It’s about time the insurance industry gets personal with customers
Are you operating with—or without—a recommendation engine?
As head of your company’s information architecture, you were likely already moving forward with digital-first customer experience improvements—before the pandemic hit. And you were not alone; CIOs and CTOs in companies across industries were accelerating AI and digital investments to attract and keep customers.
The pandemic essentially boosted the inevitable and today, insurance players—like every other industry—are facing stiff competition to personalize their offerings in a way that creates sustainable growth. No matter what’s happening in the market.
In a recent Nvidia 2022 Trends Report on the state of AI in financial services, the survey found that the use of recommender systems (or engines) that prompted next-best actions saw a 230% YOY investment growth.
Are you missing a critical building block in your IS/IT tech stack?
As you know, insurance is not something that you buy, it is something that you sell. There is a psychological distance between the customer and the product, creating a huge need for education to increase insurance literacy for the customers.
As policyholders ourselves, we tend to buy and then shelf the insurance policy until we absolutely need to revisit it again. We (the insurance industry) can do a better job of educating customers.
Your current techstack for educating and advising a customer on the best insurance to meet their needs may look like this:
- Company website: Provides prospects and customers general information about your services and offerings.
- CRM: Current CRMs give your agents basic customer information, however the shift in customer intelligence is to provide vital and timely information to help guide the sales journey.
- Agents: This human-to-human connection helps your agents understand the context and needs of the customer, to match them up with the right policies. Today, the customer intel is sitting with the agent.
- Quote engine: Helps the team configure a specific policy to the needs of the customer, at a specific price.
These building blocks all have their place in the customer acquisition and care process. But as we’ve seen in the past two years of pandemic impact, the Great Resignation is a real trend that makes it harder for you to get and keep good agents. This is creating an agent shortage; a dynamic variable that makes creating KPI-focused business goals more difficult. Also, only 15% of consumers are satisfied with their insurers’ online experience and only 22% of insurers have launched digital services. And yet, a digital-first customer experience helps reduce customer frustration and improves the effectiveness of agents.
That said, what moves can you make starting now–to protect the growth of your company in the midst of ever-changing labor fluctuations and experiential digital transformations?
The case for a data-driven recommendation engine
A building block that insurance companies are fast recognizing as essential in protecting against fluctuating market dynamics—is a data-driven recommendation engine. This advantage fortifies your ability to create an exceptional customer experience, which increases customer loyalty and longevity now and into the future.
The advantages of a data-driven recommendation engine are many:
Starts with the customer, not the product
- Instead of pushing blindly products to the market, the engine will first detect or even anticipate a potentiel need for protection based on the risk assessed proactively.
- By understanding the risk category change (e.g. new zone for wildfire or floods, or health changes), insurers can proactively reach out to the customer to let them know the coverage changes or what new risk exposures they may have.
Speeds customer choice and selection
- The engine narrows the customer options, so they don’t browse endlessly which makes it difficult for them to commit.
- The engine accesses previously collected customer data within the application process to speed up quote turnaround times and coverage purchases.
- Customers tune-in to things they care about, so when they see a product that is relevant to them, they pay attention.
- A recommendation engine personalizes this process to their needs. The more value provided to them the less price point becomes the driver.
- Understanding customer needs and responding quickly with the right products can enhance operational efficiencies, gain customer loyalty, and increase the continuation of in-force business.
Gives your marketing and sales team a competitive edge
- During the sales process, a recommendation engine bridges the gap between product lines, creating a path to upsell and cross-sell by displaying the right content at the right time to drive action.
- An engine creates an opportunity to re-engage old customers so you can inform them about new product offerings that may not have been available in the past.
- Helps capture key metrics so you have a better understanding of customers’ buying behaviors–for the discovery of new sales strategies and correlations between products that may not have been obvious.
- Creates a competitive advantage for your company by consistently delivering experiences that meet and exceed customer expectations.
- Helps you turn your customers into a passive lead generation source; referrals are the most valuable and effective way to get new customers.
- Retaining customers is less expensive than going out and finding new ones.
Optimized digital journeys: a must have for strong customer loyalty
“Putting businesses on a growth trajectory requires a granular understanding of customers, creating moments that matter for them through personalization.” – Emerging consumer trends in a post COVID 19 world, McKinsey & Company, 2022
The insurance industry is catching on and catching up with other industries that have long since invested in embracing a personalized approach to customer-first digital journeys. Why it’s smart business is well documented. The results also tell the story.
For example, look at the increased revenue and engagement numbers these companies realized in adopting a recommendation engine:
The pandemic caused market and labor upheavals that no one saw coming. Get strategically ahead of any future disruptions by offering what your prospects and existing customers now demand (because they’ve been well-trained!): that as an insurer, you know them well enough to provide the best online support and advice during the key moments of their life. It’s that simple. And it’s within your reach.
Curious to learn more specifically about how a recommendation engine works? Read our recent Zelros blog, 5 Tips to Chose Your Next Best Offer (NBO) Solution“