The Power of CX in Insurance

During times of difficulty, consumers are looking for assistance where they can get it. It’s more important than ever for insurance companies and brokers to be customer obsessed, placing the individual at the heart of their offerings and business model. Adopting a long-term mindset that focuses on brand trust and building lasting relationships with customers will help create growth within – and even after – times of inflation, recession, or general economic hardship.

Customer experience (CX) is the perception customers have of a brand based on their interactions with the company or service, covering every touchpoint from browsing the website to filing a claim. In the insurance industry, customer experience is of utmost importance, as the market is highly competitive, and customers have numerous options to choose from. The emergence of InsurTech companies has disrupted the traditional insurance model, making it imperative for insurance companies to prioritize the customer experience. Customers are looking for easy and convenient solutions that meet their unique needs, and those that don't deliver risk losing customers to competitors who do. 

The Importance of Customer Experience

The importance of customer experience in the insurance industry cannot be overstated. As competition continues to increase and customer expectations evolve, providing a great customer experience is essential for insurance companies to differentiate themselves from competitors and maintain customer loyalty.  

According to the EY Insurance survey, “72% of Canadian life insurance consumers are concerned about their financial well-being.” Being the solution to this worry is the most important thing to express when approaching a new, or even an existing, customer during hardships. Customer loyalty and retention are among the most significant benefits of providing a great customer experience. When customers have positive interactions with an insurance company, they are more likely to remain loyal to that company and less likely to switch to a competitor. This is particularly important in an industry where the cost of acquiring new customers is high, and retaining existing customers is more cost-effective. The IIAA shared that “customer acquisition in insurance costs nine times more than customer retention”. Moreover, loyal customers are more likely to recommend the company to their friends and family, further expanding the company's customer base. And as consumers seek personalization, brokerages could see more attention over traditional insurance companies because their model allows for enhanced relationship building one-on-one with their clients. This is why understanding what your audience wants out of insurance is so important, as some will look for a close relationship and some will prefer very little to no contact with their insurance provider

An improved brand reputation is another outcome of a positive customer experience. When customers are satisfied with their experience, they are more likely to speak positively about the company to others, either through word-of-mouth or online reviews. This, in turn, can help attract new customers and increase market share. On the other hand, a negative customer experience can tarnish the brand's reputation, making it harder to attract and retain customers.

Customer experience also plays a crucial role in driving innovation within the insurance industry. By listening to customer feedback and understanding their needs, insurance companies can identify gaps in their product offerings and develop new products or services that cater to their customers' evolving needs. This not only helps improve customer satisfaction but also keeps insurance companies ahead of the curve in a rapidly changing industry.

Lastly, a focus on customer experience enables insurance companies to remain agile in the face of industry disruptions, such as the emergence of InsurTech companies. By prioritizing customer experience and continuously striving to meet customer needs, traditional insurance companies can stay competitive and adapt to the changing landscape.

The Changing Landscape of the Insurance Industry

While we speak on the importance of innovation, it has to be brought up how far behind many insurance companies are compared to newer emerging InsurTech companies. This competition has led to a focus on customer experience as a key differentiator. InsurTech companies leverage technology to provide more personalized and convenient solutions to customers, disrupting the traditional insurance model and forcing traditional companies to adopt new technologies and practices to keep up. According to Medium, “between 2011 and 2020 a total of $1.158 billion of disclosed funding had been raised by 67 InsurTech startups that are either headquartered or operational in the Canadian market.” And the total active InsurTech companies at the time was over 150. Customers are increasingly looking for personalized solutions that meet their unique needs and expect an easy and convenient experience and with emerging competition that offers something different, there is less desire to stay loyal to one brand. This shift in customer behavior and expectations has made customer experience a critical factor for insurance companies to compete effectively.

As the industry evolves with new digital tools, there are opportunities to create efficiencies and delight your customers. By using precise targeting and analytics, you’ll be able to understand more about who they are and what their unique needs are. However, delivering exceptional customer experience will also hinge on using that data to create real connections as well, not just through your digital tools. According to a recent survey, “91% of financial services CEOs believe they need to strengthen soft skills in their organizations alongside digital capabilities.” Creating this balance between your data and personalization will be the key to creating individualized and meaningful solutions for your customers.

The Role of Consumer Research and Precise Targeting in Improving Customer Experience

To provide a great customer experience, insurance companies need to understand their customers' needs and preferences. Consumer research can help companies gather insights about their target audience, including their pain points, behavior, and preferences. Precise targeting can help insurance companies reach the right audience with the right message at the right time. By using data analytics and segmentation, companies can identify and target specific customer groups, tailoring their marketing efforts to their needs and preferences.

Best Practices for Conducting Consumer Research and Precise Targeting

Use a variety of research methods: Companies can use various research methods to gather customer insights, including surveys, focus groups, and interviews. Using multiple methods can provide a more complete understanding of the target audience.

Collect and analyze customer data: Insurance companies can collect customer data from various sources, including website interactions, social media, and customer service interactions. Analyzing this data can provide insights into customer behavior and preferences, which can be used to develop targeted marketing campaigns.

Segment the target audience: Insurance companies can segment their target audience based on demographic, psychographic, or behavioral characteristics. Identifying distinct customer groups allows companies to tailor their marketing efforts to each group's unique needs and preferences. As consumer cost-cutting becomes a real concern for many, insurance entities need to make sure their offerings are reaching audiences that are more likely to find insurance indispensable. Creating audiences that are less price sensitive can be more profitable to target and create long-term relationships with during economic hardship.

Personalize marketing campaigns: Personalizing marketing campaigns based on customer data and segmentation can increase customer engagement and satisfaction. Companies can use targeted messaging and personalized offers to create a more customized experience for customers.

Continuously monitor and adjust marketing efforts: Companies should continuously monitor customer feedback and adjust their marketing efforts based on the insights gained. This responsiveness to changing customer needs and preferences helps companies continuously improve the customer experience.

By following these best practices, insurance companies can gather valuable customer insights and develop targeted marketing campaigns that provide a personalized customer experience. As the insurance industry continues to evolve, prioritizing consumer research and precise targeting in marketing efforts will be essential for companies seeking to enhance customer experience and gain a competitive advantage. By understanding their customers' needs and preferences and using precise targeting to deliver personalized solutions, companies can provide an exceptional customer experience, leading to increased customer loyalty and ultimately, increased revenue.