Advanced Communications Solutions in Insurance: Managing Across the Customer Lifecycle

Transcription

1 Advanced Communications Solutions in Insurance: Managing Across the Customer Lifecycle An Author: Mark Breading, SMA Partner Published Date: January 2013 Page 1

2 Table of Contents About This White Paper This white paper is based on SMA s experience, research, and insights. DST Output has purchased the distribution rights to this research and white paper. This is not paidfor research. Insurer Communications: Perspective Matters 3 An Outside-In View of Insurance Communications Managing the Full Customer Lifecycle Managing the Multi-Channel Environment 5 Customer Communications as a Differentiator Customer Communications as a Profit Driver Output Challenges and Opportunities 7 From Content Creation to Output Management Tackling the Legacy Environment Investment Alternatives and Approaches Roadmap for Success 10 About Strategy Meets Action 10 Page 2

3 Insurer Communications: Perspective Matters An inside-out view of the world is important, but to fully understand all the nuances of the customer experience, it s important to make this evaluation from the customer (or agent) point of view taking a look from the outside-in to get the customer s perspective on these interactions. Tech savvy, electronically enabled, and constantly connected customers and distribution partners are demanding more from the interactions they have with insurers. Insurers are turning to comprehensive, sophisticated communication solutions to enhance the customer experience and boost the lifetime value of relationships. Industry leaders are shaping marketplace expectations with new approaches, finding new avenues for sourcing technology, and offering new solutions that address dynamic needs. These insurers are keenly aware that this industry has distinct characteristics, particularly because many insurance products are not optional, either because they are required by law or as a de-facto condition of doing business. Understanding the importance of effective, coordinated communications throughout the life of customer and partner relationships, they view communications as having extraordinary significance, especially at the time of a loss. Insurers are carefully evaluating the myriad of mailed documents, s, web site visits, faxes, verbal communications, and social media posts that they use to communicate with their customers and agents. Although insurance is considered a paperbased industry, one-third of insurers now state that over half of all customer communications are digital 1. In many cases, the assessment of communications challenges and opportunities are made from the insurer s point of view what the insurer is creating and delivering. This inside-out view of the world is important, but to fully understand all the nuances of the customer experience, it s important to make this evaluation from the customer (or agent) point of view taking a look from the outside-in to get the customer s perspective on these interactions. An Outside-In View of Insurance Communications Customers with one or more auto, homeowners, life, or other personal or individual insurance products form opinions about their insurer based on three critical factors: product, price, and service. The product features must address the protection or investment needs of the policyholder. The price must be competitive and reasonable based on the product promises. The service provided must effectively answer customer inquiries, handle customer changes, and manage claims with an understanding that the customer expects and deserves fast, accurate, and fair responses. A critical element that transcends all of these factors is the nature of the customer communications that occur. Paper or electronic communications manifest the product, price, and/or service. The customer s experience is significantly influenced by quotes, illustrations, policy documents, welcome kits, renewal letters, certificates of insurance, claims correspondence, and other communications that take place. The customer expects all of these documents and communications to be accurate, timely, informative, personalized, and easy to understand. At a minimum, the style, tone, visual appearance, and content of both paper and electronic communications need to be consistent, so that it is apparent that they all come from the one company that is working in unison on behalf of the policyholder. 1 CCM & ECM: Insurer Priorities and Plans. January Strategy Meets Action: Boston, MA. Page 3

4 Unfortunately, this is not often the norm in the insurance industry. The good news is that there are viable, flexible options that are helping insurers rethink and capitalize on the perspectives of customers and agents giving them the power and tools to profit from an outside-in view. The increased automation of many different parts of the business has demonstrated significant benefits for insurers, but it has often resulted in departmental silos with a focus on the efficiency of individual transactions. Managing the Full Customer Lifecycle Insurers that want to enhance the customer experience need to be able to manage the full customer lifecycle: that set of related transactions and communications that a customer receives over the course of the time that they do business with the insurer. The individual touch points that an insurer has with a customer or agent combine to create an overall impression of the insurer. For insurers, the ability to view all phases and characteristics of the unique relationship they have with each client the ability to view the total relationship through a single lens yields many opportunities for up-selling and cross-selling. Figure 1 illustrates the typical customer relationship journey. Figure 1. The Insurance Customer s Journey Source: Strategy Meets Action 2013 From a customer s point of view, it begins when a need for insurance is recognized. In some cases, the customer identifies the need. In others, the need is triggered by promotions. The recognition often leads to an assessment of offerings to determine which product best addresses the specific need. Communications occur: discussions with agents or producers; conversations with contact center representatives; interactions via web visits, , or mail/fax exchanges. A wide variety of communications take place Page 4

