KYC enables customer service improvement
Dutch Insurance Outlook 2018
In the saturated Dutch insurance market, customer satisfaction is becoming increasingly important to retain client base. Drivers for customer satisfaction are price, service, and quality of interaction moments. In this article, we provide three main foundations for capitalising on the opportunities digital interaction offers, and a four-step approach for supporting and growing those foundations.
Traditionally, customer contact would involve mainly human interaction, be it through agents, call centres, or door-to-door sales. Nowadays, technical developments enable insurers to increasingly interact digitally with their customers and potential customers. Naturally, the degree of human versus digital interaction varies based on the complexity of the insurance product or event (e.g. complex claims). Personal customer contact can be staged, and focused on maximising the value for both the customer and the insurer, as well as delivering a differentiating branded experience as part of the customer journey. Important factors in customer contact are relevance, consistency, and empathy, which should be taken into account throughout the entire value chain.
Digital interaction and customer satisfaction
Customers use an increasing number of channels to interact with the insurer. Over a third of the interactions are digital and these, often still impersonal interactions are on the verge of taking over from voice interactions1. The way in which contact takes place differs depending on the level of commoditisation of the product. More commoditised products need less specialised thinking and reaction than complex products do. In the latter case, human interaction is usually required. Customers also prefer real human interaction in the case of complex products—for explanation and a feeling of safety. The same applies to claim notification. The First Notice Of Loss (FNOL) can be a burdensome event for clients if the insurer is incapable of addressing the client’s needs in the right way. Again, simple claims such as a death benefit or car damage can be handled fully digitally, while even increasing the client’s satisfaction, while complex claims (e.g. a bodily injury claim) still need human interaction, possibly supported by digital support.
Customer satisfaction is increasingly seen as the most important customer KPI to businesses. It is therefore vital to virtually walk the steps of the customer journey and see where digital interaction can add value. But to be able to identify weak spots and potentially valuable improvements, insurers must know their clients.
Knowing your clients provides insight into their needs, enables better services, provides potential for creating loyalty and helps to identify cross- and upsell opportunities and pursue these. KYC instruments may be perceived as good for margin improvement and growth but they go hand-in-hand with customer satisfaction (valued by, for example the Net Promotor Scores) and growing these two areas in harmony is key.
Adding value to customer satisfaction
Insurers are looking for ways to optimise the contact frequency with their clients using their portfolio management tools. Too many unnecessary contact moments might make clients numb to relevant information, while not paying enough attention to clients might make them feel unappreciated and drive them away. Creating a balance is difficult, but quick improvements can often readily be found. From the clients’ perspective, it is also important that not only the contact moments from insurer to client are well balanced, but that the possibilities for reaching the insurer are also smooth and optimised. Clients are increasingly demanding interaction through a variety of channels (e.g. chat, telephone (voice), app, social media), which brings extra challenges in investing in the right platforms.
Challenges in digital interaction also arise when connecting digital platforms to legacy systems. Dealing with customer perception is a related challenge. Customers do not consider other insurers’ websites or apps as a reference, but rather compare digital performance with other frequently used websites in other industries (e.g. retail or airplane companies).
Value-driven customer journeys
Not only the amount of customer contact or the technology used are relevant, but also the quality of the contact moment is key: creating the best possible experience for customers. Luckily, new technological developments can help to improve the experience and the services offered. Deloitte’s Behavioural and Emotional Analytics Tool (BEAT)3 can for example identify risks of fraud or emerging complaints in real-time during a call, allowing companies to intervene during the interaction, leading to better and more satisfied results. AI techniques can become better at mimicking human interaction in the future and making digital communication feel less digital and more ‘human’, while data analytics can convert data to actionable information (see also the section on data analytics).
Customer journey design is a methodology already embraced by most Dutch insurers. Less common is to conduct fact-based analyses on the customer journey interactions. Digital technology allows for data-driven customer journey design, which quantifies the actual customer journey in terms of satisfaction per contact point, end-to-end throughput time, and channel hopping.
From a consumer perspective this is very relevant. A simple illustration: imagine a client going through a divorce who would like to split the insured retirement policy. Suppose this would require three activities: i) report of the request; ii) adapting the policy and ii) communication of the new policy. Suppose that in 95% of all instances an activity is conducted without delay and therefore within the boundaries defined by the internal Service Level Agreements. It would still imply that 15% of customers can expect a delay (95% x 95% x 95%). The reality for insurance companies is often even more complex, leading to a higher probability of dissatisfied customers. Customers contact the insurers via multiple communication channels on a similar topic, further increasing the number of touchpoints in the journey. Insurers frequently require a ‘four eyes’ principle, adding an additional two steps to the process.
When data from multiple sources (e.g. site visits, social media, NPS, call contact, internal process data) is combined to analyse the actual customer journeys, insights are generated which provide focus to the insurance company.
So, on the one hand, the number of digital interactions is expected to grow significantly at the cost of human interaction. On the other hand, service experience is seen as a competitive differentiator by 85% of interviewed companies4. Insurers should avoid lagging behind the competition in the race for customer satisfaction. Moreover, the digital transition gives rise to a great range of potential areas of improvement.
