Increase Customer Loyalty through ecosystems services and experiences for a Digital Car Insurance Company

Create loyalty with ecosystem services

Insurers are falling short on delivering value to customers and make them loyal. How can insurance companies fix the problem?

1. Define and analyze 4-5 different personas
2. Create ecosystem services and experiences for the personas

Especially experiences are more important as they are more memorable than just a gift

Value generates loyalty – Thoughts

Build an ecosystem of services to create value so the digital insurer is in frequent communication with its customers hence improve loyalty.

Elements of value that can lift products and services above com­modity status for consumers

• When insurers excel in more elements of value, their loyalty scores rise—and so does their revenue growth
• Creating loyalty with ecosystem services. The more meaningful interactions customers have with their insurers, the more loyal

• Loyalty scores soar when insurers deliver on the Elements of Value that matter most to their cus­tomers. Customers who award high ratings to five or more elements generate a score that is as much as 80 points higher than those customers who award high ratings to only one or two elements.
• Across insurance markets, functional elements such as “quality” and “saves time” matter most to customers.
• Insurers fail to deliver on many of the elements that matter to customers. Many fall short on higher-order elements, as well as on those that relate to the ease of interactions.
• Customer expectations of value are evolving, from basic needs (good products at fair prices) to transaction-related attributes (on demand, ease of use, simple and intuitive) to higher-level traits that emphasize engagement and affiliation.

• Rise of the insurgents

• Around the world, consumers—particularly young, digitally active ones—are open to the idea of doing business with new entrants, in­cluding those from outside the industry, such as tech companies, automakers and retailers.
• While many insurgents compete on price, few are delivering on elements such as ease of interactions. Lemonade, which provides insurance to home­owners and renters in the US, is the rare example of a challenger that has outperformed market averages in Elements of Value and loyalty ratings.
• A big threat to traditional insurers may come from noninsurance companies, such as retailers, that take command of the customer interface and provide a superior experience. In the UK, four of the top-scoring insurance providers, as measured by Net Promoter Score, are retailers, distributing “white-label” insurance underwritten by prominent incumbent carriers.

• Interaction matters
  • The more insurers engage with customers, the more opportunities they have to enhance loyalty. Customers who experienced five or more episodes in the last year awarded a Net Promoter Score that was as much as 90 points higher than those who had no interactions.
  • Customers who interact with their insurers and are delighted with the experience award the highest loyalty ratings. But when customers are

annoyed by an encounter, their displeasure shows up in negative scores.

• While insurance is by nature a low-touch business, customers have an average of 2.7 insurance-. related information needs per year, meaning companies have multiple opportunities to engage customers and build on those interactions. Customer needs range from requests for price quotes to coverage and payment details to help with an

incident and filing a claim.

• Insurers face certain “moments or truth,” episodes where the companies have the highest potential to delight—or annoy—their customers. The moments that have the greatest impact on loyalty include getting advice, assistance in case of an incident and submitting claims.

• Transition from human to digital

• Customers who use only digital channels give their carriers lower loyalty scores than do multi­channel customers.
• Customers remain heavy users of offline channels, including contact centers and in-person meetings. Throughout the world, many customers are hybrids, those who use both offline and online channels.
• Customers use offline channels because they con­sider them more personalized and easier to use— a signal to insurers that they need to improve their digital offerings.

• Ecosystems: reimagining value

• Across markets, more than 80% of customers are open to an ecosystem of services. In many countries, a majority of customers would prefer insurers to provide these services.
• Auto & home insurers can reposi­tion themselves at the center of an ecosystem of noncore services, including safe driving programs, home security systems, advice on healthy living and senior citizen support.
• Ecosystem services create more value for cus­tomers. The more services insurer’s offer, the higher ratings they receive on Elements of Value. Customers that use ecosystem services give their insurers the highest ratings.

• To Do
  • Create 4-5 personas (examples follow)
  • Map customer journey
  • Create loyalty scheme for each persona