We all know that insurance agents are a very valuable resource for insurance carriers. In many cases, they support 40% to 60% (if not more) of existing sales and servicing activities. However, there are a lot of variables in play: the current market shift, reduced top lines, increased operating costs (e.g.: 2009 represented the highest commission costs for the top 10 US insurers; estimated at 38% of operating costs, this was an increase from 29% 20 years ago), and changes in customer interaction dynamics and buying patterns. Fresh innovation needs to be considered to drive new top-line growth and enhance an agent’s ability to communicate with end-consumers. The result will be targeted revenue increases and cost efficiencies, while at the same time a delivery of the best combination of channel, product, price and servicing for each customer.

Many agents feel that they are supported in a sub-optimal way by insurance carriers.  They feel challenged to drive consistent revenue increases by tapping into consumer needs, optimizing offers and recommendation selection, while at the same time developing trustful customer relationships. It is why many of them focus on the short term — and unsustainable — strategy of moving consumers from insurer to insurer to drive one-off commission incentives.

Insurers need to find ways to support their agent networks: help them multi-equip, advise and service each and every customer in an optimal way. They need to do this while minimizing agency costs, and driving customer satisfaction, loyalty and advocacy.

I believe there are seven criteria that can drive successful results for both insurers and their independent agents:

• Identify those customers that are delivering, or are likely to deliver, long-term mutual value from the outset.
  - As most agents do not have the ability to acquire the analytics to identify these individuals, insurers will have to attain the analytical technology and push the outcome to the agents
• Incentivize agents for their cooperation in using each individual customer’s channel preferences.
  - It’s very hard to convince agents, particularly the most experienced ones, that the new alternative channels must be used to tap into the “Net Generation.” The younger generation of agents understands that even Twitter and Facebook can be an amazing source of lead generation. So new incentive models, which reward agents for their contribution in driving new business models, must be considered.
• Address customer ownership issues as information.   These issues have become the most powerful vehicle of bargaining between insurers and agents.
  - Agents see themselves as the sole source for customer satisfaction, and the sole owner of the customer intelligence, so sharing this information with insurers is not a top priority. Insurance carriers have to show agents that sharing this information will drive higher growth for both parties. The best option is bi-lateral transparency.
• Help raise agent awareness around alternative channels, and facilitate agents’ ability to home in on the strengths of their propositions to develop more accurate customer communication strategies.
  - Helping agents understand the value of alternative channels (from web to chat to social media) will require some investment in training and knowledge transfer from insurers. Finding tools that can facilitate that knowledge transfer the “smart” way will become invaluable.
• Deliver quality promotions and offers that attract the most difficult customers.
  - Next-generation customer experience tools can help both insurers and network agents become credible, competent and customer centric service enabled players. For instance, if an agent wants to focus on providing high quality advice and expertise to each one of his customers, providing this agent with the right advisor-led technology will help him focus on his customers’ priorities, thus driving growth.
• Boost customer intelligence and drive multi-specialization to enhance agent and customer support.
  - Insurers must build brand legitimacy, especially now as trust and confidence in the market has diminished. This must be done across channels to validate insurer credibility at each customer touch-point. Despite the current focus on alternative channels, more than half of policyholders want to interact directly with an agent. The ability for an insurer to attract new agents will depend on his ability to drive “shelf-mind-space” and provide quality personalized offers in real-time.
• Seamlessly integrate disparate systems with advisory-led and conversational tools to deliver high quality servicing activities in real-time. This will enhance agents’ understanding of products and facilitate the up-sell of new product features.
  - Agents want more proximity and integration with their insurers and a greater sense of partnership. They want the ability to spend more time with customers to provide great sales support and really understand their customers’ needs. Seamless access to the right data and systems through portal-based applications is key. However, we should not over-estimate good, old-fashioned professional advice. Insurers need to enable agents to become the advisors they want to be!

Chordiant can assist with all of this. Stay tuned for my next few blog posts where I’ll dive deeper into each of these seven criteria.

— Sabine VanderLinden, Director, Worldwide Insurance

• Organizations need the ability to get insight into a customer’s changing behavior and need to be able to act on that insight in real-time.
• Organizations need the ability to understand the impact that every customer interaction and conversation has on a customer’s lifetime value (CLV), and need to be able to simulate how new and revised product offerings could impact this CLV prior to the product offers being implemented.
• Social computing has shown that customers want to interact in the same way a face-to-face conversation would take place – implying dynamic, appropriate and specific responses to their requests. Gone are the days that organizations can respond based on a static set of procedures or processes.
• Organizations need to be able to implement solutions that present actions reflecting what the customer thinks about the company, rather than predetermined processes based on what the company thinks about the customer.

I’ll follow up with future posts that provide step by step best practices that explain how best to implement the recommendations listed above.

