile communications. Follow him at @BreadingSMA on Twitter.

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Kelly22
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Kelly22,
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8/22/2014 | 4:22:56 PM
re: Can Insurers Achieve Customer Engagement?
Interesting article, Mark. Insurers will need to rethink their business strategies and increase their conversations in order to improve engagement, and I think you're right that new technologies and digital channels provide a great opportunity for them to do so. As for agents, I think you make a good point in saying that even with the onset of self-service, policyholders will want to converse with agents to gain their advice on complex services and learn more about different options available to them.
Nathan Golia
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Nathan Golia,
User Rank: Author
8/20/2014 | 8:12:34 PM
re: Can Insurers Achieve Customer Engagement?
Thanks Mark. What's interesting about this whole thing is that agents are general consumers themselves, and probably disintermediate others at the same time they fear disintermediation of their own. So they know what they need in order to compete with direct sales and thus put a lot of pressure on their insurers to deliver.
KBurger
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KBurger,
User Rank: Author
8/19/2014 | 6:59:53 PM
re: Can Insurers Achieve Customer Engagement?
Thought-provoking discussion, Mark. My husband used to be an insurance agent and he always complained how hard it was to get referrals, even from customers with whom he had a great relationship. As you say, that is where the value in engagement comes from. Perhaps ironically, this is where the emerging digital channels and tools could really have an impact -- especially social media. There's an opportunity for agents/distributors to leverage those digital channels, but I would imagine going forward more of the referral activity is going to be about company and product, rather than a personal agent.
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