Good Policy: Personalization Drives Customer Acquisition and Retention for Insurers

COPYRIGHT ©.2014. ALL RIGHTS PROTECTED AND RESERVED.

Property, Casualty & Life Insurance

The Personalization Revolution:Policyholder Acquisition & Retention in a Digital WorldJune 10, 2014

2COPYRIGHT ©.2014. ALL RIGHTS PROTECTED AND RESERVED

Today’s Speakers

Elizabeth GlagowskiEditor-in-Chief

Customer Strategist Journal

Jonathan GraySVP of Marketing

Revana

Weston McDonaldHead of Financial Services

TeleTech


Event logistics

Please turn off your pop-up blocker You will not be able to participate in today’s survey

Download a PDF of today’s slides Click the green resource widget

Have a question for the presenters? Click the red Q&A widget

Helpful tools Click the gold question mark for help with technical issues Enlarge slides when needed Twitter: @CustStratEditor #customerstrategy


Compete on personalization

6 pillars of customer acquisition

5 pillars of customer retention

Q&A

Agenda


Compete on personalization


Our always on, digital world is transforming the insurance industry with a particular impact on customer acquisition and retention

Source: OVUM “2014 Trend to Watch: Insurance”; Ernst and Young, IBM Digital Insurance 2013, Ovum “Creating an Insurance Customer Experience Management Strategy”

Limited economic growth in developed countries

Consumers are ubiquitously connected

Strong competitive pricing

Individual- centered economy

Customer experience is basis of competition

Rise of online and digital channels empowering consumers

In an always-on, 24X7 multichannel world characterized by complex customer segmentation, delivering value has become more complicated

for insurers.


It’s a battlefield to acquire and retain customers, and customer experience is rapidly becoming a fundamental differentiator

Source: KPMG, World Insurance Report 2013, Accenture 2014, Forrester Research 2012, Ernst and Young Global Consumer Insurance Survey 2012, Insure.com 2013 Customer Satisfaction Report

• Trust in the financial services industry is

the lowest of any industry at 44%

• Only 30% report having positive customer experiences with their insurers

• 40% of consumers are likely to switch to another automobile or home insurance provider

• 35% are likely to take out a new contract with a new provider

• 25% of customers are likely to cancel an existing contract


With the right customer experience, insurers can increase the rate of acquisition and reduce churn of policyholders

70% of buying experiences are based on how the customer feels they are treated after they become a customer

Source: McKinsey; RightNow Customer Experience Impact Report

89% of consumers have stopped doing business with a

company after experiencing poor customer service.

A positive customer experience influences purchase decisions and minimizes customers switching to competitors


Personalization is the key to enhancing the customer experience, thereby driving both acquisition and retention

Source: Ernst and Young 2013, Gartner 2014: “Personalize the Customer Experience to Boost Satisfaction, Loyalty, Advocacy and Profit”, SAS

• Policyholders of all ages prefer personal interaction when purchasing from insurers

• A personalized customer experience can increase policyholder conversion by

up to 20%

• By 2018, companies that have fully vested in all types of online personalization will outsell those that have not

by more than 30%


6 pillars of customer acquisition


Acquisition is particularly challenging in the insurance industry because advertising encourages consumers to shop around

• 55% of current marketing spend is on new customer acquisition*

• Policyholder acquisition is triggered by an individual’s specific need, not seasons or economic trends*

• Insurance advertising has become a daily part of our lives because insurers don’t know exactly when individuals will need a policy

Source: McKinsey; Bain 2013

Insurers need to understand when the individual’s need arises and be there at the right time with the relevant offer to capture the

opportunity.


Potential new policyholders are using multiple channels to research and understand their insurance options

Linking policyholders’ interaction points to sales drives customer acquisition

Source: IBM Insurance Interaction Points 2013

Life Insurance P&C Insurance

Top U.S. interaction points for searching

Top U.S. interaction points for purchase

Personal contact

independent agent

Personal contact tied

agent

People I know personally

Insurer website

Aggregator

54%

45%

48%

47%

47%

48%

38%

47%

38%

38%

31%22%

31%33%

16%

24%

6%8%

N/A


Personal interaction and customer advocacy are more important than price when acquiring new customers

Low in customer advocacy

High in customer advocacy

High future purchase

consideration

Low future purchase consideration

Source: Accenture 2014, Forrester February 2012, Ernst and Young 2013, KBM Media Research July 2013, Forrester “Customer Advocacy 2013: How US Consumers Rate their Financial Service Firms”

Enrollment DriversWhat drives policyholders to

purchase?

