Market Conditions Drive Change in Consumer Expectations

Economic growth in the U.S. continues to expand, but at a rate that is lower than pre-recession.[i] Consumers and businesses continue to focus on reducing expenses and stretching their dollars further. Consumers now spend more time than ever before researching their options before they make any type of purchase. What's interesting however is that while consumers have become much more discerning around price – price is not the only factor in their purchase decision. More and more customers are willing to pay more for a better customer experience.

A study conducted by Oracle in 2012 found that customer experience is key component of revenue growth in an increasingly globalized economy where products and services are increasingly commoditized.[ii] Their study, "Why Customer Satisfaction is No Longer Good Enough," reveals that 81percent of consumers surveyed are willing to pay more for superior customer experience.[iii] And nearly half (44 percent) indicated they would be willing to pay a premium of more than 5 percent.[iv]

Another recent study released by Accenture, called "Customer Driven Innovation Insurance Customer Study" found that 54 percent of consumers aged 18-24 and 52 percent of those aged 25 to 34 responded they would probably or certainly be willing to pay more for auto insurance with personalized service.[v] In fact, the survey respondents under the age of 35 indicated price mattered less to them as long as they received more value.[vi]

Consolidation in Personal Auto Market

Meeting changing consumer expectations around product offerings and service is just one more challenge facing the auto insurance industry in an environment of intense market competition. Within the personal auto insurance market, market share of the top 15 writers has grown from 54 percent in 1970 to 76 percent by 2012.[vii] Billions of dollars are spent each year by insurers on advertising in an attempt to gain more share from an otherwise very slowly growing marketplace.

A recent article in The Auto Insurance Report discussed the increasingly competitive nature of the auto insurance industry in detail, and predicted that given the rate at which technology is making it more visible for customers to price insurance and understand whether a carrier can provide the type of service they are looking for, carriers that have mediocre results will ultimately disappear.[viii]

The ability to segment customers, provide innovative insurance products, and optimize pricing will become even more important as broader demographic and vehicle technology trends develop further.[ix]

Collision Repair Marketplace Evolves

Within the collision repair industry there has also been a great deal of momentum by the large, multi-region, multi-store operators ("MSOs") to expand their footprint and market share.

In his 2014 update to "A Profile of the Evolving Collision Repair Marketplace", Vince Romansreports that the combined revenue from the three distinct segments of multi-location companies and multiple location networks accounted for 23.6 percent of the annual collision repair revenue for 2013.[x] So while this was still less than one-fourth of the overall revenue in 2013, the pace of acquisition in 2014 certainly will continue to drive the overall share of multi-store operators (MSOs) in the future.

This chart below shows the growth in the national and regional MSOs share of the nearly 5 million DRP appraisals for which CCC collected data each year between CY 2000 and 2013. In CY 2000, combined national and regional MSOs accounted for ten percent of overall DRP appraisal count uploaded, and grew to over 30 percent thirteen years later.

What's certainly clear is that within both the auto insurance and collision repair industries, companies are faced with both a pace and nature of change that will continue to pose significant challenges in the future. Driving a lot of the momentum of change in these industries and many others is the rapid change within technology.

Technology today has not only made it easier for the MSOs to get all of their locations on the same platform, but has brought convenience and a new range of capabilities to consumers whose expectations have also subsequently evolved.

Technology Enables Consumer Behavior

Technology has become a key enabler of changing consumer behavior. Mobility and the cloud have created ultimate anytime, anywhere experience for consumers. According to data reported by Nielsen, 63 percent of smartphone owners keep their phones with them for all but an hour of their working day – and all agree that the smartphone has become a critical tool for connecting with friends, family and colleagues.[xi]

Mobile devices have dramatically changed the overall time that consumers spend on digital platforms. Data from comScore Media illustrates the 83 percent growth over just three years in the number of minutes spent in the U.S. on digital platforms.[xii] What's important to note is that the growth has been almost all incremental to desktop usage, with usage of smartphones and tablets almost doubling the amount of time Americans spend online.[xiii]

In fact, research conducted by the Vivaldi Partners Group shows that 48% of the U.S. population today is 'always connected,' using some sort of device that collects and communicates digital data 24/7, a number that has nearly doubled in just 3-4 years.[xiv] More and more people are not only going on line multiple times per day, but are using multiple devices, with many owning and using at least three different connected devices. And while many occupations today require connectivity to the internet and cloud, consumers are also connecting more and more often while at home, and even from their automobiles.

