Insurance isn't the only industry in the world that is struggling to deal with the "Amazon factor," but it certainly has just as much work to do as many other sectors. The Amazon factor refers to the very high customer engagement bar that has been set by digital and e-commerce leaders (indeed, it could just as well be called the Zappos, Netflix or Uber factor). That standard sets the baseline for companies in other industries, whose customers expect similar easy-to-use tools and personalized interactions. Thus, insurers find themselves being evaluated in comparison with firms well outside their traditional peer group and competitive set.
Easily accessible account information, detailed customer histories, wish lists, tailored recommendations, repeat ordering tools and free shipping – these are the features that lead to world-class levels of customer engagement. Life insurers in particular struggle to get over this engagement gap. Some have established multiple channels for sharing information and simple, self-service tools to take care of basic administrative tasks.
But, to date, a bare minimum of interactions of tasks have moved online. The insurance industry has yet to discover its own equivalent of free shipping. Certainly they have not achieved levels of engagement that will anchor their existing customer base, help individual policyholders achieve better outcomes, resist intense competitor activity and, ultimately, boost their bottom lines.
Here, we highlight five action steps insurers can take to boost customer engagement, as well as define the parameters of customer engagement. As you'll see, the key is to think holistically and creatively in applying leading practices from other industries, especially those that go beyond basic connectivity to deliver high-quality user experiences and create customer advocacy.
Customer engagement: what it is and why it matters
It's worth defining our terms because customer engagement has become something of a buzzword, and one that can mean different things to different businesses and industries. Generally speaking, customer engagement refers to the ability of a company to promote loyalty and advocacy on the part of its consumers and generally good business outcomes through a full ecosystem of externally facing touch points and channels (including online and in-person or face-to-face networks).
To some extent, the major metrics for engagement are whether or not customers feel valued and want to keep doing business with a specific company. In this sense, engagement goes beyond basic utilization of and satisfaction with basic transactions (like bill paying or email notifications).
- Does the company provide relevant and valuable information that consumers actually want?
- Does it meet individual preferences for interacting and transacting?
- Does it help consumers meet their objectives easily and efficiently?
These are the questions that must be asked by any company seeking to deepen, strengthen and extend relationships in our consumer-driven world.
The business case for customer engagement is perhaps easier to grasp than the definition. More engaged consumers equate to lower costs and reduced churn, which benefit policyholders and insurers alike. Further, competitive advantage results when consumers spread the word about a company's great service or helpfulness in solving a problem (whether it's related to a specific claim or a broader topic like retirement planning).
So what can life insurers in particular do to engage customers?
1. Communicate, communicate, communicate.
For many insurers, increased engagement will start with more effective communications. Improving the quality and clarity of standard communications is a seemingly small improvement that many insurers can make – but one that can send a potentially big message to consumers that insurers value their business.
In streamlining premium statements, cover letters and disclosures, insurers should focus on sharing meaningful information in clear language that ordinary people can understand.
Even more importantly, insurers and agents must be very sensitive on the timing of their communications, which are often distributed during periods of stress.
For example, the first notification of death benefits is not an appropriate vehicle for upselling or cross-selling beneficiaries, though some insurers automatically include information about additional products in such communications.
2. Get proactive with relevant content and timely offers.
After mastering basic communications, insurers can move on to higher-value activities, such as sharing personalized content. For instance, when sources of direct deposit change, insurers can share information about what other clients do after changing jobs.
Similarly, they can make special offers, such as free reviews of IRA fees or investment account strategies, in advance of a projected retirement date.
Such content can also be used for "defensive purposes;" by reaching out to consumers who have searched the company website for information about cancelling a current product, insurers might be able to save a policyholder who is otherwise inclined to switch.
Currently, very few insurers take a proactive approach to protecting their base.
3. Integrate data to get everyone on the same page and get to know your customers better.
Integrated repositories of customer data and systems that can speak to each other are a requirement for such proactive communications capabilities. The goal must be to eliminate the differences between digital and traditional channels and confirm that the company always acts like a single, unified entity, rather than an assemblage of standalone departments.
That means call center agents and field representatives must have ready access to current, consistent and complete information from all recent interactions – including web activities, correspondence, service notes and purchase and declination histories.
Further, integrated data – as well as robust analytics capabilities – are necessary to the design and distribution of personalized communications of the sort described above.
