InsurTech

How Improving Customer Experience Directly Impacts Your Bottom Line

Buying habits in the insurance industry have changed in recent years. According to research from Accenture, two thirds of consumers are now open to buying insurance directly from vendors that are not insurance professionals. And, were they to offer it, 23% would even purchase from a mass market e-commerce giant such as Google or Amazon.

Consumers have never been so willing to explore the full gamut of options in their quest for better customer experience and value. But despite what may seem like a worrisome trend for insurance businesses, customers aren’t ready to abandon their insurance agents just yet.

Insurance professionals have one way to maximize their chances to thrive, rather than just survive, in this new era…

Customer experience is the key

The key to remaining in business in such competitive market conditions is to offer a heightened customer experience.

In an age in which consumers can do everything online, from buying airline tickets to purchasing a car, insurance businesses have to leverage their expertise and customer service to provide an experience that creates trust, dependency and loyalty.

McKinsey found that US auto insurance firms that provided a ‘best in class’ customer experience saw their books of business grow two to four times faster than firms that did not provide such exemplary customer experiences.  By anybody’s standards, that’s a remarkable return on investment for improving a single business area.

But how exactly does improving the customer experience boost profitability?

Increased loyalty makes money

Customer acquisition costs five times the cost of retention.

In the insurance world, where professionals routinely manage tens of thousands of policies across a variety of insurance lines, a ‘revolving door’ of high customer turnover can very quickly grow to be the make-or-break factor in determining whether a business fails or succeeds.

Additionally (as an insight from Bain validates) ‘customer churn’ is significantly reduced when an insurance business sells customers additional policies.

Particularly in commercial lines, satisfied customers will be more inclined to purchase additional policies with the insurance business they are already working with and subsequently become more engaged in the relationship. They will also be happy and eager to refer their peers to that insurance business, as well.

Satisfaction begets profitability and drives retention rates upward with it.

Three strategies you need to up your customer experience

With such obvious (and profitable) benefits, what can an insurance professional do to deliver a customer experience that will rank among the ‘best in class’?

Here are three key strategies:

1. Listen better

The first action that every insurance professional should take is listen more closely to the customers.

In a relationship-driven business such as insurance, it’s vital to deeply understand the needs of customers in order to offer the most relevant and helpful advice possible.

Having an efficient system for receiving feedback (in order to implement its suggestions) is highly important. Feedback should be collected proactively, through customer satisfaction surveys and other user engagement activities before an issue arises.

Every touch-point of customer interaction, from the landing page on your website to the customer signup form, represents an opportunity to connect with your target market and learn about their needs and concerns.

2. Develop buyer personas

This is the next step in helping your business gain the edge in correctly anticipating customers’ needs.

Developing buyer personas, based on market research and customer surveys, can help insurance professionals gain a more systematic picture of whom they are looking to sell insurance policies to, and what their motivations and apprehensions may be regarding purchasing the policies. Other details worth including could be the buyer personas’ demographics, typical behavioral patterns, and goals.

Given that insurance professionals often become privy to confidential, intimate details of a person’s life (such as a complete medical history disclosed for the purposes of obtaining life insurance), having buyer personas that accurately reflect the needs and aspirations of different customer segments can also help build genuine empathy – an important consideration in a customer-facing role.

3. Use principles of “nimbility”

It is important for insurance professionals to be customer-centric in order to provide an exceptional customer experience. But listening to the needs of your customers and developing buyer personas will only get you half-way there. To truly offer the best customer experience, your insurance business must reach a point of ‘nimbility’.

Your insurance business has nimbility when employees fully understand customer needs and are ready to act accordingly. Having nimbility is crucial to maximizing the customer experience.

There are 4 main principles of nimbility, which are:

  1. Empowering customer-facing associates with the ability to make decisions, enabling them to provide faster service
  2. Using technology to provide a personalized experience
  3. Understanding that every customer is different, and acting accordingly
  4. Adopting the concept that customer-centricity is the goal, and profitability is the result

Armed with a data-driven understanding of customer needs, insurance professionals can proactively offer support and advice before customers directly communicate a need, or they can react to customer requests with an agility that would otherwise be impossible.

A worthwhile investment

The internet has disrupted how almost every industry sells to customers – including the insurance industry. Thus, it is more important now, more than ever before, for insurance professionals to provide a top-notch customer experience. By doing so, they can develop customer loyalty, increase retention rates, and become more profitable as a result.

Bottom line is: improving the customer experience enables insurance businesses to achieve their bottom line.

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