In the previous article ‘Growing customers’ lifetime value (CLV) through digital experiences', I focused on how, post-pandemic, as the insurance industry adapts to the global digitisation trend, customer lifetime value is increasingly being seen as an important metric to ascertain the total worth of a customer to a business over the whole period of their relationship.
In this second of a two part article we focus on why a platform approach to CLV is so important when it comes to driving customer communication via different communication mediums.
The need for a platform approach
There are lots of siloed models that the insurance industry has typically used in the past – you can run email and SMS separately, however this makes for a disjointed customer experience. A platform approach allows for data to stay in one platform, rather than creating APIs between desperate vendor systems. Having one single platform allows you to visualise all activity in one place. Seeing and understanding how a customer is reacting to a campaign or message is hugely valuable.
For example, the customer journey relating to an email for a renewal campaign will involve many steps which will need automating. The process of sending communications out via email and getting the messaging and target audience correct requires using testing models such as AB testing in ascertaining how successful a campaign might be. If you can add joined up dynamic intelligence from more than one channel, relating to mailing lists or messaging, it becomes much easier to get more accurate and dynamic measurements to predict whether campaigns are likely to be successful or unsuccessful, and therefore secure better results once the email campaign goes live. Furthermore, intelligence on how to adapt the messaging or target audience becomes easier to improve when planning ongoing campaign outreach.
What is important to insurers today? How are they making sense of data and how much time and money are insurers spending on evaluating it?
Sources(1) other than the CMO Survey also show that insurance agencies spend around 8% on marketing expenses, however the US Small Business Administration (SBA) recommends businesses generating under £3.5m ($5 million) in annual revenue should allocate 7-8% of its total budget to marketing. Further, the SBA says actual expenses will vary by industry and can surpass 20% in certain consumer-focused industries.
The digital revolution has completely changed the way people purchase insurance, and recent surveys confirm the fact that technology is playing a bigger and bigger role in fueling growth for insurance companies. Marketing automation and sales acceleration technology are two particular aspects of technology which are making the biggest contributions toward boosting revenue and increasing return on investment. In the insurance industry, marketing spend is very closely associated with revenue growth, no matter what the size may be of an insurance company.
According to Velocify(2) insurance companies using marketing automation sell 20% more policies per producer, and 10% more per household, and companies using lead management drove 43% more policies per producer, and 13% more policies per household.
What are your measurements based on and which lines of business are successful? How do you manage and provide insight across these lines of business, and what is the potential revenue they could provide in the future?
Understanding the customer journey
The customer experience is paramount(3) ,and getting data analytics to provide predictions on customer demand or upsell opportunities is an important piece to cover, and getting access to the backend data to pull out these actionable insights is invaluable.
Fundamental to the delivery of an optimal customer experience in insurance is a full and complete understanding of who the customer is and an appreciation of that customer’s journey. This means understanding the history and the dynamic wants and needs of the specific customer as well as their relationship to other parties and businesses. Hence, customer relationship management (CRM) data and tools must not only be complete and accurate, they must also be easy to use and available when needed. The resulting awareness and understanding of life events, business stages, and changes in the environment give the insurer the insight necessary to personalize and tailor each interaction – be it face-to-face, via voice, or electronic. Rich CRM capabilities equip the insurer to understand preferences, appreciate the context and situation, and tailor an effective response.
Complex customer journeys
The customer journey in insurance is often complex – involving complicated relationships and wants and needs that frequently change over time. The journey for each individual insured person or business is unique – often involving multifaceted relationships, multiple locations, challenging needs, and a variety of insurance product lines and different channels. Yet, it is this deeper understanding of the journey that improves the experience for the policyholder. There are two dimensions to the customer journey that are especially important: the lifecycle of an insurance contract and the insured person or organisation’s journey through different life or business stages.
The journey for the ownership of one product is represented by the customer’s movement through the insurance value chain and the related interactions. This is represented in Figure 1 which shows four different patterns of interactions as policyholders use different channels to communicate at different stages.
Equipped with a deeper appreciation of the customer journey, insurers can improve the experience for policyholders. Armed with understanding, the insurer or agent is able to recommend and provide appropriate coverage options, effectively handle questions and concerns, offer advice, and mitigate losses. A full understanding of the customer journey positions the insurer or agent to function as an informed advisor – able to be responsive to the customer’s need or desire for assistance as needed, able even to allay losses. The interaction might be face-to-face, or it might be electronic. In either case, it is informed and efficient. The policyholder receives excellent service and appreciates the value of the interaction.
One important reason for mapping and analysing journeys is to assist in making interactions more seamless. Many insurers have strategies for omni-channel operations, aimed at easing the pain and inefficiencies of switching between channels. The omni-channel objective is to go beyond multi-channel by enabling real-time transfers of conversations, information, and documents to support interactions. This is a monumental challenge for most companies, as it involves new types of integrations between systems, ready access to databases, and real-time analytics. The payoff is improved customer acquisition, satisfied customers, increased retention, and even reduced claims – all vital drivers of growth and profitability. This means that even though the effort to achieve omni-channel operations is difficult, it is well worth
it. One of the fundamental reasons to map customer journeys and exploit that knowledge is to help guide plans and investments as companies move toward omni-channel. That is a journey in itself for insurers, and it is not possible to upgrade everything at once. Understanding the journey patterns and the channel preferences of customers at different stages helps to prioritise investments and allocate resources appropriately.
For example, for homeowner’s claims, when a policyholder has damage or a theft related to their home, the resulting claims process typically has many interactions over a period of time. A good understanding of how different claims usually play out, along with knowledge about the preferences of individual customers, will aid in producing a more successful outcome. Anticipating the next step, being proactive, and enabling omni-channel operations during the claims process, all will help to speed up the process and improve customer satisfaction while managing claim payouts.
Fundamentally, meeting a complex journey with complex requirements can be difficult to achieve, as is providing one consistent reliable customer journey across multiple products whilst also meeting with regulatory requirements from the Financial Services Authority, security compliance in terms of data protection and complying with GDPR regulations.
With a strong need to comply with audits and demonstrate corporate governance whilst keeping the CRM up to date, how do insurers measure that they have this right?
To learn more about Capita’s market-leading expertise and capabilities in cart abandonment recovery, outbound marketing tools and e-commerce solutions, and the tangible benefits it can deliver for your business, contact Business Development Manager Nathan Robinson on 07730 001065 or at Nathan.Robinson2@capita.com, or contact your account manager today.
 How Much do Insurance Companies Spend on Marketing? (leadsurance.com)
 Latest Insurance Study Reveals Strong Link Between Marketing, Technology Investment, and Revenue Growth (prnewswire.com)
 The insurance customer journey in the Digital Age