Powerful interaction points - Saying goodbye to the channel

In January 2010, the IBM Institute for Business Value published
"Meeting the demands of the smarter consumer," a study focused on
the retail customer.1 "The rules of the retail marketplace are changing
dramatically," the authors report, with the key findings being the shift
from a seller's market to a buyer's market and consistently rising
consumer expectations.
Should these findings be of concern to the insurance industry? We
believe so. Like the general retail marketplace, the rules of the financial
services markets are also changing, as both banks and insurers have
found in the aftermath of the financial crisis of 2008. Connecting to
insurance customers is becoming more difficult. While thirty years ago,
agents, brokers and to a lesser degree conventional mail were the only
insurance communication channels used to search for and sell insurance,
today there are many different interaction points consumers
prefer and insurers can offer. These choices are about both whom to
interact with - the insurer directly, tied agents, call center agents, bank
advisors, brokers, even peer groups - and which medium to interact
through - face-to-face contact, telephone, written media and Internet,
either via a browser or smartphone.
How do insurers choose which of these varied options to offer their
customers? Which ones do consumers actually prefer? These are the
questions insurance leaders have been asking us since we published
"Trust, transparency and technology" three years ago - a study where
we first showed that insurance customer profile complexity is outpacing
traditional segmentation models.When thinking about how to connect with consumers, insurers - and
consultants - often talk about the "channel strategy," but this terminology
is indicative of the problem. A "channel" infers a one-way communication
from insurer to customer, and today's customers don't think
that way. Perhaps the strongest message from our survey is that
consumers don't want information to be channeled; they want access.
They want to interact with their providers. In this paper, we talk about
interaction points. Connecting to the insurer by phone is an interaction
point, as are emails to the broker, meetings with the tied agent and even
clickthroughs on the website of an aggregator that provides independent
insurance comparisons.
Mirroring findings from other industries, we also discovered that
insurance customers prefer interaction point choices and have become
truly "multimodal." Slightly more than 20 percent of consumers use
only a single point of interaction for searching, while another 20
percent of respondents say they use more than four different interaction
points to search for insurance. Our research shows there are five
predominant channels for information gathering. The remaining
interaction points are being used less frequently, but insurers should
consider using them since their total represent substantial potential
communicationWhat else did we learn by surveying these 21,740 consumers?
- Customers are becoming harder to satisfy and harder to maintain,
and generally, they still don't trust the insurance industry.
- Despite the commonly held view that the web is all that matters
now, consumers often prefer personal interaction. Insurance is still a
product that relies on personal trust - people want to buy from
people.Insurance has shifted from a seller's to a buyer's market. And while
modern consumers are willing to buy, it is not all about price, as is the
pervasive myth. Insurers also have to provide quality service and reach
customers with the right interaction mix. A one-size-fits-all approach is
unlikely to work.
Action for interaction
Insurance CEOs want to get closer to their customers - how can they
achieve this?
- Increase the number of available interaction points. Consumers
want to use multiple interaction points.
- Follow your customers. Insurers should engage these consumers
actively and collect the revealing data they offer.
- Use customer analytics. A more telling segmentation will allow
insurers to compare current interaction point offerings to the
preferred mix of current and targeted customers.
- Improve interaction quality. The interaction quality will strongly
determine whether customers will use the particular interaction
point again and, perhaps more importantly, whether they will
become advocates.
- Build a comprehensive business case. An insurer's stakeholders
will want to understand the bottom-line effect of adding interaction
points and the business implications of the overall mix.
The key to succeeding with all of the above is flexibility and the smart
use of analytics. The world has never been as complex and full of
constant and rapid change as today - and the evolving preferences of
tomorrow's consumer are part of this complexity. The starting point for
being a smarter insurer and delighting customers is the right mix of
interaction points.