How business agility grows insurance customer retention

With every discarded idea, there can be insights that are real and useful. (iStock)

In the face of InsurTech disruption, insurance-industry players need to be able to move quickly to stay competitive.

But that doesn't mean established carriers must jettison their core capabilities in order to get bottom-line business results and increase customer retention.

CSAA Insurance Group, a 100-year-old company that provides insurance under the AAA brand, is using innovation and Business Agile principles to drive customer retention. Our strategy also builds on its established core strengths.

Looking closely at the issue of retention, we realized we needed to be better equipped to evolve with changing customer needs and wants. So we doubled-down on customer intimacy as a major strategy for growth and as a driver of business results.

It's working. We estimate that, when fully implemented, the most recent customer-retention initiative — developed in only six months using Agile, Lean, and Design Thinking principles — could result in annual premium savings of tens of millions of dollars.

Focus on the customer

Happy customers may often refer, but they don't always stay.

To put the customer at the center of our business model, we re-framed the business problem (Why do customers leave us?) to the customer problem (What might we do to make customers want to stay?). From this customer-first perspective, we spent time with customers to learn about their needs, circumstances and concerns. As we developed that empathy, we were able to better define the problems they faced and began to ideate on possible solutions.

We also used proprietary segmentation to identify behavioral and attitudinal differences. What was once a one-size-fits-all approach evolved into multiple customer-problem statements and perspectives, which we used to brainstorm tailored solutions.

By mapping the journeys for each customer perspective, we were able to look beyond the mere transaction to the emotional state of the customer. We worked to understand what they were trying to accomplish during each interaction with us. That enabled us to improve their experience by making that specific touchpoint seamless.

We also re-imagined the customer's decision to stay as if it were a long-term relationship, like a marriage. From honeymoon to first anniversary celebrations to the proverbial seven-year itch, we innovated with this mindset to develop new ideas.

Agile at work

We used Design Thinking to develop those new retention ideas and then Business Agile principles to test them quickly. Agile sprints helped us frame business challenges from a customer point of view. We generated and refined ideas and gathered feedback from customers. That feedback helped us move forward with greater clarity and confidence.

If you're not familiar with an "Agile sprint," it's a series of fast-paced, collaborative working sessions that enable teams to answer critical business questions through research, analytics, design, prototyping, testing and iterating on ideas with real customers. It leverages the best from business strategy, innovation, storytelling, customer-focused innovation, Lean, Agile and more — packaged into a battle-tested process that any team can use.

Working together in a sprint, teams can shortcut weeks or even months of debating what features to build and whether customers even want them.

Test assumptions early and often

As we brainstormed and prioritized the best solutions, we realized there were some basic "leap of faith assumptions" made about the desirability (customer needs), feasibility (technical execution and organizational fit) and viability (financial sustainability and competitive business opportunity) of each solution we proposed. We prioritized these assumptions and set out to prove them using the scientific method and experiments advocated by the Lean methodology.

We began experimenting through a continuous loop of building, measuring and learning. We built a prototype that represented our best understanding of the solution. We tested and measured that prototype with customers, learning from their feedback and usage, and then we rebuilt or refined the prototype as needed for further testing.

We knew we found a successful solution when we validated the most important desirability, feasibility and viability assumptions. That's the innovation sweet spot: when the assumptions in all three areas have been validated.

For example, a common call our agents receive is from customers asking why the price of their policy changed. Agents needed a solution that would make it faster and easier to see changes to a customer's policy — and explain why rates may have changed as a result. The idea was to create a side-by-side comparison of policy changes that would make it easier for agents to help customers.

While seemingly simple in concept, we unearthed obstacles with each prototype but were able to quickly iterate to the next prototype based on those new lessons. Using Agile sprints, we were able to rapidly put a solution into place, test it against a control group, and demonstrate a statistically significant 3.5% lift on retention rates vs. the control group.

Make PPK decisions

Throughout the testing process, we met with stakeholders, shared what we learned, and collaborated to make pivot, persevere or kill (PPK) decisions based on our findings. Regardless of the decision, we celebrated. Because we either moved forward or adjusted course on good solutions, or we saved a lot of time and money by stopping work early on less successful ideas.

One retention concept we tested was meant to address the idea that customers often don't know what they don't know about the aftermath of an insurance-related event — a fire, storm or theft, for example — until it's too late. We created a virtual reality (VR) experience that allowed customers to view a simulation of the possible outcomes. After testing the platform with more than 1,000 customers, we quickly learned that it wasn't desirable. Customers found the experience too jarring — they didn't want to think about bad things happening to them or their loved ones.

But with every discarded idea, there can be insights that are real and useful. From the VR idea, we pivoted to a "virtual agent" concept — an intuitive experience that's welcoming, comforting, and informative — and more in line with what our customers want and with the company's longstanding commitment to caring for them.

If a solution receives a "persevere" decision and funding, the idea transitions to our delivery teams. They use an Agile workflow, receiving priority in one or more of our product backlogs. The project lead stayed connected throughout the process as a subject-matter expert. The idea was further developed through the sprint planning, execution and review processes until the first ship-able version of that idea was ready for customers.

Retaining customers is a challenge we all face in today's fast-changing markets. Staying competitive is crucial, and that requires speed and agility. Making the shift to using innovation and Business Agile principles has proven to be a great investment for the enterprise. We've found that taking the plunge can open a door to revenue-generating and cost-saving ideas that can be tested and delivered faster than before.

Erron Al-Amin ([email protected]) is a Customer Experience & Insights executive at CSAA Insurance Group, which offers AAA-branded insurance in 23 states and the District of Columbia. She and her team use Lean Startup and Agile methods to act on the insights they generate while holding the company accountable for its customer commitments.

Olga Dotter ([email protected]) is head of innovation within the Strategy & Innovation division at CSAA Insurance Group, strives to innovate the company's future by building new products, services, and ventures that deliver extraordinary value to current and future AAA members.

See also: