The American Customer Satisfaction Index (ACSI) is an independent benchmark of customer satisfaction grounded in annual customer surveys. In the most recent insurance industry report, satisfaction in Property and Casualty insurers is down 3 percent and life insurers down 4 percent. David VanAmburg ACSI’s managing director speculates that the underlying cause for the downturn is “the strong influence of customers’ perception of the value proposition.” In other words, customers see lower value for money. VanAmburg says that the study did not uncover any dramatic decrease in the level of service or quality of the products but credits the dips to rising premiums while household income remain largely stagnant, something many industries are finding.
If we accept that the drop in value proposition is true, what are the consequences? Customers will look for lower prices or seek higher value for money. Google’s entry into the market, albeit only for auto insurance in California, is timely. It offers a convenient way to seek out a better deal. But Google is not the big market disrupter, even though it might be a beneficiary. The disruption comes from lower perception of value and that encourages customers to shop around.
The ACSI report has some other interesting findings and one such nugget is that GEICO and Progressive suffered the largest individual carrier dips in satisfaction. Both insurers promote (largely) on price and attract cost conscious customers who will be disproportionately affected by rate hikes. The conclusion? Selling on price may well attract customers that are more susceptible to comparison shopping and more likely to be enticed by Google and its inevitable imitators.
Can insurers provide more value as an alternative? Well, insurers overall gain the highest index scores for claims handling but encouraging customers to have more accidents seems a flawed strategy (even though big data analysis might suggest this approach). But a claim is one of the few touch points customers have with insurers; and when they do have contact, they like it. This may be because someone hands them money, but is that me being too cynical?
One way to show value is through more frequent and relevant touch points and social media provides new options to talk to, and with, customers. Unfortunately as it stands today more insurers will exasperate customers than curry favor.
My own auto insurer is a good example. It is extremely active on social media and frequently posts pictures of happy children and cute pets on Facebook. I was frankly very thankful to Facebook for throttling brand posts and allowing me to focus back on the important news from family and friends. But they are back courtesy of a big ad budget which I suspect, unreasonably I might add, is the reason for my own recent rate hike.
Why is this happening, why are insurers blowing the opportunity and opening the door for Google to step through? Social media for most insurers has migrated to the marketing and advertising departments. These departments are responsible for brand awareness and consideration in other words, new customer acquisition. But what I want as a customer is value for my money. It comes down to the total end to end customer experience and the majority of customers do not have a good nor a bad experience with insurers; outside of the annual or bi-annual renewal they have no experience at all. How can insurers expect a customer to perceive any value?
There is no magic bullet, no instant fix and it does NOT start with the social media team. It must start with the question, “How can we improve the total customer experience?” To beat Google, other aggregators and any new disruptive options, insurers need to play the value card.
Social media is just one of many routes to the customer. It can, when used poorly, be just as annoying as a bad TV ad, overly aggressive local agents or excessive mail drops. As was stated earlier, some value can be created with more frequent and relevant customer touch points but the key word is relevant. So far social media has been a fairly ineffective tool but as Google provides a focal point for price conscious customers, it might just force the insurance industry to think hard about the total customer experience and how to provide clearer evidence of the value for money.
This blog entry has been reprinted with permission.
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