We talk to a lot of people in insurance about payments. When we meet, the usual suspects are always there — Finance and IT — but a new group has started emerging in more and more discussions – Customer Experience. Why are the Customer Experience (CX) folks joining the conversation?
Solving the Commoditization Problem
The commoditization of insurance products in the eyes of policyholders has stripped away many of the product differentiators insurance companies relied on in the past. When you combine that with the well-documented challenges of launching new product offerings (due to legacy core systems), you’re left with one way to differentiate: customer experience.
That said, what’s the intersection with payments? Why are the CX folks in the meetings about payments?
Simple. Payments are the most frequent interactions between insurance companies and their policyholders. It’s a moment-of-truth that happens as frequently as monthly. Not only is it part of the customer experience, for many policyholders, the insurance payment is their customer experience.
To our friends in CX, welcome to the payments conversation. You have an important role to play here. Not buying the CX hype? Try on some data:
The Importance of Customer Experience
- 80% of consumers are willing to pay more for a better customer experience (Capgemini, 2017).
- In the case of car insurance, consumers are willing to pay 7% more if the company provides an excellent customer experience (PwC, 2018).
- Insurance companies can expect $14.32 in annual incremental revenue per policyholder when customer experience score increases by a single point out of 100 (Forrester, 2017).
- In the US, 18% of consumers said they’d stop interacting with a brand after just one bad experience. 58% said they would stop interacting after several bad experiences (PwC, 2018).
What makes a good customer experience?
According to PwC (2018), the top five factors that drive customer experience are:
2. Knowledgeable service,
3. Easy payment,
4. Convenience, and
5. Friendly service.
The connection between CX and “easy payment” at number three is obvious, but it’s worth noting that efficiency and convenience are top-five factors that can be integrated into the payment process. When you make payments (1) easy, (2) efficient, and (3) convenient, you’re turning your most frequent interaction with customers from a one-way transaction into an engaging experience that taps into three of the top five factors for customer experience.
The benefits don’t stop there. These same five factors that make a good customer experience are also the top five for which customers are willing to pay more (PwC, 2018). This is especially important for preferred lines carriers who are desperately trying to maintain margins in a market with shrinking price elasticity. If you’re struggling to compete on product price, offer an experience worth paying more for.
Carriers of non-standard lines also benefit by providing an experience that makes it easier for policyholders to pay. In the words of one of our NSA customers, “You want to be the first bill they pay.” If payments are easy, efficient, and convenient, you are more likely to be among the first bills paid.
Furthermore, delivering an efficient, easy, and convenient payment experience creates a high frequency of positive interactions.
As you know, the average policyholder doesn’t submit a claim all that often. The individual or business may pay you a hundred times before ever actually making a claim.
For that reason, customer experience can’t just be about the claim moment-of-truth. Remember, even if your team crushes the claims experience, many of your policyholders will have switched providers before they ever make it to your stellar claims team. For these policyholders, making a payment is a massive portion of, if not their entire, experience with you.
Also, don’t forget what most claims involve… a payment. The experience of receiving a claim payment should be optimized, in the same way as the experience of making a premium payment.
Consider the top five factors that drive customer experience and evaluate how your organization measures up across every policyholder touch-point. What steps have you taken to improve the overall experience for your customers? Are you delivering an efficient, easy, and convenient payment experience?
If you’re interested in having a conversation about how One Inc turns payments into an easy, efficient, and convenient experience, contact us.