Waking up the sleeping customer
How to build deep relationships with people through in-the-moment interactions between the point of sales and claims
By Martin Gronemann and Martin Millard
The CEO’s dilemma
Tom*, the CEO of a leading regional insurance company, is an industry veteran. He is skeptical when people speak to him about disruption and he has yet to see convincing numbers that customers leave traditional insurance providers at scale.
However digitalization is a top-priority for him. Why? Because the company’s board have asked him to create a plan for bringing down costs while also modernizing the company’s touchpoints so that the primary interaction with customers will be through digital channels.
The first step of the plan was to design a new digital platform to engage existing customers and increase satisfaction. However, a few weeks before the launch, Tom got a disconcerting piece of information that made him question his plan for the Board: The company’s most recent digital marketing campaign turned out to be a fiasco. Instead of improving customer satisfaction, it had increased attrition. Customers that rarely thought of insurance were reminded and started researching options to get a better offer elsewhere.
What will happen to customer retention when the new platform is being launched at scale?
Is waking up the sleeping customer worth it?
Should the new platform be launched or not?
Why wake up a sleeping customer?
Across engagements in the insurance sector, we meet a concern about the risk of “waking up the sleeping customer.” Insurance executives know that their customer base is often unaware and uninterested in insurance policies and that customer relations are more often than not purely transactional. In a stable market, characterized by large incumbents that rarely rock the boat, existing quietly in the background has enabled relatively reliable revenue streams, often from large collective-bargain agreements. Why then would an insurer ever want to wake up this low-engagement and relatively profitable customer? To answer that question, let’s take a closer look at the people that insurance providers define as a sleeping customer.
Meet the sleeping customer
Arne is a music teacher who recently finished a personal project: he built the house the family now lives in himself. Without training in any of the crafts typically involved in construction of a home, Arne educated himself through googling and watching YouTube. As for others we met, Arne considers insurance a central part of leading a responsible life, and the concept of having insurance helps relieve him of worries. Yet, at the same time, Arne is highly skeptical of insurance companies and finds them entirely alienating: “All these words they use, I think it’s just a backdoor for them to avoid reimbursing me. Like ‘extended electronics’? What is that? And what is a ‘premium’ anyways? It sounds like you are being rewarded for something?” In fact, when Arne was asked to explain his coverage, he wasn’t able to, and the online world at which he was so adept, was of little help. He quickly gave up, and resorted to calling the insurance company: “Finding it online is too cumbersome. It’s just easier calling them.”
Arne’s mindset demonstrates a pervasive problem in the insurance industry: companies tend to focus on what they are selling - policies based on technical risk calculations. Insurance customers like Arne, on the other hand are buying coverage, protection of their most important assets, and, ultimately, an opportunity to park their worries.
Why insurance providers should change their customer relationship
With a cold customer relationship, insurance providers stand accused of being complicated, non-transparent, too profit-focused, and, above all, boring – traits that are the basis for roaring, industry-wide cries of “disruption.”
Insurance providers should not invest in a deeper customer relationship because of the risk of disruption. With insurance being firmly rooted in people’s habitus, we see that the disruption risk is exaggerated. The reason why insurance providers should invest in creating a deeper customer relationship is primarily to create better commercial results short-term and long-term.
We have identified three opportunities to improve the core of insurance:
1. Give people a reason to stay beyond price and convenience
There’s no customer exodus but some still leave and it’s costly for providers. Between buying insurance and filing a claim there are few, if any interactions with customers. This creates a transactional and fragile relation where we have seen even long-term customers leave without a second thought
2. Explore the many relevant opportunities to upsell between sales and claims
Insurance is too complex for people to understand. This is bad for providers. Why? Because people don’t buy policies they buy coverage and peace of mind. Our research shows that people generally buy less not more insurance than they ideally would want. Today, insurance providers are not present in the many situations between sales and claims where relevant up- and cross-selling opportunities occur.
3. Drive digital adoption by making insurance intuitive for people to engage with
People rarely adopt new technologies unless they provide a benefit. And people rarely embrace self-service solutions if its not fairly intuitive for them to interact with the service. Even some of the most digitally savvy people we meet look for a human when they need to engage with insurance. People will never speak insurance. Maybe the time has com for insurance to speak the language of people.