And while smartphones and tablets have accounted for much of the time spent connected, consumers increasingly look to other products and services to extend the convenience and access to information available to them in every aspect of their lives. Take for example the navigation systems within a vehicle. According to Edmunds.com's 2013 Car Shopping Trends Report, navigation systems were the third most enticing option or upgrade among all option categories.[xv] This is a device that is always on, tracking where the vehicle currently is and providing directions, information on best routes, traffic jams to avoid, etc.

Becoming a Digital Leader

A recent article in strategy+business titled "Reimagine Your Enterprise" talked about the challenges many companies have as they try to reach the goal of creating significant value for their customers in a digitally powered business environment.[xvi] They point to the lack of real growth seen when companies simply focus on reengineering processes and products, invest in technology platforms, or focus on improving back office efficiency.[xvii]

Instead they point to the need for "reimagination" – where your entire business is reshaped around the customer or user experience – a concept termed 'human centered design".[xviii]

A company that practices "human centered design" creates a tangible emotional connection with its customers, supports that connection across many channels such as brick-and-mortar locations, websites, mobile apps, collects data on what its customers do on each of these channels, and then uses that data to react and pivot their business.[xix]

How Can Our Industry Become Digital Leaders?

Advancements in technology for the insurance and collision repair industries have been instrumental in restructuring the way auto claims are handled. Electronic appraisal reviews and shared guidelines provide business partners with information needed to fulfill work in a transparent, compliant, and complete manner. Management dashboards facilitate claims performance review in a concise, targeted manner, enabling managers to address specific areas of performance, adjust levers, and evaluate the impact in real time.

The collision repair industry also has benefited from greater use of technology, whether through the ability to automatically update the vehicle owner of the status of a repair, or through the ability to automatically update the repair production stages via an iPhone® or Android® device. These changes have shaved time off of the claim and repair process and have worked to streamline communication between all parties. As consumers' expectations and service demands continue to grow, more will need to be done to deliver a positive auto claim and repair experience.

Carriers are looking to differentiate themselves by reaching customers through the devices that they are using more and more in their daily lives. Data from the 2013 CapGemini World Insurance Report identified which areas carriers are focused on within the mobile space to develop positive customer experiences, and what percent are focused there today versus where they expect to be in 2015.[xx] To date carriers have focused many of the mobile capabilities on providing customers with product information, whether for pricing/quotes or for providing consumers with proof of insurance.[xxi] However, by 2015, 73 percent of the insurers that responded anticipate mobile will be a big focus in claims services to drive positive customer experience.[xxii]

Carriers are responding to consumer demand for more choice and personalization by extending the options available to a customer for vehicle inspection and even repair. Today's consumer anticipates there will be some choice in how they prefer to have their claims handled, the one-size-fits-all experience will no longer suffice. When supplemented with data about basic things like vehicle information and damage information (i.e. point of impact, whether or not an airbag deployed), carriers are able to not only identify the potential level of repair complexity, but can also work with the customer to recommend the appropriate method of inspection. Carriers are even evaluating policy information (years of service, number of policies) to provide the appropriate vehicle inspection method for that customer.

With nearly 50 percent of customers "always connected," insurers and repairs are looking at ways to leverage this capability while positively impacting customer experience.[xxiii] As a result, more and more insurers and repairers are providing customers the option to submit photos through a mobile application and quickly retrieve an estimate of the damages. For the insurance company, it not only improves customer satisfaction but also helps reduce cycle time and LAE costs (no need to wait for a staff appraiser to be scheduled to appraise the customer's vehicle).