5 throughout the lifecycle related to policy purchase, maintenance, and potential claims. Along the way, the customer, agent, and insurer build relationships that are reinforced through additional personal communications such as birthday and holiday greetings, promotions for related products, and safety and educational information. These communications can be very effective in strengthening and expanding the relationship. When the experience is positive at every touch point, there is value for both the customer and the insurer that spurs added product sales and cements loyalty. Managing the Multi-Channel Environment Excellent customer communications drive both growth and profit. The ability to manage communications and relationships across the full customer lifecycle is one vital dimension of excellent customer service. Another key dimension is the ability to manage relationships and communications across all communication channels. Holistically managing across these two dimensions is essential to achieving a single view of the customer. The single view is a cornerstone capability that enables insurers to improve service to policyholders and sell more products to the existing client base. Approaching customer interactions in this unified manner allows insurers to move beyond the limitations of departmental silos and individual transactions. The multi-channel environment is common today. Most insurers deploy some combination of agent/broker, contact center, direct mail, and website touch points, along with alternative channels such as banks or affinity groups. Just as the experience needs to be consistent, high quality, and effective throughout the customer lifecycle, insurers need to achieve the same objectives across the multi-channel environment. Figure 2 shows the complexity of a multi-channel environment where communications occur through direct channels, agent channels, and social media. The agent and direct channels use a combination of paper and electronic delivery methods including regular mail, parcel delivery services, fax, PDFs via , and websites. Many of the electronic communication modes depicted are also available via mobile devices. Figure 2. Insurer Communication Channels with Customers Insurer AC Agent Channel Customer Source: Strategy Meets Action 2013 Page 5

6 Recent SMA research shows that 14% of insurers say they are either replacing or making major enhancements to their customer communication management solutions. Customer Communications as a Differentiator Customer communications across the lifecycle and across the channels are often important differentiators in a price sensitive market place. Insurance is fundamentally different from most other industries in that the product is not something the customer receives and uses immediately. In some cases, it is a product that is not purchased by choice. Insurance is a promise from the insurer to perform in the future if a covered event occurs. This heightens the value of the communications with the customer. Until a claim or payoff occurs, the only tangible aspect of the insurance product experienced by the customer is their interaction with agents and insurance company personnel and the documents and electronic communications they receive. To enhance the impact of routine communications, insurers are personalizing their outbound communications, and making their products feel more tangible, as well as more memorable and appealing. For most market segments, price will always remain an important differentiating factor. Nevertheless, leading insurers are now changing the value proposition by adding outstanding, exemplary customer communications to the mix. Recent SMA research shows that 14% of insurers say they are either replacing or making major enhancements to their customer communication management solutions. 2 This means that one in seven insurers has a major initiative underway to improve the technology platform for customer communications. Because insurers are still selling the majority of insurance through distribution partners, it is extremely important that insurers view insurer-originated communications as an extension of the intermediary. For business written by captive agents, communications need to support these agents to make them more successful. In many cases, independent agents are viewed as the primary customer. Communications for business placed by independent agents are highly important because these agents have choices about where to place their business. Robust support for agent marketing efforts can be a critical success factor in winning an agent s placement and loyalty. Customer Communications as a Profit Driver At one time, insurers viewed customer communications for both agents and policyholders only through the efficiency lens. The first consideration for both paper and electronic communications and documents was cost rather than effectiveness. Today the primary reasons that insurers invest in technology in this area are to increase revenue and profitability. Insurers now indicate that the top three business drivers for IT investment in customer communications are customer service (67%), better understanding of customer needs (60%), and improved retention (51%) all key components of profitability 3. Improving communications is especially important in an era where customers can easily compare prices via online sites. Insurers that communicate frequently and effectively with their customers are able to demonstrate that insurance is about more than just price. Effective communications are timely and accurate, and elicit a positive response from the customer ultimately increasing the value of the brand. The overall enhanced value equation results in new customers, higher retention rates, and more opportunities for cross-selling and up-selling all major contributors to improved profitability. 2 Insurance Ecosystem: Insurer Priorities and Plans. January Strategy Meets Action: Boston, MA. 3 CCM & ECM: Insurer Buying Behavior. January Strategy Meets Action: Boston, MA. Page 6

