Most of us are familiar with the term "customer journey," which tells the story of how customers interact with companies from their perspective. By identifying and understanding our customers' journeys, we can better gauge and guide their experiences with us as a company–fostering positive, long-term relationships that benefit both the customer and the organization. But the process of understanding that journey across communication and distribution channels–while creating a consistent customer experience–has largely eluded the insurance industry.

One of the primary challenges is most insurers' technology and data infrastructures don't support a customer-centric perspective. Policy-level legacy systems and applications built literally decades ago still hum in modern data centers. Over the past few years, insurers have made strides in modernizing their infrastructure, but primarily under the guise of cost and operational-efficiency.

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

Legacy infrastructure comes with a legacy mindset. The policy versus customer-centric view is still pervasive in many organizations. And there's still inertia around the need for change. Overall, the property/casualty insurance market is stable and profitable, and the "if it ain't broke, don't fix it" mentality keeps some carriers from evaluating and moving forward with customer-centric capabilities.

Carriers have been eyeing the banking industry's customer-obsessed focus. For example, Australian bank Westpac leverages data-driven marketing and analytics in support of their "Know Me" program for their nine million customers. Westpac takes their customers' digital and transactional data and creates a picture of who each customer is, where they are in their life journey, and what needs they might have. Although their program is driven by the marketing organization, the bank is careful to take a service-oriented approach to their interactions. The benefits of the program have included higher conversion rates for offers and an increase in the number of products by household.

Taking a cue from banks like Westpac, insurers are creating their own "next-best action" strategies. Buzz-terms like "customer experience management" are starting to shape into something a little more real. Insurers are making more investments in customer-facing applications and decision engines to drive customers to a next best action, and in tools to analyze the customer contact points (big data, data mining, text analytics, and social media analysis).

Where many of these initiatives fall short is when 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 customer experience. This is primarily because funding for these large-scale transformational programs is coming from revenue generation opportunities. As with other industries, insurers will need to be mindful of marketing fatigue–if your customers are constantly bombarded with marketing messages and offers (even ones that are more 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 customers want and need.

Beyond marketing, next-best-action can drive customer service strategies. One U.S. federal government agency is evaluating capabilities that would allow them to automate their extensive knowledge base and incorporate a recommendation engine. They want to include Amazon-like recommendations within their search capabilities (e.g. customers like you selected ABC or XYZ). This gets their customers to information faster while reducing the cost and operational burden on their contact centers.

Regardless, if you're starting with a marketing or service approach, analytics represent the core component. Analytics drive the deep understanding of customer, prospect and agent relationships and assist insurers with uncovering meaningful interactions and offerings that will ultimately drive profitable growth. The customers' digital footprints are growing through increased use of telematics, always-on mobile devices and social media as well as the transactional breadcrumbs they leave behind. Customers are expecting this data will be used to their benefit.

Insurers are well positioned to evolve their organizations to bring life to the customer journey. This includes assessing the organizational, operational and infrastructure components necessary to support digital transformation. Companies are recognizing the need for cultural change as part of their customer-centric strategy. Many are bringing in change agents to transform capabilities. One company approached its data-driven customer transformation as if they were starting up a new company. They sketched out how they wanted their customer ecosystem to work and identified how their current operational model would need to evolve to support it. Incorporating digital thinking within the organization–understanding and engaging with consumers on their terms–was paramount.

The key to success is creating a strategy that engages customers across their lifecycle, incorporating both relevant marketing offers to drive profitability as well as providing superior service capabilities. Remember, it's their journey…and yours.

Rachel Alt-Simmons is a Principal Industry Consultant for Financial Services at SAS, based in Cary, N.C. Alt-Simmons drove enterprise analytic capabilities at Travelers and Hartford Life, and was Research Director for Life and Annuity at research firm TowerGroup.

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How carriers can support a customer-centric perspective

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