— Ray Gerber, SVP and CTO

The report goes on to state that insurance carriers are investing resources to better respond to the needs of their customers to drive better satisfaction and relationships. Investment responses include web portals and websites directed at the customers and the agents that support them to improve policyholders’ overall servicing experience. A key requirement to turn those projects into successes includes accessibility to the right data and upgrading insurance carriers’ legacy infrastructure.

Chordiant’s customers are at the front of the insurance industry, taking advantage of truly integrated solutions able to drive targeted customer experience strategies. At the same time these solutions access the right data in real-time to facilitate dynamic portal and web interactions whilst preserving legacy environment. A great example was published by Robert Regis Hyle in “Who’s There? Customer Service Steps to Forefront” last December in TechDecisions for Insurance.

We understand that customer retention, development and risk management are all intertwined and have a ripple effect that customer experience management solutions should address.

But in particular, customer retention is top of mind for many of our insurance customers. The IVANS’ report points out and being able to reduce attrition even by 1% could mean millions in protected revenues. There are a few best practices that P&C insurers should consider immediately to ensure this critical area is working to a company’s advantage.

These include:

• The delivery of one consolidated and appropriate view of the customer, considering not only structured but also un-structured data to meet immediate retention needs and future regulatory and transparency requirements
• The collection of all relevant data during real-time portal and web- interactions regardless of the customers’ interaction channel of preference
• The usage of the latest customer segmentation techniques to capture existing and emerging behavioral, buying and servicing patterns during the key-touch points of the interaction lifecycle
• The personalization of offers tailored around life-stages and life-events supported by real-time feedback, guidance and alerts to drive superior customer experiences
• The focus on traditional interaction channels to promote offers as well as alternative channels to intensify the customer interest and loyalty
• The use of robust business enabled tools to support business domain owners whilst easily augmenting and extending the life of existing legacy systems

The results are clear:

• Optimum re-use of existing and new data in servicing conversations to optimize the scalability, flexibility and agility of existing capabilities.
• Cost-effective engagement in proactive retention discussions by leveraging not only predictive analytics to focus on those high value customers that might defect and develop mini-business cases on individual policyholders’ propensities, expectations, preferences and optimum resource allocation; but also advanced adaptive analytical techniques that help organizations act optimally in real-time.
• Appropriate timing of all recommendations by taking into account the policyholder’s responses, mood and behavior.
• Optimized selection of customer-centric “save” decision strategies by acting on models’ results to guide agents through proactive conversations designed to retain targeted customers.
• Rolling out of new programs faster regardless of the channels used by simulating and adjusting planned strategies and determining the impact on policyholders, agents and each carrier via business-friendly tools that reduce reliance on IT.

— Sabine VanderLinden, Director, Worldwide Insurance Solutions

In a recently updated report by Forrester entitled “The Marketing And Customer Analytics Software Landscape”, Suresh Vittal discusses how simple analytics doesn’t work for customer intelligence any longer.  I found the two paragraphs below (emphasis added) very intriguing:

Today, predictive analytics go beyond response prediction to serve all kinds of marketing goals like Cross-sell/Up-sell, retention, and loyalty management. But firms are only scratching the surface when it comes to applying analytics to drive customer decisions.  As the head of Customer Intelligence for a large retail bank described, “We want prediction to inform more than just marketing.  We want to influence our go-to-market strategies, collections management, risk mitigation, and fraud detection.”

Insights are rarely available at the point of interaction.  For most organizations, analytics remains the domain of the power users and data analysts.  As the head of CRM for a European telecom explained, “Our intelligence team generates great insights. But we are constantly struggling to integrate these insights into our customer and marketing strategy.” This is a common refrain – marketing teams often lack the skills or the technologies to integrate the essential insights to guide customer interactions.

If you take a look at Chordiant’s solutions, you’ll see that this is exactly what we do. Chordiant coined the phrase “Next-Best-Action™” to recognize our solutions are more than just offers and we do it in real-time.  We operationalize analytics at the point of interaction just like Tracy Porter did!

— Scott Andrick, Director, Product Marketing – Financial Services

Companies can no longer be content with minimal outbound sales discussion improvements or slight customer retention improvements. Today’s economic and environmental factors are so dire – brand hopping, erosion of customer trust, economic pressures on companies to do more with less and meet shorter product windows — that the smart companies are setting longer term goals that focus on holding more intelligent conversations that extend the value of the customer to company relationship – think marriage, not dating…

— Ray Gerber, SVP and CTO

Many companies think they have the most up to date customer intelligence and business analytics that provide the ability to react quickly to changing customer needs and opinions and changing market environments. But in reality, they lack not only a true real time component but also the ability to tie customer dialogues to departments outside of the call center.