Safeguarding is the key to wake up sleeping customers in a helpful way
Instead of focusing on what providers want to sell – products and policies, we believe it is helpful to focus on what people buy – coverage and safeguarding.
Years of studying worrying, uncertainty, and safeguarding shows us that there are many specific moments, outside of sales and claims situations when insurance can be relevant, but rarely is. Based on hundreds of ethnographic encounters, we have mapped the countless moments when worries arise, and how people act in these situations. There is a clear pattern across everyday behaviors like picking up sprigs and branches in the driveway when the neighbors are on vacation, place old FM radios in windows to deter burglars, back up photos on multiple hard-drives, park their cars in the neighbors driveway when she is away, or wear activity-trackers to motivate healthy movement.
People take small actions in the moments when worries occur. The key to be a relevant and proactive insurance provider is to be present in the many moments when people’s uncertainties are in the foreground and stay away when people’s worries are in the background.
How insurers get safeguarding wrong
Our clients in the sector are aware of the need to go beyond the policy and demonstrate relevance beyond sales and claims. Solutions today include, but are not limited to, customer letters that acknowledge life-events, collections of good and well-meaning advice that is hidden in a corner of a webpage, apps and websites that digitize and speed up the claims-process without making it significantly easier to document or make it feel more “human,” and campaigns that bring attention to an issue without providing easy solutions.
These well-meaning attempts at going beyond the policy either only capture a tiny fraction of the commercial potential or even end up as a waste of resources.
What’s the alternative?
What people look for in these moments are simple solutions that push their worries into the background, here-and-now. In these moments, people are open to help, good advice and support.
Insurers that start playing a role in the reduction of people’s worries have an opportunity to situate themselves firmly in their customers’ minds as a helpful and valuable safeguarding.
How insurers can wake up customers in a helpful way
There are many examples outside the world of insurance for how to meet people with simple solutions that push their worries into the background, here-and-now. Like when a TelCo sends a text message to people when they land in a new EU country, reminding them that the costs are the same as back home. Or when a software company makes it easy to upgrade to the latest version with the click of a button. Insurance is a more complicated industry and the opportunity is bigger.
So here are five things that insurers should consider in their service development to make technology meaningful, to reduce worries, not increase them, and to gain a mandate to help in such situations.
1. Focus on micro-moments, not only large life-events
Large life-events can be easy to detect, but offers of support in such moments can easily feel intrusive when the current relationship to providers is cold. Micro- moments of worry are more frequent and accessible, and often a more low-risk involvement strategy from which to warm up the customer relationship.
2. Frame the solution as a coherent service, not only small tips and tricks
Without clear guiding principles behind interactions they come across as fragmented and random. You can create continuity and predictability between various interactions by framing this as a coherent service with a clear benefit or goal for the customer.
3. Work with the customer to get high-value data and build ownership, don’t just look at the data you have today
Let’s just take a concrete example: What are the five things that people care the most about in their home? Not what the most costly items are but the ones that people are most concerned about loosing. We have yet to meet an insurance provider that systematically captures and uses this information to build meaningful interactions.
4. Speak the customers’ language, not the employees’
Making insurance intuitive is not first and foremost about fewer clicks but about speaking a language that people understand. When technical language is required, push it to the background an be sure to always meet people with services and products that customers relate to. That will go a long way to becoming more relevant.
5. Get started and build a proof of impact. Don’t get stuck in a theoretical masterplan
Most executives suffer from a project and slide fatigue. The cure? Identify the first 3-5 moments and customers to target, identify how you can be helpful in these moments, test the new interventions with customers in real life, asses the impact and iterate. Skip the focus groups and paper based concept testing.
Waking up the sleeping customer CEO
Tom and his team discovered that the reason why their digital marketing campaign had failed was because they targeted people with the wrong timing, focused communication on the policy, and didn’t have anything relevant to offer. Tom and his team decided to rebuild the customer engagement model to create simple, predictable and relevant interventions that targeted the moments when people worried. It paid off.
Having observed the insurance industry the past years including having read hundreds of industry reports and attended several industry conferences, we have come to this conclusion: The first step in waking up the sleeping customers and improving the customer relation is really not about waking up the sleeping customer. It’s about waking up the sleeping CEO from a technology-centered science fiction dream and changing the conversation: Ignore the voices of disruption and be helpful to people.
[Banner image by Razvan Chisu via Unsplash]