Unlocking the benefits of the Experience Economy to transform the perception of insurance from a commodity into something that adds tangible value to the customer’s life.
Have you ever been asked at a party what you do for a living? And then when you tell them, you get subjected to everyone’s sad stories about the horrors of their last insurance claim, or the frustration of interacting with their insurance company or broker?
Have you ever wondered why this is the case? After all, insurance is about offering a safety net to people in times of distress. Had an accident or a burst water pipe? The insurer will take care of it. Broke your leg skiing in a foreign country? The insurer will cover it. You would think that working in such an industry would be a fascinating and fulfilling job.
Unfortunately, the insurance industry has completely strayed from its fundamental purpose of serving its customers. Instead of prioritising customer satisfaction and providing a safety net, the industry has become excessively self-focused, leading to a misalignment of interests with customers. Despite all the talk of customer-centricity and exceptional experiences in marketing communications, what truly matters to insurers and brokers is the loss ratio.
To clarify, I’m not suggesting that profitability is inherently negative. In fact, quite the opposite. However, for profits to be sustainable, policyholders must feel that they are receiving valuable returns on their premiums. Sadly, this is where insurance professionals encounter a major issue. Just analyse the customer churn rates prevalent in the market. Consumers and businesses constantly seek out the best deal, treating insurance like any other utility, bank, or mobile operator. This indicates that the product has been reduced to a commodity, a necessity with little differentiation between competitors, aside from price.
Meeting customers’ emotional needs
To effectively cater to customers’ emotional needs, insurers and brokers must acknowledge that insurance products often relate to stressful and emotional life situations. Exhibiting empathy, ensuring clear communication and providing prompt responses to customer enquiries and claims are vital for delivering exceptional customer service. Furthermore, insurers and brokers should focus on educating customers about their policies and helping them grasp the significance of having adequate coverage. Empowering customers to make informed decisions and streamlining their user experience can also significantly contribute to addressing their emotional requirements.
Recognising and tending to customers’ emotional needs plays a pivotal role in delivering outstanding customer service. By comprehending customers’ emotions and concerns, we can foster positive experiences, build trust and loyalty, and enhance overall customer satisfaction. This may entail practices like active listening, empathy and effective problem-solving skills, coupled with a willingness to go the extra mile in meeting customer needs. By prioritising emotional intelligence in customer interactions, long-lasting relationships can be built, benefitting both customers and businesses.
Furthermore, emotional connections with insurance brands are sought after by both customers and employees. In a technology-driven era, it is easy to overlook the emotional aspect of business. However, customers, employees, and partners form the foundation of any organisation. Insurers and brokers should strive to create experiences that align with people’s emotional motivations and functional requirements. By understanding people’s emotions before and during interactions with an insurer, valuable insights can be gained, leading to improved services.
Prioritising experience
Joe Pine and Jim Gilmore propose a captivating model in their book The Experience Economy, outlining diverse economic offerings that insurers and brokers can put forward.
Insurance as a service: The foundational economic offering is insurance as a service, which currently represents the standard approach. It involves making conditional payments to cover unforeseen losses. Unfortunately, whether the insurance companies acknowledge it or not, customers perceive their offerings as commodities in this traditional model.
Immersive experience: The next phase involves transforming insurance into an immersive experience. Rather than solely focusing on financial compensation, there should also be an emphasis on addressing the emotional well-being of customers. Unfortunate events typically elicit concern or distress, so why not offer support to help individuals cope with the situation both financially and emotionally? Although this may seem like common sense, the current complex regulations and slow processes often exacerbate emotional distress.
Transformation: The third and ultimate level of economic offering is transformation. Rather than simply reacting to negative scenarios, why not strive to prevent problems before they occur? Suddenly, the value proposition becomes significantly different. Instead of waiting for unfortunate events to unfold, there is a proactive focus on assisting customers in safeguarding against potential issues.
The empty chair at company meetings
Amazon’s empty chair at all company meetings serves as a highly symbolic representation of the company’s unwavering commitment to its customers. The empty chair serves as a visual reminder, a powerful and tangible representation of the most important stakeholder in Amazon’s business: the customer. This unique practice, which was introduced by Amazon’s founder and former CEO, Jeff Bezos, is designed to keep the customer at the forefront of every decision and discussion within the company.
By having an empty chair present at all meetings, Amazon is signalling the customer’s presence and influence, even when they are not physically present in the room. It underscores the company’s dedication to customer-centricity, ensuring that every decision made considers the impact on the end user.
This practice aligns with Amazon’s core principles, one of which is a relentless focus on the customer. It reinforces the company’s mission to prioritise customer satisfaction, loyalty, and their long-term experience. The empty chair serves as a constant reminder to employees, leaders and executives that the customer’s needs, wants and expectations should be their compass in all business endeavours.
The symbolic empty chair also encourages open and inclusive conversations. It invites employees to step into the shoes of the customer and think critically about how their initiatives and ideas will benefit or impact the end user. It fosters a culture of empathy, reminding everyone that Amazon’s success is directly tied to delivering value to their customers.
Moreover, the empty chair practice reflects Amazon’s commitment to innovation and forward thinking. It signifies that Amazon’s customers are not just the ones currently using their products or services, but also those who have yet to become customers. It encourages employees to anticipate and address the unmet needs of future customers, constantly pushing the boundaries of what is possible.
Revolutionising profitability through the power of transformation
Each stage of engagement must offer an increased perception of value for the customer. What’s remarkable is that, when executed effectively, the additional perceived value for the customer can far outweigh the actual cost to the insurer. In the long run, insurance costs should even decrease because of healthier, safer and more secure customers, leading to a reduction in loss occurrences.
The encouraging news is that many insurance companies and brokerages have recognised this concept and are enthusiastically communicating it. However, the unfortunate reality is that this message hasn’t truly resonated within their business operations, creating a disconnect between theory and practice. It is now time for insurers and brokers to put into practice what they advocate.