The issue of customer engagement in the insurance industry

Until a few years ago, companies used to operate on the basis of a product-centric philosophy. Delivering the best quality in correspondence to best price, to a certain extent, was enough to ensure a competitive market position. But the advance of the digital revolution and the adherent proliferation of media, devices and online content profoundly changed customer behavior. For one, logistics no longer puts constraints in terms of purchasing decisions and people are free to buy whatever their heart pleases with a sole click of the mouse or a tap on the touch screen. By simply going on Amazon or eBay, one can purchase a printer directly from the manufacturer, skipping over the smaller retailers. With AirBnB-like business models, where the entire payment and insurance handling has already been integrated in the process, the financial industry is being downgraded to the plumbers of the new growing business models. Moreover, this often comes with a preferential, lower pricing and at the convenience of the buyer. So, what is to keep customers coming to your organization’s doorstep?

Simply “satisfying” their demands for a product or service doesn’t cut it anymore. Customers have become accustomed to great user experiences from the likes of Uber and Apple. Over and over, we see customers expecting similar service levels for other products and services.  So for creating a memorable customer experience, you are not only competing with fellow financial conglomerates, but also with the mindset of a customer who wants the same immersive user experience throughout all their purchased products and services. The September 2015 McKinsey report on the financial industry states that current digital offerings are shallow and only cover the very basic transaction opportunities.

Next, customers are more informed and, thus, more demanding. This allows them to take control of their own experience and decide for themselves how and when to interact with organizations. And as products are no longer the sole driver of the brand-customer relationship, marketers across organizations are hands on rethinking their strategies in efforts to foster engagements and establish long-lasting connections with their customers.

Building and maintaining customer engagement can be challenging, especially when it comes to an industry such as insurance. While retail and telecommunications industries are gaining speed in establishing emotional connections with the customer, the insurance sector is hardly known for its high scores in customer engagement. Or is it?  After all, who would expect another conservative sector like transportation to become the birthplace of the hottest startup in the world right now?

For most customers, insurance companies all look the same. You only need them when there is a problem and then you have to navigate through the legal minefield. Although companies claim to put the customers first, at the end of the day, the whole digitalization momentum has led to cost reduction schemes instead of investments in customer excellence. The lack of an excellent and distinctive experience makes it quite easy and emotionless for a customer to replace one insurer’s package with another’s. A recent study by IBM shows that only 43 percent of customers trust the insurance industry. Luckily, this level of trust is higher than the one in bankers and second-hand car salesmen, but still. The issue here is that without trust, it is impossible to develop an ongoing customer engagement. There are exceptions to the rule of course, like the Dutch insurance company Interpolis which has an unorthodox way of handling claims without issues.

Another challenge with converting customers to loyal supporters comes from a specific segment of today’s population – namely, millennials. According to Gallup , out of all generations, millennials are the most likely group to be actively disengaged with insurers. Being constantly wired, millennials are looking for digital tools that would make handling the insurance process faster and at their online convenience. And you cannot blame them. They use for example payment solutions like Paypal for buying goods on eBay. So for them it is logical that all goods are being insured automatically at the time of purchase. So why not team up more with the products the customer of today actually wants to buy? That should be possible, right?

One of the solutions is to focus on the omni-channel approach of customer intimacy. Today’s customers are combining multiple channels of interaction – social, mobile, customer support centers, catalogues, etc., to complete a single transaction. They are expecting insurers to engage with them through more personalized, responsive and seamless experiences across all touch points. As customers are looking to simplify and mobilize nearly every aspect of their lives, smart insurance companies are already hands on implementing latest advancements in mobile and wearable technology.

In comparison to fully disengaged or indifferent customers, an actively engaged customer is less sensitive to pricing and is more likely to stay with the insurance carrier. If managed properly, customer engagement has the potential to bring in substantial business gains for insurance companies. For those daring to rethink their customer experience, the upside to customer engagement will be huge. Take on that opportunity now and good luck with creating customer engagement!

To hear more about this topic, you are invited to join the upcoming webinar; please register here https://attendee.gotowebinar.com/register/8798904843488631298 or email Jennifer.vanlent@spigraph.com