In a recent article by Chordiant’s Rob Walker, this concept of having faster reactions to customer needs – literally in real time during call center or other multichannel conversations – can allow a company to start simulating strategies before they go into production or consider modifications of strategies that already are in production.  Companies can capture data from their customers, and then run hypothetical strategies against real data to consider the effects on aspects of customer relationship, retention, company sales abilities and the like immediately.  Customers can also see hypothetical results of strategic changes to, say,  the number of call center agents by 10 percent, making a proposition more often (cannibalizing others), changing an upgrade policy, doubling the retention budget or increasing the price of data services…

— Ray Gerber, SVP and CTO

I decided to bring you some reasons straight from banks that have all looked at traditional CRM offerings and realized there were none comprehensive enough to solve the case of the disappearing customer. Surprisingly, even though we’ve been talking about this for several years, I still hear bankers say (as recently as this week) “we don’t really have a single view of our customer or a true understanding of their value to our institution”.  That notion is set against rising consumer sentiment against banks for a litany of reasons like:

•  Declining trust due to the financial collapse
•  Loss of the actual institution due to M&A
•  Onerous fees/pricing
•  Exorbitant bonuses
•  Cold, impersonal, numeric decisions

Bowing to populist pressure, Washington is attempting to regulate some of these points, like Credit Card rates.  In addition, the Huffington Post launched a mini-revolution on New Years by urging fed up consumers to leave the Wall Street banks for the safety and relationships of their local community bank.

And that seems to highlight the issue of “big banks” and their “traditional CRM systems”.  Customers don’t want the M; they don’t want to be “managed”.  Customers don’t want to be sold the product that will give the branch manager a trip to Miami.  They want the R; the “relationship”.  Customers want someone to partner with who will stand on their side and truly look out for their interests.

– Scott Andrick, Director, Product Marketing – Financial Services

• The rise of pro-active intelligence (with customers on-line)
  • Organizations need to be become more pro-active in maximizing the opportunity to build customer relationships while they are on-line (in person or via self-service). To do this they’ll need insight into customer behavior and the ability to predict the next-best-action(s) that will optimize the customer relationship. It is pro-active intelligence that helps determine the optimal next-best-action(s). A simple example is an address change customer interaction. Some of the actions that can be driven via intelligence are things like:
    • Does someone else have the same address? If so, it could possibly be a fraud case and the next-best-action can be a set of tasks to determine if fraud is real.
    • Did the customer move to a state with different rules? For example, some states have different credit card APR maximums. Imagine a customer’s joy when he finds out in real-time that his APR will drop from 28% to 19%!
• Companies will focus on their ability to make customer-impacting changes on the fly
  • The quick changes in the economy proved that companies need the ability to respond to changes much quicker than they did in the past, i.e. change a risk profile in real-time.
• A move to 24/7 real-time service expectations
  • The customer need for 24/7 service will continue to increase as internet-based customer service volumes increase. Many service providers have been working hard to mature their online experience (most notably insurance) and customers now have greater around-the-clock expectations from their vendors.
• A new multi-channel dialogue
  • The maturity of online service will create a large volume of agent-based service requests to help customers that are still new to self-service. These agents will have to mature these customers using multi-channel dialogue capabilities.  For example, a customer on a self-service site while an agent co-browses and educates the customer in real-time.
• Product-based marketing gives way to customer-based marketing
  • Product-based marketing (traditionally known as campaign management) has proven to be less and less effective. Enter “mass-marketing” that is based on the same concepts as real-time, one-on-one customer marketing. With customer-based marketing, offers to customers are established by the same next-best-action decisions as if the customer was in physical contact with the organization, but the offer/s are delivered via indirect contact methods, i.e. unsolicited outbound e-mail.

— Ray Gerber, SVP and CTO

In this economic climate, customer churn remains the most critical customer concern for many of our telco customers, and in order to help them deliver an order-of-magnitude better customer experience, Chordiant helps our telco provider customers identify and keep their best, long-term customers at the right cost. We do this in a few unique ways: giving a unified, up-to-date view of customers with instant analysis to better understand current behavior, building more effective customer retention strategies that are optimized for every customer’s personal situation, and delivering a superior customer experience by continually guiding interactions while the conversation with the customer is occurring. Unlike any other technology offerings out on the market today, we are able to deliver actions, recommendations and negotiations based upon customer responses, mood and instant analysis of behavior in real time, so  end customers don’t get hit with pre-scripted, best-guess conversations based on outdated data.  Working with Chordiant, O2, a leading provider in the UK supporting 17M subscribers, found a three percent reduction in churn, an 85% conversion rate on inbound offers, and 15% uplift in ARPU, all with Chordiant.  This short O2 video gives you an idea of the effects a positive customer experience can have on the profitability of your business.

– Marchai Bruchey, SVP and CMO