We’ve been taking a look at how insurance distribution is being impacted by a confluence of forces and how insurance companies need to respond by following a 2D strategy approach.
In my first two blogs we detailed the four fundamental drivers of the changes. In my first blog, “Bringing Insurance Distribution Back Into Sync Part 1: What Happened to Insurance Distribution?” we talked about how new expectations are being set by other industries and technology. Last time in “Unending Waves of Change in Digital Expectations and Distribution Issues ,” I discussed the other three: new products are needed to meet new needs and risks distributed in new channels; channel options are expanding; and the lines are blurring between insurance and other industries.
Today we’ll dive deeper into the components of the 2D strategy, which calls for:
- Optimizing the front-end with a digital platform that orchestrates customer engagement across multiple channels.
- Creating an optimized back-end that effectively manages the growing array and complexity of multiple distribution channels beyond the traditional agent channel.
Optimize the Front End
The digital revolution is being powered by an array of technologies and the changing expectations of customers across all demographic groups. As customers gain market power, they are increasingly comfortable with technology, have a stronger voice, and are willing to use it to make their expectations and needs known. In this new world, all technology should be viewed as customer touching, because it directly or indirectly influences the customer experience.
As a result, many insurers are rapidly investing in digital initiatives and technologies, but too often in a tactical, fragmented and reactionary approach. In today’s world, insurers must look to orchestrate the customer experience through any channel and technology that consumers choose to use. Whether they choose agents, websites, mobile apps, portals, compare sites, aggregators or retail firms, they want a consistent and compelling experience that will give them confidence in the insurer.
This demands a platform that enables personalization of portal and mobile solutions based on the unique customer journeys and personas defined by each insurer. To fulfill their unique and multi-channel distribution and customer experience needs, they must be integrated with other core insurance solutions and an extensive partner ecosystem that integrates content, channels and technology.
Optimize the Back End
In a fast-paced competitive market, distribution channels and effective management of those channels is increasingly critical. Designing, developing, maintaining, and managing productive channel relationships is increasingly critical to achieve sustainable competitive advantage.
Effective distribution management should cover a broad array of capabilities to drive operational effectiveness, including distribution registration and licensing, compensation plan design and configuration, compensation payments and reconciliation, and performance management reporting and analytics. Channel management and productivity are critical in contributing to overall growth and profitability. The ability to improve channel productivity, reducing sales cycles, and increasing cross-sell and up-sell opportunities is increasingly important for long-term success.
To stay competitive and keep their distribution channels engaged, insurers are increasingly putting a priority on engaging and servicing these channels. From providing access to their production and compensation reports, to providing new leads, licensing compliance and education, all of these offer opportunities for channel service excellence to retain and grow the channels. Enter the growing need for effective distribution management, and systems that improve carriers’ capabilities to manage multiple channels and multiple factors.
An insurer can have the best insurance products, pricing and advertising to build its market presence, but if it doesn’t have a distribution ecosystem underpinned by a connected, digital front-end and a robust distribution management system on the back-end to optimize and maximize these channels, its customer growth and retention potential will remain limited. If it is difficult to effectively manage or, better yet, optimize compliance, compensation and performance of distribution channels, insurers could end up losing business to competitors that can.
Customers expect and demand multiple, coordinated channel options to learn about, shop for, buy and use all products and services, and insurance is no exception. Just like long-established retailers will remodel every few years, the place you meet your customers can’t remain untouched without your organization and its products losing its sense of value. Building an integrated digital distribution framework within a foundation of modern distribution management capabilities will provide new efficiencies, new opportunities and additional fuel for growth.