As a response to consumer demand for choice, many insurance companies are offering their customers the option to select any body shop to get an appraisal. For example, CCC ONE® Open Shop allows the carrier to connect electronically with approximately 20,000 repair facilities. This allows carriers to provide their customers additional shops to choose from, in turn positively impacting customer satisfaction (CSI). As for the repairer, it generates potential new repair leads and lets them electronically connect with more insurers while reducing phone calls and emails. It's a win-win for the insurer, repairer, and most importantly the customer.

For many consumers an auto accident is fortunately a situation that does not occur very often. Subsequently, many consumers have no idea where they would like to have their vehicle repaired. Among the criteria a consumer might use are hours of operation, distance to home or work, and perhaps, most importantly, referrals from friends or family, or other referrals found online. Today Yelp, Google, and CCC's Carwise™ Solution provide reviews and ratings for consumers. Insurers and repairers are looking to leverage this data within their own websites to provide customers the information they need to make an informed decision that drives a positive experience. Having access to consumer reviews, comments and ratings, potential customers have the ability to see what other customers are saying about the repairer. This is important, because according to a study by Nielsen from April 2012, 92 percent trust recommendations from friends and family above all other forms of advertising, up 18 percent from 2007.[xxiv] Online consumer reviews are the second most trusted source of brand information with a 70 percent trust rating, up 15 percent since 2008.[xxv] Television ads were trusted only by 47 percent, down 24 percent since 2009.[xxvi]

Another key component of customer satisfaction with the claims process that has been identified by numerous sources is the overall time to handle the claim and return the vehicle back to the customer.[xxvii] Consumers also want more visibility throughout the process – on the right device at the right time.

Insurers and repairers communicate with customers about the status of their claims. Unfortunately, this means customers may be hit with the same or even conflicting information numerous times, making the overall process seem disjointed, unorganized and potentially wrought with error. Having a single coordinated communication can lead to better customer satisfaction.

Traditionally, CSI surveys are sent weeks after the claim is complete making it nearly impossible to address customer concerns in an impactful manner. Now, repairers and carriers are leveraging technology and analytics to proactively address customer issues before it is too late. Text mining and sentiment analytics identifies those customers providing negative sentiment. In addition, post-delivery feedback generates alerts to the repairer and carrier notifying them to follow up with an unhappy customer.

In summary, as companies look to achieve greater engagement with their customers, it is important to consider all of the interaction points that customers may have with your business.

Customer satisfaction with a claim is not just the satisfaction with the repair of the vehicle itself. Certainly this is a critical component, but a consumer wants to have information up front in the "pre-service" period that helps them make an educated decision on where to get his or her vehicle fixed.[xxviii]

With referrals from friends and family and online reviews valued most by consumers, providing feedback from prior customers that is available to new customers is critical, particularly since most customers do not have accidents very often, and are unlikely to have had the need to check a shop's website, Facebook page, or Instagram account prior to the accident. Most consumers will want the ability to choose a shop based on location, hours of operation, and online reviews.

Regular updates during the course of a claim are critical to keep the customer informed and engaged. As engagement levels grow, so does the likelihood that customers will respond to customer satisfaction survey. And finally, as more customers become engaged and willing to take the time to recommend the repairer and the insurer, these recommendations can be used during the "post-service" period to drive more business in the future.

The information and opinions in this publication are for general information only, are subject to change and are not intended to provide specific recommendations for any individual or entity. Although information contained herein has been obtained from sources believed to be reliable, CCC does not guarantee its accuracy and it may be incomplete or condensed. CCC is not liable for any typographical errors, incorrect data and/or any actions taken in reliance on the information and opinions contained in this publication. Note: Where CCC Information Services Inc. is cited as source, the data provided is an aggregation of industry data collected from customers that use CCC's products or services and/or that communicate electronic appraisals via CCC's electronic networks.

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Customer Satisfaction through Multiple Touchpoints

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