Most of us are familiar with the term "customer journey," whichtells the story of how customers interact with companies from theirperspective. By identifying and understanding our customers'journeys, we can better gauge and guide their experiences with usas a company–fostering positive, long-term relationships thatbenefit both the customer and the organization. But the process ofunderstanding that journey across communication and distributionchannels–while creating a consistent customer experience–haslargely eluded the insurance industry.

One of the primary challenges is most insurers' technology anddata infrastructures don't support a customer-centric perspective.Policy-level legacy systems and applications built literallydecades ago still hum in modern data centers. Over the past fewyears, insurers have made strides in modernizing theirinfrastructure, but primarily under the guise of cost andoperational-efficiency.

Even with the re-architecture and implementation of new policyadministration systems and new claim systems, carriers have failedto capitalize (and invest in) capabilities that drive long-term,profitable relationships. The argument being that a new policyadministration system may create efficiencies and drive downlong-term operational costs but won't necessarily drive newcustomers to the door.

Legacy infrastructure comes with a legacy mindset. The policyversus customer-centric view is still pervasive in manyorganizations. And there's still inertia around the need forchange. Overall, the property/casualty insurance market is stableand profitable, and the "if it ain't broke, don't fix it" mentalitykeeps some carriers from evaluating and moving forward withcustomer-centric capabilities.

Carriers have been eyeing the banking industry'scustomer-obsessed focus. For example, Australian bank Westpacleverages data-driven marketing and analytics in support of their"Know Me" program for their nine million customers. Westpac takestheir customers' digital and transactional data and creates apicture of who each customer is, where they are in their lifejourney, and what needs they might have. Although their program isdriven by the marketing organization, the bank is careful to take aservice-oriented approach to their interactions. The benefits ofthe program have included higher conversion rates for offers and anincrease in the number of products by household.

Taking a cue from banks like Westpac, insurers are creatingtheir own "next-best action" strategies. Buzz-terms like "customerexperience management" are starting to shape into something alittle more real. Insurers are making more investments incustomer-facing applications and decision engines to drivecustomers to a next best action, and in tools to analyze thecustomer contact points (big data, data mining, text analytics, andsocial media analysis).

Where many of these initiatives fall short iswhen insurers still look at their customers from the inside-out.Most next-best action strategies focus on marketing–upsell,cross-sell–and have yet to incorporate the broader customerexperience. This is primarily because funding for these large-scaletransformational programs is coming from revenue generationopportunities. As with other industries, insurers will need to bemindful of marketing fatigue–if your customers are constantlybombarded with marketing messages and offers (even ones that aremore relevant to them), they're more likely to opt-out or leave.The challenge for insurers is to find the right blend of marketing,service, and educational messaging and support. To get this right,insurers need to understand and anticipate what it is the customerswant and need.

Beyond marketing, next-best-action can drive customer servicestrategies. One U.S. federal government agency is evaluatingcapabilities that would allow them to automate their extensiveknowledge base and incorporate a recommendation engine. They wantto include Amazon-like recommendations within their searchcapabilities (e.g. customers like you selected ABC or XYZ). Thisgets their customers to information faster while reducing the costand operational burden on their contact centers.

Regardless, if you're starting with a marketing or serviceapproach, analytics represent the core component. Analytics drivethe deep understanding of customer, prospect and agentrelationships and assist insurers with uncovering meaningfulinteractions and offerings that will ultimately drive profitablegrowth. The customers' digital footprints are growing throughincreased use of telematics, always-on mobile devices and socialmedia as well as the transactional breadcrumbs they leave behind.Customers are expecting this data will be used to theirbenefit.

Insurers are well positioned to evolve their organizations tobring life to the customer journey. This includes assessing theorganizational, operational and infrastructure components necessaryto support digital transformation. Companies are recognizing theneed for cultural change as part of their customer-centricstrategy. Many are bringing in change agents to transformcapabilities. One company approached its data-driven customertransformation as if they were starting up a new company. Theysketched out how they wanted their customer ecosystem to work andidentified how their current operational model would need to evolveto support it. Incorporating digital thinking within theorganization–understanding and engaging with consumers on theirterms–was paramount.

The key to success is creating a strategy that engages customersacross their lifecycle, incorporating both relevant marketingoffers to drive profitability as well as providing superior servicecapabilities. Remember, it's their journey…and yours.

Rachel Alt-Simmons is a Principal Industry Consultant forFinancial Services at SAS, based in Cary, N.C. Alt-Simmons droveenterprise analytic capabilities at Travelers and Hartford Life,and was Research Director for Life and Annuity at research firmTowerGroup.