7 Output Challenges and Opportunities Enhancing customer and agent communications across the enterprise creates both challenges and opportunities. From a technology perspective, this means providing an integrated set of capabilities that encompass a full spectrum of proficiencies from content creation all the way to the delivery of the output. Enhancing customer and agent communications across the enterprise creates both challenges and opportunities. From a technology perspective, this means providing an integrated set of capabilities that range from content creation all the way to the delivery of the output. From Content Creation to Output Management Solutions to address the design, creation, production, and management of output must include the following components: Creative Support Capabilities that support the creative process and design of materials sent to policyholders and agents must include the management of graphic design and content development for promotional pieces. Efficient workflows, proper authorizations, color management, and compliance with company standards are also required all with the purpose of producing the most effective communication materials possible. Composition Support These capabilities provide document authoring abilities that leverage existing templates and designs, in addition to the support of page layout, multiple format output, and version control. Campaign Management End-to-end management of marketing campaigns, from campaign planning through execution and measurement are provided by campaign management capabilities. Many of these are able to exploit the wealth of data that most insurers have available, and offer the ability to mine that data to model and build additional relevant campaigns. Production Processing These integrated capabilities produce output documents and then manage the delivery through physical or digital channels. They handle print on demand and manage high-volume printing with intelligent inserting, production tracking, job management, postal optimization, and delivery tracking. Postal regulatory changes alone require focus, since the USPS requirements change often. Specialized print functions such as QR codes and MICR are often required, as well as e-delivery including SMS text messaging, secure , e-bill presentment, and delivery to mobile devices. Content Fulfillment As customer needs arise, including those triggered by agents, content fulfillment capabilities manage specialized content access, customization, and delivery, making sure the customer has the content when needed. Output Management and Analysis Delivery tracking for physical or digital output communications, including return mail, bounce processing for , and closed-loop processing, is handled by output management and analysis capabilities. Functions include production reporting, campaign analysis, and campaign results reporting with inclusion of success metrics. Tackling the Legacy Environment In order for insurers to more effectively manage their lifecycle and channel communications, communications solutions must be integrated with core insurance Page 7

8 systems for underwriting, policy administration, billing, and claims. These core systems are the official systems of record for the company. They have the primary responsibility for processing the central transactions of the business. In fact, a high percentage of the important output communications delivered to customers and agents are generated by these systems. Examples include underwriting correspondence, enrollment kits, policy declaration sets, bills, privacy notices, and claims letters, among others. More modern and advanced output management systems, with modern software architectures and stateof-the-art print/production hardware, enable insurers to integrate more easily with existing systems. A second, equally important integration requirement for new output-oriented solutions is integration with any software that is currently being used to support marketing efforts. There are a wide range of sophisticated options available to marketers for designing promotional pieces, such as traditional direct mail, inserts, adserts, onserts, targeted promotional or educational messages, and QR codes. Most insurers find themselves facing significant integration challenges. Many continue to operate their businesses using legacy systems, both in the core space as well as in the marketing area. Integrating new output systems with existing marketing, underwriting, policy, billing, and claim systems are typically multi-year, multi-million dollar initiatives. The replacement and upgrade projects can be long and arduous, requiring major custom coding efforts and specialized expertise. The greatest difficulty occurs in situations where legacy core systems are paired with legacy output management systems. The good news is that more modern and advanced output management systems using modern software architectures and state-of-the-art print/production hardware are now available, either as outsourced or on-premise solutions. They make the coupling of modern output solutions with existing systems feasible and possible without lengthy implementation timeframes and comprehensive development efforts. Investment Alternatives and Approaches In most typical insurer environments, delivering modern customer communications requires significant infrastructure investments to facilitate the design and creation of compelling content, to produce high quality printed communications, and to manage delivery across multiple channels. Capital investment in the technology infrastructure can be high, especially as insurers move to a higher quality, high-volume color printing and more sophisticated document assembly. For insurers, it is important to be able to appeal to customers with the same creativity and color they have come to expect from other industries. The technology infrastructure is only one element of the investment required to upgrade to modern capabilities. Insurers must also consider the needed investment in personnel and skills, the time required to implement solutions, and the organizational implications of various alternatives. More than a few insurers find themselves at a crossroads. They recognize the need for advanced customer communication capabilities, but have a difficult time deciding whether to make upgrades to their current infrastructure or to partner with a provider and then outsource part or all of the capabilities required. There are three approaches that insurers can take to enhance their customer communication capabilities: custom build, best-of-breed, or outsourcing. Custom Build Building a comprehensive solution from scratch, the custom build option is typically out of reach for all but the largest insurers. Even for the larger insurers, the custom build approach is declining in favor. According to SMA research, Page 8

