To an average person, insurance practices have always been a mystery. There are many regulations, incomprehensible jargon and long periods of wait. It is a common phenomenon among insurance companies’ customers to perceive having a policy as a necessary evil due to the coldness and tardiness of the system. But how can it be considering the fact that insurance products are all about people? With the market becoming more and more difficult, the industry has started to realize the importance of the customer satisfaction. The notion went even further – the industry leaders finally noticed the link between the bottom line and the insurer-insured relationship.
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How Did the Customer Satisfaction Enter the Game?
For a very long time, insurance companies were getting away with not paying attention to customer satisfaction since they knew that people would have to get insurance anyway. Lack of visibility of practices and difficulty of comparing products and prices offered by different providers were adding to the immobility of the customers. Once a customer signed up for a policy with one company, he often stayed with that company for years, if not for life. And suddenly (or maybe not that suddenly after all), the technological revolution happened. With the internet, new online insurance companies started to show up offering lower prices. Thanks to the internet again, customers for the first time got a powerful tool into their hands allowing them to compare prices and offers without much hassle. Then, social media came along and made a word of mouth thus far limited to small circles of family and friends, global. The insurance industry got demystified and with that, it became obvious that customer satisfaction is a key to success.
Be or Not to Be? Who exists for Whom?
That being said, customers no longer are limited to one company they know. Now, they have a choice. Initially, many customers may be looking for lowering their premiums, and use the information to find a provider that meets this goal. Ultimately though, customers are looking to be satisfied. Everyone with a policy agrees to pay premiums in hopes that he will never have to file a claim. But when it comes to the unfortunate event and a claim gets submitted, the claimant wants to receive the claim payment immediately and the whole experience to be as quick and painless as possible. This is the deciding point for many customers whether to stay with the company or look for service somewhere else. With the high cost of obtaining a new customer and delayed return on existing one, none of the insurance companies can afford to lose a policy holder in the first year after signing him up. In order for him to want to stay, he needs to experience the greatest customer service that can be provided.
Happy Customers = Larger Profits
According to a 2007-2012 study done by Forrester Research, customer experience industry leaders achieved a 22.5% cumulative total return during that 5-year period. Industry laggards, on the other hand, recorded loses of 46.3%. It was the customer loyalty that allowed these excelling insurance companies to outperform their competitors. That loyalty translated into a reduced number of complains, better retention rates and lowered cost of customer maintenance. In addition, the increased level of satisfaction among existing customers led to lowering cost of acquiring new ones, spreading positive word of mouth and ultimately lowering prospects’ price sensitivity.
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