A four-step approach
In order to improve customer experience, we advise a four-step approach with selected investments in both technology and personnel. First, reduce low-value tasks in the customer contact centre to free up time for high-value conversations. Second, build the capability to recognise high-value customers and their context. Third, promote high-value conversations between customer and customer service agent, offering a personalised customer experience. And fourth, monitor outsourced services closely to quickly identify interference necessities.
1. Reduce low-value tasks
In the past, reducing low-value tasks in the customer contact centre was a rather lengthy job, given the time it takes to extend, integrate, or replace the legacy systems common in most insurance companies. Luckily, modern technology has brought forward some lightweight solutions, two of which we highlight below.
The first solution is the use of Robotic Process Automation (RPA) to automate processes that extend across multiple applications. Instead of starting a complex IT integration project, RPA literally automates the interaction between the customer service agent and several IT applications. See also the section in this Outlook on Robotics Process Automation for more applications.
Another example we increasingly see is a virtual assistant that can automate customer interaction through intelligent chat. These next generation chatbots can provide intelligent responses to customer questions, carry out transactions at the request of the customer (e.g. simple policy changes) and switch to interaction with a human agent. Some processes still need a human agent to carry out a few tasks (e.g. approval), but sales triggers (e.g. high-value customers) can also be a reason to switch from a virtual assistant to a human agent. By 2018, Gartner predicts that 25% of customer service operations will integrate virtual customer assistant technology across all engagement channels5.
By using these solutions, manual labour and average handling times can be decreased, enabling the human agent to focus on interacting with high-value customers, which also has a positive effect on customer satisfaction.
2. Recognise high-value customers and their context
Insurers are looking to acquire and retain high-value customers, in order to improve or keep a good portfolio value. High value can be defined as long-term clients with a fair margin. To actively manage the customer portfolio, insurers need to be able to recognise those customers and take the right actions.
The insurer normally has data available on existing clients and potential customers. To find high-value opportunities in the existing client portfolio, data analytics (see also the section on data analytics) is combined with client value, market conditions and behavioural modelling (see section about dynamic pricing in this Outlook). For example, high value customers are also attractive to the competition, making it extra necessary to monitor them and their market conditions specifically. In addition, analysis may show that non-high value customers can become high-value if the insurer takes the right actions (e.g increasing premium, enabling a long-term relationship, or cross or deep-selling). Identifying potential high-value customers (not clients) can also be improved using the new technological solutions.
Recognising customers on (public) digital channels used to be a difficult challenge. However, with DMP technology (Digital Data Management Platform) we can now pinpoint a customer through a cookie on a company’s own website, or even elsewhere on the web, and match them with customers in a company’s own customer base.
Once we recognise the customer, we can track customer behaviour across channels and determine the customer’s context and their intention accordingly. The next step is to determine the right action to take, which can be enabled by either Next Best Action technology and/or abovementioned DMP technology. By 2018, Gartner predicts that 50% of agent interactions will be influenced by real-time analytics6. The challenge is to ensure all channels take the same action, rather than each channel making their own choices.
3. Promote relevant conversations
Relevance, consistency, and empathy are important factors in client and customer interaction. When the interaction is on a ‘push’” basis, the insurer seeks contact with the client. For the client to react, the information at hand should be relevant. Data analytics can help to tailor relevance to the individual client level and communicate accordingly (e.g. bring relevant preventative technological innovation information to specific homeowners).
Digital technology allows basic tasks to be automated, while the human agent becomes the primary point for service escalations and high-value sales. In order to deliver relevant conversations, the agent needs to be highly engaged with the insurance company and its customers. It brings insurers back to their basics: what value does it want to deliver to its customers? What is the purpose of the company? What story will drive a relevant conversation with each individual customer, and at what frequency?
As mentioned before, information and relevance can be tailored to each individual separately. Without any constraints, this could most probably lead to inconsistent information trails. Since consumers need awareness and familiarity to bond with brands, consistency is a second important factor in the conversations, as it increases both.
The third factor in interaction, empathy, is mainly found in human interaction. Especially on the more complex products and claims, this factor becomes increasingly important and helps focus the interaction to the relevance and not distract to less relevant, but more emotional areas.
Creating relevance requires—besides increased data analytics—insurers need to rethink their approach to people and culture: empower agents, democratise information, promote a collaborative working style, hire suitable talent, and migrate to a distributed organisational structure as opposed to a hierarchical organisational structure.
4. Monitor outsourced services
Finally, knowing your customer also means monitoring outsourced services closely. Having access to the information related to outsourced services related to valued clients is part of treating the customer fairly as the insurer remains responsible. This urges the insurer to monitor outsourced services to quickly identify when it is necessary to intervene to prevent fraud, mistakes, or losing the clients with the required potential, but above all, preventing loss of reputation.
Every insurer will state that the client is their most important stakeholder, but client behaviour is changing and competition is constantly adapting. Clients expect more digital interaction, but currently value it less. Insurers are advised to make digitalisation a pocket of growth. By being cleverer in the interaction, focusing on high-value segment opportunities, and improving the quality and relevance of the interaction moments, insurers can find profitable growth while simultaneously improving customer satisfaction.