Return of the Guru

Do You Really Want to be “Customer Centric?”

Ara Trembly
Insurance Experts' Forum, July 19, 2010

It’s been nearly a decade since customer relationship management (CRM) and the accompanying notion of being “customer-centric” burst onto the insurance technology scene as the latest wonder drug to cure all our industry’s ills.

The funny thing, though, is that after all this time we still don’t seem to have gotten it right. My colleague Carrie Burns at INN recently reported that after analyzing results from more than 140 large North American firms, 17 of which represent the insurance industry, Temkin Group came to the conclusion that companies are “in early stages of customer experience maturity.”

The group asked respondents to rate their companies on four competencies, including purposeful leadership, customer connectedness, compelling brand values and employee engagement. The survey found that only 3% of firms had achieved the status of being “customer-centric organizations,” while 33% of firms were called “customer-oblivious organizations.”

One begins to wonder just what it means to be “customer centric.” Does it mean that we simply give customers everything they want? If so, I would suggest that insurers simply give all customers policies with zero premiums and guaranteed payoffs for any claim, no matter how ridiculous. And oh yes, let’s make sure that claims payment is immediate and without question.

Obviously, that version of customer-centricity would put us all out of business. Perhaps what we mean instead is that we should give customers all that they would reasonably expect in the way of products and services. While that sounds much more practical, it also puts the definition of “reasonable” in the hands of customers who, when it comes to spending their own hard-earned cash, may not be as reasonable as we hope they will be. And it is inevitable that our customers will disagree among themselves as to what they can reasonably expect.

Maybe what we want is to cater to the wants and needs of our most profitable customers. That seems like a good strategy—as long we don’t want to attract additional customers who may not find our offerings or service “reasonable.” It also occurs to me that the most profitable customers will be the targets of our competitors as well, thus setting up a bidding war that could border on desperation, depending on just how profitable these customers are.

Take, for example, the notion put forth by one insurer that customers can “name their own price” for auto insurance—a great illustration of trying to give the customer everything he or she wants. Of course, this insurer doesn’t bother to point out that if one names an extraordinarily low price, they may get less than optimum coverage or services. As a competitor to this insurer points out in its own advertising, an auto policyholder may thus not be covered if a tree limb falls on his vehicle and causes significant damage.

So where exactly do we draw the line between serving the customer and giving away the store? The answer is that while we want to please customers, we have to do business in a responsible and sensible way, which is to say we must be “company-centric” first. If we’re offering a quality product with competitive pricing, and quick and caring customer service (optimally from human beings), we really don’t have to worry about gimmicks that appear to be wonderful features but may instead wind up biting our customers in their hind quarters.

It would be really interesting to find out if the “customer-oblivious” companies in that survey are doing any worse than the few “customer-centric” firms. My prediction is that the companies that fare best—regardless of their “customer-centricity” status—will be those who attend to their own goals and strategies first, rather than desperately trying to measure and match the shifting attitudes of the buying public.

Ara C. Trembly (www.aratremblytechnology.com) is the founder of Ara Trembly, The Tech Consultant, and a longtime observer of technology in insurance and financial services.

Readers are encouraged to respond to Ara using the “Add Your Comments” box below. He can also be reached at ara@aratremblytechnology.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

Comments (3)

While making some good points about avoiding blind catering to customers' every expressed whim (couches and espresso in the bank branch lobby, anyone?), this post misses the larger point of the importance of customer-centricity -- a focus on reliable and accessible customer data to drive marketing strategy, service strategy, risk analysis, and profitability analysis.

See full response at http://blog.novarica.com

Matthew Josefowicz
Director
Novarica

Posted by: Matt J | July 23, 2010 4:11 PM

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I enjoyed your article. I think the goal is relative to the organization. There's no perfection, just like there's no point where infinity ends...you just keep striving to do the best you can with what and whom you have to do it. As long as the mutual goals of having a great organization and providing great customer services are held as true principles of the company, things should turn out well for both parties.
There are always exceptions. And it's how we handle those exceptions that show the true mettle and realization of that goal.

Posted by: larrylipman | July 23, 2010 1:35 PM

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I don't think of customer-centric as giving everything for nothing, but putting yourself in the customers' shoes. that is, is your website easy to navigate for a first-time visitor? Are the phone menu choices burdensome or friendly? It is easy it find and fill out forms, to get information/explanations? Do we make decisions because it makes the experience easier for the client or for ourselves/our salespeople/our shareholders?

Posted by: wendy.hersh | July 23, 2010 1:13 PM

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