The Home Insurance Customer Experience Leader portfolio outperformed the industry, generating a total return which was nearly double (87 points higher) compared to the Dow Jones Property & Casualty Market Index.
While several property insurance carriers made it into the Leader category many times, Erie Insurance was again the only one that achieved that distinction for every from the years covered by the study.
The Property insurance Laggards within this latest study fell even further behind the Leaders, using the cumulative performance gap between the two portfolios reaching 119 points. (In the prior study, the space was 57 points.)
Interpreting the Results
This study should give pause to anybody who is skeptical of the value that customer experience differentiation accords to an insurer.
The Auto and residential Insurance Customer Experience Leader portfolios generated average annual returns which were more than double that of their Laggard counterparts. The results claim that carriers that consistently succeed in customer experience are usually viewed by the market as more valuable entities compared to those that do not.
That enhanced value is a function of the Leaders visiting a increase in revenue, thanks to happy, loyal customers who spend more together, hang in there longer and refer others.
It's also a function of a more competitive cost structure, because the Leaders can spend less on start up business acquisition due to all of the referrals they receive. In addition, because these firms' happy customers complain less, there isn't as much stress on their operating infrastructure, that also assists in keeping expenses in check.
The Laggards, obviously, are weighed down by just the opposite factors-depressed revenues, high customer churn and profit-sapping, strained infrastructures.
What was notable within this year's study could be that the disparity in performance between the Leaders and also the Laggards wasn't just striking-it was also growing by double digits.
This suggests that the competitive edge enjoyed by Insurance Customer Experience Leaders is both real and strengthening. That should certainly concern any carrier that frequently finds itself in the Laggard category, because these results do not bode well for businesses that struggle to endear themselves to customers.
Those angling to interrupt into the Leader category ought to be forewarned: There is no “silver bullet” for achieving customer experience excellence. Latching on to some buzzword – big data, insurtech, AI, etc.-won't get you there. Neither will advertising how great your customer experience is. The truth will always overshadow the marketing.
Companies which do customer experience well-inside and out of doors the insurance industry-recognize that there are no shortcuts. Customer experience isn't some “initiative du jour” for them. It's not just part of their business. It is their business.
Those leading firms often depend on a handful of time-tested experience design principles. (Begin to see the white paper referenced below for examples). However, in their core, why is the Leaders different is the unwavering commitment to always start with the customer-understanding their needs and desires, their frustrations and aspirations-and then working backward to craft a distinctive, impressive, end-to-end experience.
Fundamentally, it is primarily the outside-in philosophy that gives these companies their competitive edge. And, because this study so clearly illustrates, the strength of that advantage shouldn't be underestimated.
