Insurance isn’t the only industry in the world that is struggling to deal with the “Amazon factor,” but it certainly has just as much work to do as many other sectors. The Amazon factor refers to the very high customer engagement bar that has been set by digital and e-commerce leaders (indeed, it could just as well be called the Zappos, Netflix or Uber factor). That standard sets the baseline for companies in other industries, whose customers expect similar easy-to-use tools and personalized interactions. Thus, insurers find themselves being evaluated in comparison with firms well outside their traditional peer group and competitive set.

Easily accessible account information, detailed customer histories, wish lists, tailored recommendations, repeat ordering tools and free shipping – these are the features that lead to world-class levels of customer engagement. Life insurers in particular struggle to get over this engagement gap. Some have established multiple channels for sharing information and simple, self-service tools to take care of basic administrative tasks.

But, to date, a bare minimum of interactions of tasks have moved online. The insurance industry has yet to discover its own equivalent of free shipping. Certainly they have not achieved levels of engagement that will anchor their existing customer base, help individual policyholders achieve better outcomes, resist intense competitor activity and, ultimately, boost their bottom lines.

Here, we highlight five action steps insurers can take to boost customer engagement, as well as define the parameters of customer engagement. As you’ll see, the key is to think holistically and creatively in applying leading practices from other industries, especially those that go beyond basic connectivity to deliver high-quality user experiences and create customer advocacy.

Customer engagement: what it is and why it matters

It’s worth defining our terms because customer engagement has become something of a buzzword, and one that can mean different things to different businesses and industries. Generally speaking, customer engagement refers to the ability of a company to promote loyalty and advocacy on the part of its consumers and generally good business outcomes through a full ecosystem of externally facing touch points and channels (including online and in-person or face-to-face networks).

To some extent, the major metrics for engagement are whether or not customers feel valued and want to keep doing business with a specific company. In this sense, engagement goes beyond basic utilization of and satisfaction with basic transactions (like bill paying or email notifications).

  • Does the company provide relevant and valuable information that consumers actually want?
  • Does it meet individual preferences for interacting and transacting?
  • Does it help consumers meet their objectives easily and efficiently?

These are the questions that must be asked by any company seeking to deepen, strengthen and extend relationships in our consumer-driven world.

The business case for customer engagement is perhaps easier to grasp than the definition. More engaged consumers equate to lower costs and reduced churn, which benefit policyholders and insurers alike. Further, competitive advantage results when consumers spread the word about a company’s great service or helpfulness in solving a problem (whether it’s related to a specific claim or a broader topic like retirement planning).

So what can life insurers in particular do to engage customers?


1. Communicate, communicate, communicate.

For many insurers, increased engagement will start with more effective communications. Improving the quality and clarity of standard communications is a seemingly small improvement that many insurers can make – but one that can send a potentially big message to consumers that insurers value their business.

In streamlining premium statements, cover letters and disclosures, insurers should focus on sharing meaningful information in clear language that ordinary people can understand.

Even more importantly, insurers and agents must be very sensitive on the timing of their communications, which are often distributed during periods of stress.

For example, the first notification of death benefits is not an appropriate vehicle for upselling or cross-selling beneficiaries, though some insurers automatically include information about additional products in such communications.

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2. Get proactive with relevant content and timely offers.

After mastering basic communications, insurers can move on to higher-value activities, such as sharing personalized content. For instance, when sources of direct deposit change, insurers can share information about what other clients do after changing jobs.

Similarly, they can make special offers, such as free reviews of IRA fees or investment account strategies, in advance of a projected retirement date.

Such content can also be used for “defensive purposes;” by reaching out to consumers who have searched the company website for information about cancelling a current product, insurers might be able to save a policyholder who is otherwise inclined to switch.

Currently, very few insurers take a proactive approach to protecting their base.

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big data

3. Integrate data to get everyone on the same page and get to know your customers better.

Integrated repositories of customer data and systems that can speak to each other are a requirement for such proactive communications capabilities. The goal must be to eliminate the differences between digital and traditional channels and confirm that the company always acts like a single, unified entity, rather than an assemblage of standalone departments.

