When it comes to winning customer hearts and minds, insurers are no longer competing against each other; they are being measured against the last, best experience the customer had… no matter what industry sector delivered it. That means the pressure is now on insurers to deliver increasingly relevant and valuable experiences.
Are they up for the task? If a recent global survey of insurance CEOs is anything to go by, CEOs are feeling bullish. In fact, eight-in-ten insurance CEOs say they believe they are now meeting (or even exceeding) their customers' expectations for a personalized experience.
There are certainly a number of stand-out insurance brands that are meeting and beating their customers' expectations. In a recent KPMG International survey, Tomorrow's customer experience, today, of consumers in 14 countries around the world, insurance brands were ranked first for customer experience across all sectors in four markets. Clearly, it is possible for insurance organizations to differentiate themselves based on customer experience.
What the leaders demonstrate is that it takes more than just good customer service and fast claim processes to deliver a truly differentiating customer experience in the insurance industry. Rather, it requires insurers to radically sharpen their value proposition in a way that responds to their target customers’ expectations.
That won’t always be easy; it will require insurers to meet customer expectations from beginning to end.
So what does this mean? In part, it means becoming better connected to their policy holders and insured risks. The emergence of smart home technologies, autonomous cars and the shift towards the sharing economy are already changing the dynamics in the non-life sectors. The introduction of wearable technologies and the adoption of health and fitness apps may lead to similar changes in the life sector.
It also means becoming a more connected enterprise – from a data, IT and systems perspective, as well as from a vision, culture and objectives perspective. The reality is that customer expectations are not easily met when organizations operate in siloes; those that are able to connect and align their organization behind their customer agenda stand to gain the greatest traction with their target customers.
Of course, all of this requires insurers to develop a much clearer understanding of their target customers’ needs, preferences, and expectations.
Our survey of insurance CEOs suggests that most are facing challenges understanding how millennials’ needs differ from those of older customers. But they must also remember that millennials are not the only customer segment that is changing and influencing growth: boomers are retiring and becoming more tech savvy; Gen-Xers are starting to enter their spending years; according to some estimates, Gen-Z (the group that follows millennials) already represent up to US$143 billion in buying power1.
Insurers will need to understand each of their target segments in greater detail if they hope to truly respond to their expectations. Depending on the target segment’s needs and preferences, it could take extensive digitization and ruthless product simplification or radical changes to processes and the adoption of innovative new ways of interacting with customers.
At the same time, insurers will also need to consider the end-to-end customer journey – understanding that customers have expectations not only pre-issue but also post; from policy admin and changes all the way through to the ‘moment of truth’ when the customer has a claim. Meeting those (ever evolving) expectations and delivering the desired experiences along the entire journey will require insurers to change everything about how they interact with customers.
Last but not least, it will require insurers to find their optimal balance between cost and growth (a topic I started to cover in my first post in this series). This means understanding the economics of a good customer experience and investing into the areas that deliver the greatest value for both the customer and the organization. Insurers will need to remember, however, that the economic value of the customer experience is maximized when customer expectations and experiences are in alignment; when companies over or under-deliver, profits suffer.
In a world where consumers expectations are being influenced by every other brand they interact with, many insurers will struggle to remain relevant in the lives of their customers. But those that are able to enhance their relationships and brands by continuously delivering on their customer expectations will likely be the winners of the future.