Insurance companies that deliver a great customer experience are rewarded over the long-term, by consumers and investors.
That’s the conclusion from customer experience advisory firm Watermark Consulting. In a new report, the company details its analysis of stock market returns for insurers that lead in customer experience versus those that lag.
The analysis focused on model portfolios of the top five (“leaders”) and bottom five (“laggards”) publicly traded insurers in J.D. Power and Associates’ annual “Insurance Satisfaction Studies.”
“We found that the fortunes of insurance customer experience leaders and laggards diverged in a dramatic and revealing way,” says Watermark Consulting founder and Principal Jon Picoult. “Leaders far outperformed the industry index, while laggards trailed it.
The performance gap was significant. Over the seven-year period examined, leaders secured average annual returns that were at least double that of the laggards.
“Insurance providers may publicly tout the importance of customer-centricity, but behind the scenes, many are skeptical that such a strategy pays off,” Picoult notes. “As a result, they continue to cling to archaic business practices that create complexity and confusion, further stoking customer frustration. But as the leaders in this study illustrate, there is a better way.”
Insurers that impress policyholders reap the rewards in the form of increased loyalty, greater wallet share, stronger word-of-mouth and a more-competitive cost structure.
Summing up the findings, Picoult alluded to the serious challenges facing the industry: “Insurance companies are struggling to set themselves apart in a marketplace that increasingly views their products as commodities.”
He concludes: “As the Leaders in this analysis demonstrate, the best way to break out of that ‘sea of sameness’ is to deliver an end-to-end customer experience that turns everyday policyholders into true raving fans.”
See the bar charts on the next page highlighting key findings from Watermark Consulting’s analysis:
(Click on the chart to enlarge.)