Approximately 4 minutes reading time
The world is going through an unprecedented digital transformation. Technological developments are happening at a tremendous pace, and the company that can use data in the most efficient way is sitting on a goldmine. The hunger for newer and better has not gone unnoticed amongst consumers: they have effortlessly adjusted their expectations to match the possibilities generated by this transformation.
Vision of the future
In 1964, the British science fiction writer Arthur C. Clarke gave us an impressive vision of the future world we live in today. He predicted, amongst other things, that there would be many technological developments that we would ‘gratefully’ use in our daily lives without thinking about it.
Thanks to his frustration with the poor quality of telephone lines, Clarke predicted a future where video calls would be the norm. He also predicted a future with ‘devices connected to each other’ that could be used to send and receive all types of information (today’s internet). In addition, there would be mobile, portable devices that would make it possible to contact somebody without knowing their exact physical location. Sounds familiar, doesn't it?
People like convenience
Now, in 2020, many of Clarke’s predictions have become a normal part of everyday life, especially when it comes to mobile devices and the connectivity of the internet. Modern technology has made instant communication possible. The old-fashioned letter was replaced by the fax, which was replaced by the email, and now we even get irritated if a company doesn't respond immediately via the phone (WhatsApp!) or a live chat. With the digital transformation, we have become more impatient and our expectations have become more demanding.
Advances in technology have made life easier for us in all sorts of ways. We now have a remote control so we can change the TV channel without getting up, we have a microwave so we can cook our food faster, we have a smart phone so we can talk to our friends whenever we want, and so on. But there is one thing all these examples have in common: the technology is driven by our unquenchable thirst for convenience.
User-friendly technology generates extreme customer expectations
User-friendly technology causes consumers to have increasingly higher expectations when dealing with businesses. Not only when it comes to daily things like managing your bank account from your smartphone, but also in the contact with your insurer or agent. People expect speed, reliability and flexibility. Without any hassle and without getting up from their armchair.
Customers are consequently more demanding than ever before. Thanks to the internet and the ability to compare products and services, consumers have more power than in the past. They are smarter and have higher expectations than ever before. At the end of the day, modern technology has made them that way.
According to 72% of businesses, the improvement of the customer experience has become a top priority. It might sound somewhat paradoxical that customers are not as easily satisfied even though most businesses are now doing everything they can to make that happen.
Luckily, off-the-shelf technology offers tremendous possibilities when it comes to satisfying these growing expectations. Unfortunately, there is a downside for businesses: in order to tap into this wealth of opportunity, they will have to make the transition to a data-driven organisation. Up until now, only a few businesses have managed to successfully make this cultural shift.
Needless to say, it is not the first time that businesses have been confronted by sky-high customer expectations: in 2013 we saw the sudden emergence of the abbreviation IWWIWWIWI. It says everything about the way people expect to be satisfied nowadays: I want what I want when I want it. The digital transformation has only reinforced this mentality. We want services to be provided on our terms, and businesses to make it possible to engage in a 24/7 real-time dialogue.
This mentality means businesses have to develop lightning-fast reflexes. You don't get extra points for delivering services on demand, because that has now become the norm. That is why data is becoming the deciding factor when it comes to differentiation. The more you know about a person, the higher the level of personalisation you can achieve, and ultimately the better you are able to satisfy the growing expectations of each individual.
Satisfying expectations in the insurance industry
What can insurers do to satisfy these extreme expectations? The potential range of possibilities is enormous, because there are very few sectors where (the use of) data lies so deep in the heart of the business operations. After all, the basis of every insurance product is essentially an algorithm that calculates the impact and probability of certain events on the basis of data. And these algorithms also play a central role in the contact with customers, for example in order to estimate the probability that a claim has been submitted in good faith.
An insurance company that is better than its competitors at converting data into operational insights – and thus has better predictive capabilities – will therefore have a significant competitive advantage.
Understanding and satisfying expectations
And this brings us to the crux of the matter: there are only a few businesses that are able to use their data in such a way that they can offer instant added value to their customers at an individual level. Although the insurance industry is sitting on top of a goldmine of data, it is also a sector that is struggling to make the switch to a data-driven mindset.
One problem is that existing processes are often structured in a very rigid way – usually because of the IT systems that ‘shape’ these processes. In addition, it can be very difficult to mine data if you have a mishmash of legacy systems tangled up with each other like a plate of spaghetti. These older IT systems were designed on the basis of a hierarchical distribution of information. The external IT environment, however, is now formed by networks of information.
More and more companies are setting up partnerships with other companies so they can offer a more diverse range of products and services. Customers automatically expect that an insurance company and its systems will be able to adapt to the new situation. At the end of the day, you will only satisfy your customers’ hunger for convenience if you can supply what they want, when they want it.