Strategies for Achieving Customer Engagement

Steven M. CallahanPractice Director

www.renolan.com

The Robert E Nolan Company

The Nolan Company has been specializing in the insurance industry for over 38 years.

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We assist carriers and solution providers with strategy development, operations / service / profit improvement, and technology effectiveness.

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We Face a Convergence of Trends

Workforce

Sca

le

Service Operations

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With a New Service Paradigm

§“Customer Satisfaction Doesn’t Count”The emotional connection payoff

…Through extensive research, Gallup has developed a measure of customer engagement (CE11) that quantifies the strength and nature of a customer’s emotional connection to a company. Gallup’s 11-item metric assesses the critically important emotional bonds of Confidence, Integrity, Pride, and Passion that together reflect the true health of any company’s customer relationships. The payoff is a far stronger link to business results than any satisfaction measure can hope to provide. …Gallup has found that without a strong emotional bond, satisfaction is meaningless.

Gallup Management Journal, March 20034

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Making Engagement The Key

§ Expectations for high service being driven from outside the industry

§ The commodity nature of Insurance products

§ Increased competition and current economic challenges putting more pressure on margins and price§ Service is ‘the differentiator’ in our industry for all

manner of customers– End consumer / insured– Distribution channel / agent

And Companies Are Responding

Expanding Accessibility 100%Accelerating Service Delivery 96%Increasing Hours and Days of Service Availability 82%Creating Different Levels of Producer Service 82%

Consolidating Similar Functions Across Divisions 75%

Creating Different Levels of Customer Service 63%Aligning Operations with Customer Markets 63%Consolidation of Call Center Operations 57%

Aligning Operations with Distribution Channel 57%

Consolidating Physical Locations 50%

RespondentsArea of Focus

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Yet The Challenges Grow

§ People– Technology is removing all the easier work– Products are more complex– Substantial impact on front-line, especially call centers– Recruiting needs have changed– Virtual workforce requires new management approaches

§ Process– It is becoming an e-world– Electronic transmission saves mail time

» But processes must be continually streamlined to keep pace

§ Technology– Social Networking– Marketing and sales tools– Communicate with field and dispersed staff

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As Operations Grow More Complex

Mail FaxPhone

E-mail

Internet

Workflow/BPMC

OMPLEXITy

’60s ’70s ’90s ‘00s ‘10s

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And Diversity Drives Expectations

0

10

20

30

40

50

60

70

80

Milli

ons

GI Swing Boomer Gen X Gen Y

High TechLow Tech

Increasing Customers Demands• Immediacy / 24x7 access• Transparency• Personal service relationships• Language • Driven within and outside the industry

Including Expanding Cultural Markets

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Driving Enhanced Service Strategies

§ Still easier and more economical to keep a customer

§ Yet diversity means different service models by segment

§ But all want product simplicity, modularity, and customization

§ Yet not all customer segments offer the same economic value

§ And distribution is getting more complex and costly

RESULT: Greater sensitivity and variation in profitability

Strategic Implication:

§ Pricing models increase in sophistication and data awareness

§ Operations and Technology must reshape service delivery

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Defined By Each Segment’s Needs

FOCUSCreate an Advantage

FOCUSKeep the business

you have

AVOIDLose existing

business

No Opportunity

NECESSARYPrevent over-

servicing

AVOIDDrives customers

away

Or Table Stakes?Service Differentiator?

An Advantage

No Advantage

A Disadvantage

Define For Each Unique Customer SegmentComparing to Competitors

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Evolving the Service Delivery Model

One Size Fits All

§ Same service for all segments

§ Over invest in some, under invest in others

§ One model to manage

§ Differentiation created at company vs. segment levels

§ Easier to match capabilities

Evolving Model

§ Segmentation of needs and value

§ Service matched to segment needs

§ Appropriate service investment in each segment

§ More challenging model to manage but also …

§ Harder to replicate by the competition

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With Technology Enabling Evolution

From:

To:Phone

Paper

Email

Text

IVR

Internet

Service Delivery Process

Self-Service

ResolutionChat Video

Transfer Dialer

• Technology driven – beyond paper and phone• Main sequence process the same• Tailored service approaches• Challenging to manage

Process = Requestà Process à Resolution

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Common Issues and Challenges

§ Misalignment of service strategy and corporate strategy

§ Focus on technology solution and ignore process

§ Customer service positions viewed as entry level

§ Sales skills requirements are very different than traditional service requirements

§ Customer service training often early casualty of budget cuts

§ Static solutions prevent dynamic changes

§ Failure to revise key metrics to reflect dynamic service environment

“… a modest increase in customer experience will increase customer loyalty

and boost revenues by approximately $298 million for a $10 billion insurance

provider.“Forrester Research, February 17, 2010

“Nationwide Insurance found that a 1% increase

in customer retention increased annual

premiums by $1 million”Insurance Tech. - CRM in Global Insurance, Datamonitor, 2008.

“Reducing customer attrition by 5-10% can

increase annual profits by as much as 75%,

according to a study by the Wharton School.“

Eight Strategies for First Rate Customer Service, Cisco Innovators, January 2008

Why Does It Matter?

Tens of thousands of positive service touchpoints a day, and yet one bad interaction…

And suddenly your company is at the top of the tweets list telling thousands followed quickly by a Facebook “Unlike” Fan Page.

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