That means call center agents and field representatives must have ready access to current, consistent and complete information from all recent interactions  – including web activities, correspondence, service notes and purchase and declination histories.

Further, integrated data – as well as robust analytics capabilities – are necessary to the design and distribution of personalized communications of the sort described above.

In fact, the vision of “right message or offer to right consumer at right time via right channel” is simply impossible without integrated data. Effective data collection across internal and external channels and data management set the stage for deep consumer knowledge by enabling detailed analysis of specific behaviors, which in turn leads to a deeper understanding of what’s relevant to specific individuals.

See also: 9 ways to unleash the power of social media in insurance


4. Take an incremental approach to engagement.

Executives feeling that they can never achieve consumer experience parity with the leading eCommerce platforms can take comfort in knowing that major gains are possible without huge, “big-bang” transformation projects and enormous budgets.

In fact, rethinking the basic relationship dynamics with current policy owners doesn’t have to cost a dime, though it is a critical change on the strategic and cultural levels. The most basic question is: how can the company make everything it does easier, clearer and more beneficial to consumers? It should be asked across every level of the organization.

Many companies seek to incorporate specific customer experience objectives and strategies into existing transformation projects or change initiatives within customer service, claims or other functions.

That can mean adopting self-service channels to simplify payment processes, for example, or adding more communications options (e.g., texts or automated notifications) to core processes.

See also: New strategies to keep today’s employees engaged, educated and empowered


5. Create advocacy by building on engagement.

With basic building blocks in place, insurers can begin to use more advanced tools and techniques to enhance their relationships. Again, it all starts with knowing – deeply and subtly – what customers really want. Some of that insight will come from channels (e.g., social media), as well as correspondence and service notes.

Advocacy is a two-way street, of course. Insurers can – and should – serve as advocates for consumers by providing valuable information and offering timely recommendations (e.g., to consult with an advisor or re-balance a portfolio).

When such offers resonate, consumers will be willing to spread positive messages about their carriers. Here again, other more digitally savvy industries point the way forward. Amazon-like recommendations make intuitive sense in insurance – “People like you also purchased a similar annuity.” Or: “75 percent of people in similar circumstances typically adjust their portfolio.”

The “gamification” techniques used by the travel and fitness industries could also be a good fit in insurance. Customer-centric insurers could make retirement planning feel more like preparing to run a marathon or planning a special getaway.

The key is to have the data, systems and cultural commitment to provide appropriate nudges and inspirational reminders along the way. As an industry, we know that trying to scare people into saving has not delivered optimal results. So why not try more engaging approaches that are familiar to consumers from other aspects of their lives?

In the future, the rules of engagement are likely to shift and expand — a development that could present new opportunities for insurers. For instance, some consumers may be willing to share more personal information in return for valuable content or specific guidance, provided they are compensated and appropriate security guarantees are in place.

In return for completing a questionnaire, consumers might receive special discounts or other compensation (such as gift cards or sessions with financial planners). As consumers recognize that their data is valuable, they are more likely to expect something in return for sharing it.

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Playing the long game of engagement.

As an industry, insurance is coming to terms with the idea that we operate in a fundamentally different era. That’s why forward-looking executives are benchmarking their consumer experiences against those offered not just by the most popular eCommerce platforms, but also by, Personal Capital and other firms somewhat closer to home.

Why can’t we offer policyholders the ability to consolidate information about their insurance holdings? Why wouldn’t we strive to enable financial account integration or eliminate policy administration fees for our most valuable clients? Imagine the customer affinity and advocacy that would result for the insurer that got it right.

Insurers must also prepare themselves for the long game when it comes to customer engagement. In our consumer-driven world, where digital leaders will continue to up the ante on customer experience, it will only grow more important. To keep their best customers, carriers will have to offer value in new and creative ways. That will require better analytical capabilities to identify what consumers want, effective tools for sharing meaningful information and offers, and the strategic savvy to know when to share information and when to sell products. It can sound like a daunting task, but through a set of small tactical steps, insurers can start moving forward toward value today.

See also:

Insurance & tech: What is big data & how to use it?

7 deadly financial advisor marketing sins exposed, Pt. 1

4 ways to achieve success in life insurance sales