58%

82%

41%

Personal Interaction

Price

Personalized Services

USAA and Amica have customer-centric strategies and put their customers first in everything they do, from claims handling to renewals and communications


To successfully acquire new policyholders, insurers must deliver an integrated and personalized experience across six key pillars

1. Personalized Search Experience

2. Attribute Based Routing

3. Custom Call Scripting

4. Technology Platform

5. Policyholder Outreach

6. Analytics Platform


Not having to repeat information already given

Unique landing pages

Device specific

Early customer segmentation


With most prospective new policyholders beginning their search online, ‘personalizing’ the initial contact is critical



With most prospective new policyholders beginning their search online, ‘personalizing’ the initial contact is critical

• Understands prospective policyholder location and garage share during search

• Offers discounts on policies relevant to policyholder’s search

• Customizes the online search results


Leveraging attribute based routing enables the potential policyholder to speak with the right person with the right skills to help convert them to a new policyholder


Intelligently connecting insurance teams that most closely match the customer profile for sales discussion

Skills-based call routing

Temporal 800 number is unique to specific policyholder’s online search history


Leveraging attribute based routing enables the potential policyholder to speak with the right person with the right skills to help convert them to a new policyholder


• Uses text analytics to assess policyholders’ social media comments and tweets

• Routes customer claims to the appropriate department for a prompt resolution


Custom call scripting can be utilized to align to specific customer inquires and search history for both inbound and outbound calls


Build custom scripts for inbound calls

Match agent’s call script to customer’s online search history

Develop content for targeted outbound calls


Custom call scripting can be utilized to align to specific customer inquires and search history for both inbound and outbound calls


• Organizes, stores, and analyzes call center data from agent surveys

• Identifies policyholder questions being answered incorrectly

• Updates answers immediately


4. TechnologyPlatform

An integrated technology platform manages the multiple channels policyholders use to search and purchase new policies

Integrated technology platform remembers who the policyholder is and their preferences

Connects the policyholder’s claim history to the call to manage the experience



4. TechnologyPlatform

An integrated technology platform manages the multiple channels policyholders use to search and purchase new policies


• Links customer’s mobile quotation app to a mobile voice assistant

• Integrates mobile app with technology platform

• Personalizes the search experience

• Addresses registered policyholder by name

• Stands ready to lend a hand


5. PolicyholderOutreach

Targeted, relevant, and proactive policyholder outreach delivers increasingly personalized interactions

Care Services team to proactively onboard policyholders

Care Services manages outbound communications to policyholders who have submitted claims and inquired about new policies or offers


5. PolicyholderOutreach

Targeted, relevant, and proactive policyholder outreach delivers increasingly personalized interactions

• Uses proactive chat invitations on website

• Decreases abandonment rates• Increases customer satisfaction• Adds significant revenue from specialty

insurance customers



When insurers have a deep understanding of their target policyholder segments, they can more effectively manage personal interactions to drive acquisition

Knows when and what to communicate

Predicts when a customer might churn

Optimizes offers based on search history

Identifies when shoppers are ready for outbound calls



When insurers have a deep understanding of their target policyholder segments, they can more effectively manage personal interactions to drive acquisition

• Conducts advanced direct marketing testing

• Uses analytics to test and define different audience segments

• Creates detailed profiles for each customer segment

Leading Insurance Company


Unlock the value of “personalization” to drive significant improvements in acquisition

Personal interaction

drives 82% of policyholder’s

purchasing decision

1 2

3 4

5 6



3. Customer Call Scripting

4. Technology Platform

5. Policyholder Outreach



Poll question

Which of the 6 pillars is the biggest opportunity for improvement at your company?

