Single View of a Customer – An Unattainable Dream or Inescapable Reality?

A number of C-Level executives from insurance companies and technology providers recently met with MarkLogic and Insurance Post to discuss “Single View of a Customer” (SVOAC).

This hot topic has been an industry buzzword across insurance and other verticals for years. However, despite an acceptance that it would be beneficial for both organisations and their customers, there appears (from the outside at least) to have been little progress from insurers in actually getting closer to having a true 360-degree view of their policyholders.

Cross-selling

Cross-selling was the first topic for discussion, as this is one of the main areas where SVOAC could help the insurance industry. There is a data problem with cross-selling, which is the issue of consent. Following GDPR, insurance companies are collecting data from agreeing customers but aren’t sure how it can be used or if it’s even appropriate to use it to sell additional services customers have not asked for. This was a question that the room did not seem to have an answer to, showing the increased need for data controls and awareness following GDPR. An additional issue is that data that is relevant to one section of the business may not be relevant to another. It is easy to imagine that the specific data points used to sell health insurance might not be relevant to whether someone needs house insurance as well.

The consensus was that cross-selling has historically run into difficulties at insurance companies, but these are often people-led rather than due to data consent issues. When you have a traditional insurance company, sales bonuses and incentives are often tied to individuals or vertical teams. This means that there is no incentive to cross-sell.

Stumbling Blocks – Technology or Culture?

There is also a worry that current clients will not receive the same level of service at other divisions of the company, which will lead to the loss of the current business. The prevailing attitude was “why take the risk, if your client is happy with your business and your bonuses are secure?” or “why would I let another division offer a 10% cut on my product to land a client when that affects my bottom line?”

This attitude is not the responsibility of the salespeople themselves but rather the broader industry, which is stuck in its traditional cycle of selling procedures. Cross-selling has historically performed badly, so businesses do not see the need to invest either in technology to support it or in systems to reward successes in that area. Because they do not actively put investment into generating a cross-selling culture, that culture doesn’t develop, and it continues to underperform.

The issue with this is that cross-selling works in many other industries and is cited as a positive where a customer appreciates you understanding their needs and offering tailored packages for them. Cross-selling in a world of big data is becoming a norm, and customers are experiencing it on many of their business deals and in their personal lives.

Also, newer data-driven entrants to the market will cross-sell and have this built into their DNA, so failing to adapt means losing business to companies that not only cross-sell as a matter of course at the point of sale, but that likely due to their more agile systems and data can offer a cheaper premium and better customer service. For example, in research conducted by PwC and StartUP Bootcamp, 80% of those surveyed believe the future of insurance is actually prevention, which is a data-driven solution to stop insurance threats before they happen.

The Solution: Digital Transformation

The answer for traditional and legacy insurance companies is a blunt one –  it’s time to transform. This means:

• Installing systems that can bring data together from across the business and break down silos between sectors, making data accessible to all divisions equally
• Updating the company ethos to put the needs of the customer first in every aspect you can help them
• Hiring a chief customer officer and putting them on the board to emphasise the new customer focus
• Change your incentive scheme to reward individuals/teams that cross-sell, and increase the revenue for the entire business as a whole
• Re-focus the profit reporting from teams to the company as a whole

The Balance of Profit and Loss

This also raised an interesting question at the table. What do you do about unprofitable lines?

Many companies try to increase profits by cutting unprofitable lines, and it was agreed that this was a valid strategy. Why should any company sell a product at a loss? But the point was raised that with a greater awareness of your customer’s needs, you can ask the question, is this product the one that will win/lose/retain this customer? Many customers have some awkward items that for regulatory or business reasons they need to maintain insurance on, and they will shift their entire business to the provider that guarantees to maintain insurance on that item. This is where maintaining this customer focus and single customer view allows you to justify this practice, by saying that the customer is profitable as a whole. A single unprofitable line can be maintained if it guarantees customer retention.

Innovation Is No Longer an Option

This doesn’t mean that every salesperson is now required to be a generalist; there are still benefits to a customer and an organisation for having specialist salespeople for each sector. This is one area where legacy insurance companies can distinguish themselves from data-driven newcomers. An algorithm isn’t a substitute for real-world industry knowledge that companies can bring to the table.

Everyone at the table agreed that innovation was required, because if it didn’t happen, the threat from data-driven newcomers would only grow larger. No one could put a timeframe on this exactly, whether it would be 2-5 years or longer, but the change is definitely coming. The consensus was that no one wanted to risk being the “Blockbuster Videos” of the insurance world, so innovation and change was no longer optional.

Find out how MarkLogic helps global insurance companies accelerate data-driven digital transformation with a SVOAC by reading about our Operational Data Hub for Insurance.