The need for insurers to adopt new technologies based on their customers needs and wants, at each stage of the customer journey, and four key considerations to creating effective segment-driven tech strategy.
Automation. Bots, including chatbots. Apps. AI. Advanced analytics. As innovation advances, new “must have” technologies enter the insurance ecosystem, or do they?
New technologies can offer insurance carriers advantages -- in the right situations. Yet all too often discussion around use of the technologies such as automation in the form of chatbots or robo-advisors is binary, pushing for insurers to fully embrace innovation or inevitably be left behind. These positions miss the mark.
Depending on where an insurance carrier wants to position themselves in the marketplace, any technology strategy must embrace a combination of options and approaches targeted to the needs of specific customer segments, at a particular point in the customer journey.
One technology currently drawing significant attention is automation through bots (e.g., chat bots) and robo-advisors, which have already gained traction in the wealth management space. Automation offers tremendous opportunities to drive efficiency, and is making some carriers question whether human advisors and customer service reps will soon be used only in niche or escalated situations.
However, the way that a specific technology plays into a carrier's overall go-to-market strategy must be driven by specific, targeted customer needs and preferences. Often, customer segmentation focuses on socio-demographics. While aspects such as age, location and wealth are critical components in order to understand customer needs, insurers should also differentiate by the stage in the customer journey.
Different customers have varying desires and expectations of their insurer at each stage of the engagement process. Such expectations have cascading implications for the technologies needed to support and engender these interactions. For example, consider a high net worth customer looking for comprehensive coverage for multiple properties, vehicles, and high-value possessions. Such an individual is often willing to pay a premium for “white glove” service, with a dedicated phone number, concierge-style customer service, forms completed on her behalf, and more. While automation in form of technologies such as chat bots, apps and self-service websites might drive efficiency for the carrier, it would provide little benefit for --or even repel --a high net worth customer of this type -- leading to a mismatch between customer preference and carrier proposition.
Interestingly, given the value of their time, this type of customer may still want the process for mundane transactions (e.g., address change, payment or a small claim) to be quick and painless. This means that not only may bespoke underwriting through human customer service be a must for this customer type, but also that certain processes may have to be streamlined though technology, automation, analytics or otherwise to deliver a painless experience from the customer's perspective.
In contrast, customers who purchase insurance only because it is required will have different needs, with different implications for the strategy to attract, engage, communicate with and serve that segment. For example, customers who purchase car insurance just to meet state or provincial requirements or who obtain home owner's insurance just to meet requirements from a mortgage company will often prioritize price and ease of purchase, wanting to “tick the boxes” as fast and as cheaply as possible. Contrary to our first example, standardization and automation, as well as self-service, could be a good fit here, delivering both quick service for the customer and efficiency for the carrier (which in turn can lower the premium). However, at least sub-groups of this same customer segment may have a different preferences when it comes to claims, seeking greater support and reassurance of a human customer service representative over speed of transaction.
Effective segmentation thus cannot just encompass what customers need and how they prefer to engage with their carrier in general, but what their needs and preferences are at each stage of the journey, down to individual interactions from marketing, to distribution, to underwriting, to policy administration, to claims, to other areas. Therefore, the question carriers need to ask is not whether or not to use a specific technology approach, such as automated advice or an app-based claims process. Instead, carriers need to question which technologies and supporting strategies most effectively (and efficiently) deliver the desired experience matching the customer's needs and preferences as part of the carrier's proposition for that targeted market segment. The answer will differ by target segment and by interaction type.
When considering where and how technology may effectively support a go-to-market strategy, carriers are encouraged to consider four key areas:
A commitment to a customer-centric interaction approach (meaning developing interactions as a function of specific preferences of a given customer segment at a given point in the journey) is also a commitment to an ongoing journey of discovery and change. As technological innovation continues to accelerate, not only will customer needs and preferences evolve but so too will a carrier's opportunities to optimize