1. Personalized search experience2. Attribute-based routing3. Custom call scripting4. Technology platform5. Policyholder outreach6. Analytics platform


5 pillars of customer retention


Customers have lots of choice in insurers and are transient

The cost of acquiring new customers can be up to 10 times the cost of retaining existing ones

Even a small increase

in retention rates can add millions of

dollars to premium revenue

for insurersSource: SAS


Personalized services and proactive outreach are two key factors that influence retention

Source: Accenture 2014, Forrester February 2012, Ernst and Young 2013, KBM Media Research July 2013

Attrition DriversWhat drives policyholders to

switch?

87%

80%

42%

23%

Retention DriversWhat drives policyholders to renew?

42%

35%

44%

43%

62%

Confidence in Relationship

Better Offer

Trust

Relevancy

Proactive Outreach

Lower Price

Lack of Personalized Services

Lack of Fair Handling of Claims

Lack of Feeling Valued

95%Policy Bundling


Insurers that focus on policyholder engagement see better retention results

95% retention rate when policyholders

bundle their homeowner and auto policies with the

same insurer

Source: 1to1 Media and KBM 2013

Policyholders are more likely to consolidate

and purchase all of their existing insurance policies

when engagement is high

Policyholders are less likely to shop

around when engagement is high

Life Insurance

P&C Insurance

Consolidate and purchase all policies from insurer

4.04.9

5.7

Weak Moderate Strong Weak Moderate Strong

3.54.4

5.65.4 5.6

6.9Purchase additional insurance

products

5.8

4.9

3.2

Weak Moderate Strong

Shop around when it is time to renew your insurance policy


And customer advocacy is high when customers are engaged with their insurance providers

Source: Forrester “Customer Advocacy 2013: How US Consumers Rate their Financial Service Firms”

RecommendRecommend an insurer to a

friend or colleague

DefendDefend insurers when others make

unfavorable comments about it


3.83.6

5.3

7.07.1

5.0


4.44.8

6.6

8.28.4

6.6

Life Insurance

P&C Insurance


An integrated approach is necessary to retain existing policyholders and reduce churn

1. Know the Policyholder

2. Proactive Outreach

3. Handle Claims Fairly

4. Provide Relevant Offers

5. Value Policyholders

Five Pillars of Policyholder Retention


1. Know the Policyholder-

Personalization

With 80% of a policyholder’s decision to switch determined by lack of personalized services, insurers must know their policyholders

Moments of Truth Journey Map - Knowing key events that drive need for personalized touchpoints:

• First Notice of Loss• Price Increase• Claims/Renewal Notification• Product Inquiry and Offer up-sell/cross-sell

Know the customer persona – e.g., his or her sales and communication preferences

Keeping in touch with their life events and customer episodes


1. Know the Policyholder-

Personalization

With 80% of a policyholder’s decision to switch determined by lack of personalized services, Insurers must know their policyholders

• Conducted data asset inventory

• Created a set of “life stage” based target segments

• Created detailed profiles for each customer segment

• Customized segment messaging

• Optimized direct marketing program’s effectiveness

Leading Insuranc

e Company


2. ProactiveOutreach

Almost 62% of policyholders are more likely to renew when they receive proactive outreach

Predictive Analytics

Churn Model

Response likelihood (propensity and channel)

Offer Optimization (LTV)

Lean Process Design

Triggering communication in key processes

Send tailored messages

Post-interaction customer care surveys


2. ProactiveOutreach

Almost 62% of policyholders are more likely to renew when they receive proactive outreach

• Uses an automated system to improve customer interactions

• Sends outbound messages to customers who may be affected by adverse weather conditions in specific regions


Since 42% of policyholders switch when claims are handled unfairly, those Insurers who handle claims well are more likely to see retention increase

First Contact Resolution

Technology to power outcomes

Attribute routing

Associate Empowerment

Segment-based associate training

Providing Intelligent Web Self Help

3. HandlesClaims Fairly


Since 42% of policyholders switch when claims are handled unfairly, those Insurers who handle claims well are more likely to see retention increase

