July 14, 2021
The 4 Building Blocks to Successfully Transform your Customer Experience
Customer satisfaction equals business success
No surprise, there’s a strong positive correlation between customer satisfaction and the financial performance of individual companies. This has been empirically validated by a study1 that looked at customer satisfaction and performance using the American Satisfaction Index, the ACSI; the index could predict how well companies performed in terms of corporate revenue and earnings growth. A satisfied customer is therefore an economic asset to a company and can be expected to generate future income.
Getting customer experience wrong can be a serious risk to business, and one that needs to be avoided and/or quickly fixed. Even after just one negative experience2:
- 37% of customers would change their supplier
- 28% would post a negative online review
- 26% would complain via social media
- 13% would tell friends/colleagues.
Research shows that a customer’s experience is in fact a result of the utility (e.g. price and services) and something that’s often underestimated, a positive emotional connection.”
Getting customer experience right, on the other hand, can be a competitive differentiator, as agreed in one survey3 by 81% of organizations. In another survey4, making improvements to the customer experience led to increased customer loyalty (92%), an uplift in revenue (84%) and cost savings (79%).
Research shows that a customer’s experience is in fact a result of the utility (e.g. price and services) and something that’s often underestimated, a positive emotional connection5. Experiences that are linked with emotions are far more memorable than others. One survey6 reported that:
- 50% of customers say that emotions shape their experience.
- Businesses that make emotional connection a priority outperform their competition by as much as 85%.
- Customers who feel emotionally connected with a company are three times more likely to repurchase.
- 44% of customers said that they would be less likely to shop around for better prices if they felt an emotional connection.
So we need to look at customer experience from a holistic perspective. We can’t just deliver what’s needed from a purely utilitarian perspective, creating a positive emotional connection (“emotional value”) with the customer is equally as important.
Having the right building blocks then enables the organization to transform the customer experience, and to transform faster.”
To strategically transform the customer experience
This is a journey that starts with a customer-focused vision and corresponding culture.
Having the right building blocks then enables an organization to transform the customer experience, and to transform faster – these building blocks are (1) a decentralized and flexible architecture, (2) the capability to harness data and leverage AI, (3) the ability to integrate into the wider product/services ecosystem and (4) an agile culture.
1. Implement a decentralized tech architecture – for the freedom to rapidly iterate
- In monolithic applications, even a small change, e.g. a new column in a database, can sometime take weeks.
- With a decentralized architecture, complex tasks are broken down into manageable processes that operate independently and communicate through language-agnostic APIs.
- Incremental improvements, e.g. following customer feedback, can be delivered fast – e.g. within days or even hours.
- Enables easy experimentation with new approaches.
2. Harness data and leverage AI for a fast, tailored and intuitive customer journey
Strong data harnessing and AI capabilities (aside from the many provider benefits, such as for decisioning and fraud detection) take the customer experience to the next level, enabling for example:
- Recommendations, e.g. Starbucks’ product pairing based on the weather.7
- Personalisation, e.g. Netflix uses data to personalize its content and service to customers.
- Faster turnarounds, e.g. rapid decisioning for life insurance via Verisk’s voice-based smoker detection model, instead of traditional nicotine testing.8
- Value-added customer services, e.g. chatbots9, Paypal’s use of AI to react much faster to customer issues10 and Ping An’s multiple use of AI for enhanced customer experience including rapid claims payments.11
3. Seamlessly participate in a digital ecosystem for added customer value
A digital ecosystem is an interconnected, interdependent network of various market players that combine their strengths to create better value for the customer.
Orchestrating a new digital ecosystem is not trivial. Joining an existing ecosystem is in many instances the best strategy and the fastest way to access a broad range of capabilities that together improve the customer experience. For example, we have seen several cases of service providers (health clubs, clinics, hospital, insurers, payment service provider, wellness apps and many others) joining hands on a common platform.
Strategic ecosystem participation and partnerships can allow an organization to:
- Scale much faster.
- Strengthen their value proposition.
- Reduce costs.
- And most importantly, improve the customer’s experience.
4. Implement agile processes so solutions are fast and flexible
At the heart of ‘agile’ is the ability to move and react quickly, incrementally and continuously. An agile organization will:
- Apply continuous customer listening.
- Maintain momentum via small, frequent improvements.
- Focus on initiatives that deliver perceived value for the customer.
- Enable collaborative cross-department teamwork and accountability.
- Reward – enable and reward persistent internal questioning, building and learning.
Offering the best customer experience is at the centre of our approach. This is reflected in our products and services.
Find out more about Life Risk Solutions from PartnerRe.
For more information, please get in touch with your usual PartnerRe contact/s.
This article is for general information, education and discussion purposes only. It does not constitute legal or professional advice and does not necessarily reflect, in whole or in part, any corporate position, opinion or view of PartnerRe or its affiliates.
8 smoker propensity model https://www.verisk.com/insurance/life-insurance/products/tobacco-usage-propensity-model/