The word “digital” is most commonly associated with front office transformation – client-facing activities, often in the service of new business acquisition. This is for good reason, of course. Driven by their experience in other industries such as retail and banking, customers are demanding digital capabilities from their insurers as well. Customers – from individuals to companies – expect that everything from access to information, to the ability to bind a new policy, initiate and manage a claim and even pay the bill should be “easy to do” and available digitally. Our consumer and SMB research reinforces this, indicating that net promoter scores (NPS) can swing 60-70 points when the entire journey is “easy.”
With that in mind I’m continuing on my promised theme of looking at all of the steps in the value chain to explore digital transformation across the customer journey. This month I’ll take a look at billing and payments, an area that, at first glance, might not be an obvious choice for digital reinvention. But it is a great way to engage with customers, optimize a process that is often manual and present additional selling opportunities as well.
Not coincidentally, we also have a recently published thought leadership paper, The New (Digital) Face of Billing: Defining Multi-Line Insurance Billing Excellence, that takes a deeper look into digital billing.
Thinking Beyond Transactions
In my previous posts, I have talked about the need for a service mentality instead of the siloed, transaction-focused approach insurers have traditionally taken since the automation of business processes 50+ years ago. To drive value from digital investments, insurers need to expand their thinking beyond transaction processing. Any interaction should be taken as an opportunity to develop and enhance the relationship with the customer, not as simply a means to an end.
In other words, billing is not just about getting the premium paid, although that must be done efficiently and effectively. It is one of the rare opportunities insurers have to interact with their customers in a relatively benign situation (as opposed to the stressful, often contentious interactions associated with claims), and it must be embraced as such.
This does not just mean cross- and up-sell, although that can be an element. Customers will be wary of this, particularly if done in a clunky way, particularly when offering a product that does not match the customer’s unique needs. The overall approach must expand from a basic indemnity mentality to one of service – and the billing approach must evolve beyond simply accepting a customer’s premium. It’s important to keep in mind that the customer engagement mentality is needed across all customer “types”– from individuals, to businesses, to agents, to 3rd parties and other partners.
The Customer Journey
Digital transformation must always begin with mapping the customer journey. Identifying key touchpoints and “moments of truth” in billing is the first step to mapping interactions and defining the required capabilities. Journey mapping allows you to consider how to roll out capabilities incrementally, giving you the chance to experiment with different services for unique groups and to quickly see what works and what does not.
Understanding your customers and their needs is of key importance. Not every customer will benefit from an in-depth engagement at the time of billing. Some customers may be only interested in a hands-off billing experience, with, for example, a credit card being charged automatically on a monthly basis. Building an automated, paperless process for these customers is likely the right approach, while spending time and effort on building a deeper relationship may not result in a strong ROI. But even these customers can benefit from clear, natural-language explanations of such things as changes in their premium or renewal options.
Other customers may benefit from a deeper interaction. The key moment of truth for these users can be providing opportunities for them to lower their premium through product bundling or identification of local risk factors that they may be able to address. While lowering premium payment may seem at first glance to be a negative, the improvement in customer engagement and satisfaction – with associated Net Promoter Score (NPS) – will more than pay for the difference.
Still others may be interested in an interactive experience that doesn’t require them to speak with a human. AI and chatbots are becoming increasingly sophisticated in providing a “human-like” experience in a mobile setting, which can be a powerful way to prevent relatively costly calls into the call center as well as provide an engaging way to interact with customers.
But only by taking the time to understand your customers through journey mapping will you be able to make the right investment decisions. And don’t just rely on your own experience – you need an “outside-in” perspective to do it right.
The customer journey for billing does not end at billing. It is important to note that billing is an enterprise process – it touches on many different parts of the business. For the advanced capabilities I’m highlighting to work, it may require a wider transformation to take place first. A 360-degree view of the customer – all of their policies, correspondences, claims, etc. – is needed to offer bundling options. Customer analytics will provide cross-sell options. Core system replacement may be needed to offer paperless processing. These are just a few examples.
This is another reason why mapping the customer journey is key – it allows you to see where the process breakdowns and bottlenecks exist that need to be addressed in order to create an engaging customer experience in billing.
Our research shows that all generations (including the younger “digital natives”) use a variety of touchpoints for questions and service requests when it comes to billing. This is important to map in your customer journeys, and important to build into your operating model – the people, processes and technology around billing that make it work. People may still want to pick up the phone and ask why their premium went up (our studies show at least 30% of calls are billing related). But by being proactive and providing clear information to customers around the billing process you can prevent a certain amount of those calls from coming through in the first place.
Do It Right
Billing is an opportunity to engage customers, but an occasional one at best. It is of primary importance to know how customers want to be billed and to pay – electronically, with a paper check, via bank transfer, etc. – and how they will want to interact if they have a question or concern – self-service, call center, etc. But the most fundamental need is to make sure the bills themselves are accurate. Cross-sell or risk management exposed through the billing process will not have much effect if the client is double-billed or if their payment was not correctly recorded. As Novarica sums up succinctly in their recent report The New Normal for P/C Insurers: 100 Data, Digital, and Core Capabilities, “errors can be costly.” And those errors are not only costly in the sense of having more people call into your call center, which they are still likely to do as noted above when there are problems, but also making it far less likely that those customers will become advocates.
Mind the Gap
In our thought leadership from earlier this year, Insurance in the Digital Age: Transforming from the Outside In we referenced the growing gap between customer expectation for digital services and the ability of insurers to provide them. Billing is a key moment of truth for customers and a real engagement opportunity for insurers. While this makes it an excellent place to get started with your overall digital transformation, it is important to remember that you need to look at the end-to-end process as billing flows through many systems and data stores. This should not dissuade you from tackling billing, but don’t be surprised if there are some basic things that need to be done with the underlying technology (including considering retirement of old, inflexible core billing systems) and processes.
It may seem intimidating, but the benefits in terms of longer-term cost savings, efficiency and customer engagement will be worth the effort … while bringing billing into the digital age.