3. HandlesClaims Fairly

• Collects and analyzes customer data from social media, email, phone

• Assesses urgency and immediate damage

• Deploys first responders in times of crisis

• Resolves problems in a timely fashion


With 43% of a policyholder’s decision to renew based on relevant offers, insurers need to engage their policyholders with the right offer at the right time

Communicate to policyholders according to persona

Optimizes offers based on customer LTV and sensitivity

Technology-Driven, Personalized Treatment Plan

Intelligent routing/connections

Custom engagement scripts

Retargeting ads to reengage customers

Single data environment

4. ProvidesRelevant Offers


With 43% of a policyholder’s decision to renew based on relevant offers, insurers need to engage their policyholders with the right offer at the right time

4. ProvidesRelevant Offers

• Creates detailed profiles for each customer segment

• Customizes product offers and benefit statements messages accordingly

Leading Insuranc

e Company


When policyholders feel valued by their insurance providers, they are less likely to switch


Associates who are advisors and advocates

Acting in the customers’ best interest

Professional treatment and recognition

Loyalty programs

Proactive decisions to make it right

Intelligently connecting the customer to right resource the first time

Making contact and engagement easy


When policyholders feel valued by their insurance providers, they are less likely to switch


• Suspended premium charges when soldier customers were overseas

• Proactively sent out unsolicited refund checks to soldier- customers


1. Know the Policyholder

“Personalization”

2. Proactive Outreach

3. Handles Claims Fairly

4. Provides Relevant Offers

5. Values Policyholders

Delivering a personalized Policyholder Experience will drive significant improvements in retention and reduce churn

An integrated approach to personalization will significantly mitigate the risk of policyholders switching providers


Poll question

Which of the 5 key pillars is the biggest opportunity for improvement at your company?

1. Know the customer2. Proactive outreach3. Handles claims fairly4. Provides relevant offers5. Values policyholders


Tackling the “Personalization Revolution” demands a proven methodology to deliver value

Assess Design Deliver Optimize

►Design acquisition & retention processes

►Create differentiated treatment strategies by customer segment

►Create roadmap for execution

► Roll-out live testing

► Develop reports

► Complete recruiting and hiring

► Complete training

► Go live

► Daily management aligned with best practices

►Refine execution

►Test and measure strategies and processes

►Recalibrate teams and solution as required

► Identify improvement opportunities

►Determine lifetime value of various customer segments to determine acquisition and retention priorities

►Define desired customer experience

Workshop

►Gather information about what the client is selling

►Understand the audience, market dynamics, & competitive situation

►Understand the value proposition


Getting started: Acquisition & Retention workshop

TeleTech will present a 2-day workshop with organization stakeholders designed to understand the current environment with respect to the 6 acquisition pillars and 5 retention pillars. The discovery session will:

• Demonstrate the value of customer experience and the role of the acquisition and retention pillars to key organizational stakeholders

• Help TeleTech understand the opportunities for improvement across the 6 acquisition and 5 retention pillars

• Identify barriers to success, resources available and context with regards to strategic priorities

• Collaborate to identify potential next steps to impact the acquisition and retention pillars and – ultimately – build competitive advantage

Deliverables and Expected Outcomes:

TeleTech charges a $20,000 fee for this workshop

Acquisition• Current State Assessment & Initial Uplift

Forecast• Sales Strengths & Weaknesses Analysis• Operational Gap Analysis by Channel • Sales Optimization Prioritization Plan• Definition of potential next steps to move

the needle on the 6 acquisition pillars

Retention• Deeper understanding of imperative for

knowing the policyholder• Report Out on the current state of the

retention pillars across the enterprise and potential opportunities

• Definition of potential next steps to move the needle on the 5 retention pillars


Q&A Session

Elizabeth GlagowskiEditor-in-Chief

Customer Strategist Journal

Jonathan GraySVP of Marketing

Revana

Weston McDonaldHead of Financial Services

TeleTech

Good Policy: Personalization Drives Customer Acquisition and Retention for Insurers

Economy & Finance

Transcript of Good Policy: Personalization Drives Customer Acquisition and Retention for Insurers