Profiting from Great Insurance Customer Experiences

In an effort to retain customers, insurers in recent years have placed focus on creating positive customer experiences. However, despite this trend, the 2014 Capgemini and Efma World Insurance Report (WIR) reveals that only 32% of customers around the word cite having positive experiences with their insurers, leaving more than two thirds of global insurance customers at risk of changing carriers.

These statistics signal a need for insurers to make improving customer experience a top priority. The WIR confirms that consistently providing customers with positive experiences is one of the most effective ways to create loyal customers. Insurers that succeed in this area can turn ordinary customers into advocates who feel respected, valued and engaged, creating a competitive advantage that is hard to beat: a customer base that is extremely loyal, connected, and ultimately more profitable.

To improve customer experience in a meaningful way, insurers need to provide positive customer experiences across all channels with special attention paid to digital and mobile channels.

This graph shows how positive experiences (in blue) affect propensity to buy more products from a life insurer, more so than neutral or negative experiences (in yellow)

Positive Customer Experiences Present Opportunities to Drive Profitability

The WIR reveals a clear link between positive experiences and customer behaviors that lead to greater profitability. Customers with positive experiences are nearly twice as likely to refer friends to their insurer. Such referrals are an extremely important lever in increasing market share. Customers willing to share their positive impressions of a firm are often a primary source of new business. Their insights carry extra weight with potential new customers because they offer a level of authenticity that cannot be matched by claims from the firm itself.

In addition to making referrals, customers with positive experiences are also more likely to buy additional products from their insurer. Boosting product sales drives profitability in a variety of ways beyond simply increasing revenue per customer. For one, selling more products to existing customers is more cost effective than acquiring new customers. In addition, customers with more products are likely to stay with their firm longer. Increasing the rate of positive customer experience improves a firm's opportunity to excel along all of these dimensions.

And this graph shows how positive experiences (in blue) affect propensity to buy more products from a non-life insurer, more so than neutral or negative experiences (in yellow)

In contrast, customer experiences that are negative – or even neutral – can be damaging. In most regions, the report found that the percentage of customers who have expressed intent to leave their insurer is double for those with negative or neutral experiences when compared to those with positive experiences.

Embracing Digital Transformation Is Essential

One of the most effective ways to improve customer experience is through digital transformation. In today's world, customers are relying on digital channels more and more in the way they consume information and interact with companies – a trend that will only continue in the years ahead.

[6 Life Insurance Customer Experience Leaders]

The WIR finds that even though a customer's relationship with an insurer can be fairly static – limited to annual renewals or one-off claims – nearly 40% of insurance customers say they expect their use of digital channels to nearly double in the next five years. Thus, digital channels have the potential to not only change how customers interact with their insurers, but how often.

Jean Lassignardie, Capgemini

Despite this growing demand for digital, customers are not yet reporting a high rate of positive customer experience with their insurers' digital channels. To meet customer demand in this area and remain competitive in the years ahead, insurers need to fully embrace a top-to-bottom approach to digital transformation to provide seamless, positive experiences for their customers across multiple channels.

Mobile Packs a Punch

Across all regions, the WIR finds that positive experiences that occur through the mobile channel have a heightened impact on profitable customer behaviors, making it imperative for insurers to develop an effective mobile strategy. The WIR reveals that nearly 48% of insurance customers who had positive experiences using mobile channels are likely to refer a friend, more than for any other channel including the internet, phone, and through agents.

In addition to referring others, customers with positive experiences via mobile are also the most likely to buy additional products. The WIR finds that 40% of customers with positive experiences via mobile are likely to buy additional products.

Insurers thrive or falter based on their ability to attract new customers, retain existing ones, and cross-sell additional products. Given the clarity of our findings on the connection between positive experience and profitable customer behaviors, it is vital for insurers to provide positive customer experiences with a focus on digital and mobile in order to ensure business growth and competitiveness in the years ahead.

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About the author: Jean Lassignardie is chief sales and marketing officer for Capgemini Global Financial Services.