Digitization of the customer dialog in the insurance industry (Part 2)

In view of the challenges posed by increasing digitization, insurers (and not just them) have to ask themselves: Are selective digital changes enough to optimize the interface to the customer and meet their needs? Or are far-reaching changes necessary? The need for change is usually high. For these changes to be successfully implemented along the value chain or at the individual stages of the customer journey, a strategic plan and targeted organizational and operational measures are necessary, which must be implemented step by step. This results in a six-step model for the digitization of the customer dialog.

Step 1: Take inventory

Every company in the insurance industry, regardless of its business model, has experience with digital projects. Some have been positive, some negative. Which measures worked, which didn’t – and why? In the first stage of the digitization model, taking inventory, you gather all your experience with ongoing digital projects in customer communication to identify potential for improvement. A work list will be developed for this purpose, which may include the following points:

• Just who is the customer? Are you well enough informed about their respective life situation to address them specifically with products? How can digitization help your company get to know your customers better?
• For which stops of the customer journey has your company developed digital measures? How do you interact with the customer?
• Through which channel does the customer come into contact with your insurance, your products and services? What is the cause for contact? Which channel is successful, which isn’t?
• What are the customer’s needs and requests? How does the company react to them? Is the staff in the branch or service center trained and digitally equipped for this?
• Can digital processes win new customers or increase sales? Can sales use digital processes to address customers in a more targeted way? If not, what are the reasons?
• What is the customer’s perspective? In their opinion, how can processes be improved and simplified? Does the customer recommend the products and services via social media?
• Do the digital projects create a better service for your customers? Are there any additional benefits offered in addition to the products and services?
• How much does the company have to change digitally in order to actively sell products to the customer and gain their long-term loyalty?

Naturally, more can be added to this list. It’s important that projects already underway are analyzed according to their strengths, weaknesses, opportunities, and challenges. The goal should be to improve and complement the digital processes in such a way that they improve the customer experience at the respective contact points, and thereby secure and expand the customer base. Last but not least: Do these projects contribute to an overall digital strategy? If not, they need to be readjusted. What if your company doesn’t have an overarching digital strategy? Then it’s high time to establish one!

Step 2: Formulate a digital vision

Of course, the topic of digitization is on the agenda in most companies. But the term is often too narrow: Digitization isn’t just about IT and technology, it’s about transforming the entire company. Digitization renews the brand promise, changes customer behavior, destroys traditional business models. and defines new ones.

Digitization isn’t an EDP 2.0, but a business strategy to develop new business models and agile ways of working to meet the needs of customers in the digital world. Various factors are crucial for success: the corporate culture, the organizational structure, and the individual attitude of decision-makers and employees. Here, characteristics like flexibility, speed, readiness to experiment, and constructive handling of mistakes promise success. This is a new and unfamiliar working environment for many insurers. The vast majority of insurers come from a world where processes were stable and secure and established structures prevailed. This is a huge obstacle to the implementation of digital projects. This urgently requires a cultural change that combines the old and the new and creates incentives for experimentation.

The prerequisite for this change is a digital vision. It serves as a guiding principle for repositioning and planning the digitization of customer dialog. Four guiding questions should be taken into account:

1. What is the vision for the next five or ten years?
   Do you maybe want to set up a purely digital insurer separated from its parent company by independent, highly automated processes? Or start a smart insurance offensive that rethinks insurance and, for example, starts with prevention, so that a loss ideally doesn’t occur in the first place? Or do you want to use Big Data and analytics to communicate offers to your customers in a more targeted way? For the protection of existing business models and the development of new ones, a “strategic time window” will open where the right timing is important. Whoever comes too early as a pioneer has few chances. But the universe punishes those who come too late as stragglers.
2. What does the customer want?
   You’ll probably end up with some inconvenient answers, like product ideas that cannibalize existing products. It might be difficult to implement these answers in the company, as they jeopardize current positions, and the loss will initially be much more clearly visible than the potential profit. Nevertheless, you shouldn’t shy away from such projects, otherwise someone else will realize it. One tip: Turn your company’s preservationists into innovation allies by letting them take the customer view.
3. Is there an exchange between employees of different generations?
   Come to grips with the perspective of young people. They sometimes have completely different requirements for products and services. Establish digital workgroups in your company across age and hierarchical boundaries. Don’t leave it at wastebasket projects; trust your experimentation teams to do real work, with a realistic budget and organizational support.
4. Can you tolerate mistakes?
   The digital world is a terra incognita. You don’t know what will succeed. Even the most experienced tech investors don’t know. That means landing in a dead end can happen to the best of us, and provide important information for future projects. The challenge is to react quickly in the event of success or – through appropriate KPIs and consistent execution.

Digital vision is not a digital master plan, mind you. Rather, it’s a guiding idea to trim the insurance company down to agile development through digitization, and to position it for the future in such a way that it meets the needs of customers in the digital world. From here, appropriate changes and digital projects still to be defined can be derived. These projects should be small, manageable, and flexible to start. Of course, insurance companies can’t act as flexibly at all contact points of the customer journey as other industries. And this is not without reason: For example, legal data protection and the regulatory framework of the German Federal Financial Supervisory Authority (BaFin).

Learn more about the other steps in the digitization of the customer dialog in the next part of our series.

Author: Editorial team Future. Customer.
Image: © zozzzzo– AdobeStock