The Most Important Metric in Claims
Managing customer service means tracking a large number of metrics on a regular basis. In the insurance industry, however, there is one metric that has a much higher value than any others. It is customer satisfaction of the customer post claim. Keeping track of this metric is the key ingredient in securing and growing the insurance business market share, producing higher margins, and growing the business.
Insurance is a very different business when it comes to customer service. In claims, customers do not pay for an immediate access to a product or service. They pay a premium for something that has not yet happened. The only thing expected from the insurance in return for continuous payments is a settlement if the actual event that is being insured from occurs.
Comparing with other businesses that immediately get the access to the product or service, insurance customers purchase insurance coverage based only on public perception, reputation, and availability of coverage for a given brand. Hence, advertisement and marketing campaigns for insurance companies largely revolve around grand advertisement campaigns that attract new customers and secure the present customers with elements of brand recognition loyalty.
Looking at this model, the competition is fierce and customer acquisition costs through TV and ad campaigns become very expensive. Nevertheless, it is easy to keep typical insurance customers happy. They are glad to pay the premiums, but the first loss is exactly when the insurance “product” will finally be taken to be tried, tested, and evaluated. The result of this experience will make or break the account with a customer either being happy how the claim was handled, or simply leave, which can be very easily done with modern mobile accessibility to a wide set of competitive insurance carriers.
Insurance companies that base their customer service performance on Net Promoter Score which measures customer loyalty based on customer satisfaction will find that it is a metric that carries very little weight for claims. Customers who buy based on image, perception, popularity and brand recognition will quickly leave after even a single bump is experienced during the claim handling process. The last thing anyone wants to see is a business model that resembles a leaking funnel – bringing more customers from the top, while losing more customers through poor customer service in claims.
The most important metric in insurance, hence, is customer satisfaction measurement of the customer post claim. It is very unproductive to spend enormous funds on ad campaigns only to lose the customer after a single loss event. An insurance company that can build great reputation simply through the quality claim resolution process can prosper and grow comfortably within its niche with fewer expenses in the area of the advertisements, especially in light of modern social marketing availability and lower marketing costs. Besides, in words of Scott Stratten (Twitter @unmarketing), a marketing Guru and an author of a book called UnMarketing, "Why put more emphasis on spending more on ads, when customers make more effort on trying to avoid them?"
Knowing the most important metric in claims and focusing on its improvement, the business model and the growth strategy of an organization begins to change. Customer service takes a higher level of precedence with innovation and technology to drive much of the efficiency in keeping the customers aware of the status of their claim, helping collect the evidence in the easiest way possible, expediting automatic payments, and negating risks of fraud.
With modern customer experience trends and growth of social feedback, customer satisfaction metric post claim plays the most important role in insurance organization. It leaves only two options. The first is to compete on service quality. The other option is to compete on lowest, cheapest price.