Amanda Fox, Chief Customer Officer (CCO) at Markerstudy Group, shares her experiences and lessons learned from adapting customer-facing processes to address the challenges of the rising cost of living and new regulatory changes.
In the financial services space right now, there are some key factors affecting companies – in particular the need to address the impact of the rising cost of living crisis on our customers and the new Financial Conduct Authority (FCA) Consumer Duty regulations the industry has to meet, effective from the 31st July, which requires agents to meet the needs of customers, in particular ‘vulnerable customers’.
The FCA explains that ‘a vulnerable customer is someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care’ and the new principle aims to drive improvements in the way firms treat vulnerable consumers so they have confidence that the service they receive will be suited to their needs.
One area that would fit under this scope is the cost of living crisis and FCA calculations show more than six million people cut or cancelled insurance cover in the six months to January 2023 to save money.
Putting customers needs at the front and centre has never been more important and there’s clearly a challenge for all financial service providers, including insurers, to make sure their products are in step with issues customers are currently facing, while maintaining a regulatory focus on customer-centricity across all lines.
Insurance is all about making sure our offerings are compelling and competitive, and more than this, ensuring that we put the customer back in the position they were in before they had the claim.
Customer-centricity must be built into product offerings and pricing
Cost of living issues are having a huge impact on policy changes and cancellations, and on price negotiations with customers. There is a definite trend for customers to try and save money on insurance products that are a legal requirement, such as motor, and to increase cancellations of products such as home insurance. Recent figures from the Consumer Intelligence cost-of-living consumer behaviour tracker demonstrate this split, 35% have completely axed home buildings and contents insurance, and 63% of consumers have changed their car insurance to switch to cheaper policies.
Here’s the conundrum: Insurers need to focus on price of cover, but also need to make it clear to the customer precisely the level of entitlement in a claim scenario. For motor, many customers may just look to buy as cheap as they can get it, but if they then have to make a claim, they then realise that maybe they haven’t bought a policy that is suitable for them.
The lesson here for insurers and brokers is always to be looking at how we can support those people who are in financial difficulty in terms of product design and the claims process.
Taking the scenario to its conclusion, the result is customers completely cancelling policies that may lead to large costs for uninsured damages such as home and contents. You never know when something might happen in your home, such as fire and/or flooding.
So here we should be asking, should there be some type of minimum coverage offering to accommodate those struggling with monthly costs?
Technology for all ages and capabilities – striking the right digital balance
Alongside matching product offerings to customer needs, the end-to-end touchpoints with customers throughout policy selection, implementation, ongoing customer service, and claims is definitely becoming more tech-enabled. This again reflects consumer preferences –but one-size or one-channel definitely doesn’t fit all.
When we’re responding to a customers needs, we should take into consideration all aspects, such as how tech-savvy people are, are we using the correct language so customers are completely clear on what they are buying.
Financial services products span a wide age range of customers with differing levels of understanding – motor insurance products for example have typically an age range spanning 17-80+. So, all options must be considered when we’re looking at how far we take the digital interaction with the customer.
For us at Markerstudy, that comes back to customer experience and actual testing. That means going out and talking to customers about what they want and not just making assumptions. Financial services providers will need to strike a perfect balance between digital capabilities and customer preferences to provide each customer with the channel and journey they’re most comfortable with at any given time.
Employees – get them on board the customer centricity journey
If financial services companies want to have a customer centric business, you have to recognise that your employees are the most important part of this – because they are the face of the business. They’re the ones who talk and interact with the customer. For me, the culture of customer centricity must come from the top. It is a key part of the role of the CCO to reinforce that commitment to the customer and ensure good customer outcomes are front of mind for employees and at the heart of all business decisions.
While a financial services provider can build customer-centricity across all processes, it is the staff who make that a reality and being the face of our company, we need to ensure they have the right skills and capability to recognise and respond to the needs of all customers, including vulnerable customers.
We encourage a culture of continuous feedback where customers have problems. So, the claims teams, for example, will feed back that a customer said they didn’t understand something or weren’t sure about a process. This information is then included in the product review and the product life cycle.
From a high-level this means grouping employee feedback to look at themes and trends as well as customer testing. Once we’ve identified a common theme, we can then look at addressing it. We’ll also take a deeper dive and look at whether it’s specific to one channel or if it’s generic across products, so that we can work with those third parties. Crucially, it’s the responsibility of all staff across key internal functions to identify where there are issues – because they’re the ones who talk to the customer.
The ripple effect of the customer-centric business model
While unquestionably a better customer experience and outcomes are the primary driver behind an organisational focus on customer-centricity – there are serious business benefits to be gained, especially at a heightened time of competition across the financial services space:
1. Increase customer acquisition
The more an organisation can make its products, services and pricing more customer-centric, the greater likelihood of a customer renewing. Meeting the key requirements of customers right now means taking into account the economic and personal circumstances impacting them and harnessing that data from customer feedback to refine and tweak offerings. If this can be brought down to an acceptable price point – then those products will stand-out from the rest.
2. It’s a win-win situation for brokers and providers
A better end-customer policy experience is beneficial for both brokers and product providers. For brokers, customer attention and interaction tends to sit with them, and they of course are more likely to place products that are well received. For the providers, if you are providing good products, and good service, the brokers will tend to place that business back with you. It’s a win-win business scenario.
3. Enhance profitability
It follows that the above two benefits will filter down to the bottom line, driven by better customer-centricity. As Experian highlights: “The insurers who thrive as the crisis bites will be those that adapt to help customers best manage this new reality. That means using new tools to navigate a new landscape – using data insights to make the best decisions at application, and offering products that work for increasingly hard-pressed consumers.”
Aligning customer offerings to the current economic climate
The financial services market and in particular the insurance sector is built on a core foundation to help consumers ensure they have a financial safety net and are prepared for and can cope with unexpected events. Now, more than ever, CCOs and insurance brokers and providers need to put customers first in not just their product offerings, but their business models too.
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