9 only one-quarter of insurers continue to custom build output management solutions. 4 Staying current on all the latest printing, postal, and communications technologies is a massive undertaking. Keeping that infrastructure integrated with the rest of the enterprise systems is even more challenging. The best-of-breed and outsourcing approaches are the two options that most insurers should consider. The optimum approach will vary by insurer and depend on the current technology infrastructure, skill set, capability requirements, time horizon, and financial criteria. Best-of-Breed Many insurers opt for the best-of-breed approach, acquiring the best software and hardware solutions components in the market and then integrating them into a modern, SOA-based architecture. Outsourcing Increasingly, insurers are pursuing outsourcing strategies for output management. A recent SMA research study found that 16% of insurers now outsource all high volume output activities. 5 Insurers taking this approach hope to capitalize on the most advanced capabilities while addressing the challenges of capital investment, integration, and skills. Since the custom build approach is not viable for most insurers, the best-of-breed and outsourcing approaches are two options that most insurers should consider. The outsourcing approach provides several attractive advantages. Insurers that choose a strong partner will benefit from continuing technology advances without having to make ongoing capital investments. The specialized expertise that a partner is able to provide can reduce or even eliminate the need to hire and train employees focused on customer communications output. Many outsourcing providers offer redundancy, providing levels of disaster recovery capabilities that might be beyond the reach of an individual insurer. An outsourcing option mitigates issues associated with rapidly changing channels, freeing the insurer from the burden of large fixed assets. There is no one-size-fits-all approach to migration. The optimum approach will vary by insurer and depend on the current technology infrastructure, skill set, capability requirements, time horizon, and financial criteria. The overall migration plan should be in lock step with the business strategy and plans. As the migration progresses, the quality and breadth of customer communications will increase, delivering high quality customer communications that will differentiate the company and drive both growth and profit. 4 CCM & ECM: Insurer Buying Behavior. January Strategy Meets Action: Boston, MA. 5 The Paper to Digital Transformation in Insurance. April Strategy Meets Action: Boston, MA. Page 9

10 Roadmap for Success Regardless of which approach is selected, the key issue for most insurers is how best to orchestrate the technology migration that is required to modernize their customer communications capabilities in output creation, delivery, and management. This undertaking can seem daunting; just getting started can be difficult. Fortunately, a disciplined step-by-step approach enables insurers to build a roadmap for success. In addition, good governance and project management approaches are just as valuable here as in other parts of the technology world. Insurers should consider four steps in their roadmap for success: 1. Assess the communications demands and preferences of customers and agents and the related challenges and opportunities. 2. Evaluate the organizational approaches to customer communications and print/mail management. 3. Research the existing capabilities and potential partners in the marketplace to assist with advanced customer communications. 4. Develop a cross-enterprise plan for enhancing customer communications throughout the customer lifecycle. Progressing down this path will enable insurers to implement advanced communications solutions to capitalize on the demands from customers and distribution partners. While insurers are investing to be more responsive, the dividends are multiplying cementing long-term, loyal relationships and driving higher levels of profit. By managing across the customer lifecycle and by capitalizing on new approaches to deliver rich and meaningful communications, insurers are finding new ways to attract and appeal to their customers and deliver new levels of value. About Strategy Meets Action Exclusively servicing the insurance industry, SMA is a strategic advisory firm offering a unique blend of research, advisory, and consulting services to insurance companies and IT solution providers. By leveraging best practices from both management consulting and research advisory disciplines, SMA s advisory service offerings are actionable, business driven, and research based where strategy meets action. This white paper is based on SMA s experience, research, and insights. DST Output has purchased the distribution rights to this research and white paper. This is not paid-for research. Additional information on SMA can be found at Mark Breading, SMA Partner, can be reached at mbreading@strategymeetsaction.com or Follow Mark on Page 10