How to improve customer retention and the customer journey in insurance

October 2, 2014 SSP Worldwide

According to James Allen of Harvard Business School, 80% of businesses state that they offer a great customer experience. This is in stark contrast to the 8% of customers who feel the same way. There is clearly a disconnect, and represents a large risk to profitability as customers are increasingly likely to act.

Low barriers to switching are exacerbated through the increasing use of mobile devices and social communications. Coupled with customers becoming more willing to complain and expose poor experiences on social media sites, building a sound customer experience is critical in protecting the brand and reducing customer churn.

A customer retention survey commissioned by Accenture a few years ago found that 57% of European general insurers felt customer retention was the most important issue facing the industry. The survey found that insurers lost around 20 percent of their customers each year, resulting in £3.3 billion of premium churn in the private motor and home insurance markets. This would approximately represent £500,000 to £1m lost premiums for every 1,000 policies. Churn rates range from 1% to 2% per month in mature markets and in advancing high growth East Asian markets this range increases to 3% to 4% per month.

Businesses have long emphasised that providing customers with access to a multitude of channels is critical to facilitating optimum customer experiences. However, securing customers’ attention requires a clear understanding of the full end-to-end customer journey, including processes such as marketing, selling, post-sale servicing and renewal.

The benefits are transparent. Through their Customer Journey related research and consulting work (discussed in a recent Harvard Business Review article), McKinsey identified that businesses able to manage the entire customer experience - meaning the end-to-end customer engagement processing cycle rather than the channels used to interact with customers - could reap enormous rewards, including enhanced customer and employee satisfaction, reduced churn, increased revenues, lowered costs, and improved collaboration, a practice (discipline) that would deliver massive tangible and intangible benefits to a business. The survey identified that top motor insurance performers that enhanced their end-to-end customer journey achieved substantial results. These would include increased customer satisfaction with scores of 8 to 9 points on a scale of 10 points, as well as top line revenue growth, ranging from 6% to 8%.

Gartner estimates that customer engagement initiatives are currently in progress at 15% of Global 1000 organisations, run by leaders such as the Chief Innovation Officer, Head of Digital Marketing, Chief Customer Officer and Chief Information Officer. Creating a seamless customer experience across all interactions is a business priority.

Understanding why customers defect and identifying those moments of interaction that trigger dissatisfaction becomes a top priority. Once identified, these customer journeys and business processes need to be mapped, and the enabling technologies to optimise these engagements specified.

SSP is working with a number of large household and motor insurance players to deliver their customer experience strategy and their digital strategy. SSP deliver solutions that enable organisations to automate their businesses – improving customer interactions as well as realising productivity and efficiency benefits. A final thought – Gartner found that 95% of organisations with customer experience on their agenda measure it through customer satisfaction surveys, but only 35% make use of the lessons learned, and only a few commit enough resources to manage and improve it.

About the Author

SSP Worldwide

SSP is a global provider of technology systems and solutions across the entire insurance industry, using our expertise to enable our customers to transform their business and increase their profitability. SSP provides core technology solutions, distribution and trading capability, advanced analytics and solution delivery. We work with 8 of the top 10 UK insurers, 4 of the top 10 global insurers and over 40% of UK Brokers. Our unique position in the market, including the largest market share of UK e-trading, enables us to provide leading data insight and unrivalled distribution. Our knowledge, talent and technology capabilities deliver innovative results that make us the partner of choice for our customers.

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