Putting customers at the centre of business transformation
The old adage that ‘the customer is king’ is clearly embraced across the IT channel industry.
It's an area where the majority of businesses take an approach that focuses on providing a positive customer experience throughout the sales cycle in order to drive profit and gain competitive advantage.
In fact, a growing number of channel professionals would already describe their business as ‘customer-centric’, whereby more products and services are increasingly being developed in line with customer requirements instead of the sole interests of the vendor or service provider.
However, other companies plan to transition to customer-centric business models in order to stay not just competitive, but also relevant in what has been one of the most disruptive business climates in recent memory.
Delivering a high-quality customer experience is absolutely key to drive profit and gain customer loyalty, and therefore competitive advantage, especially in uncertain times. Adopting a customer-centric mindset will not only ensure that customer needs are being met successfully, but it will also help build trust as well as a solid reputation.
Virtual communications have accelerated over the last year and have given businesses the potential to disrupt more digitally mature competitors. A lack of meetings has forced the world to go online, and what started out as an inconvenience has quickly become the norm and a vital lifeline both in business and everyday life. People from all walks of life have learned to embrace video conferencing and collaboration tools and reduced their need to use traditional tech like the office printer, therefore entering into a period of progression that will not be reversed. Even as the infection rate falls, converted customers will not accept a process that involves them seeking in-branch assistance for a service that they should be able to get online.
A drop in spending also means that customers are becoming increasingly conscious of what they are getting for their reduced and constraining budgets. Predictions of rising rates of unemployment following the end of the furlough scheme and the shrinking economy mean businesses will continue to feel the pandemic’s effects for some time and recovery will not be as fast as once hoped. Survival for businesses in this time will be challenging, especially as these events have changed their customers’ expectations.
What both areas have in common is that they are solved by digital transformations that are human-first rather than technology-first. The challenge being, how can a company justify new customer-centric initiatives when they are under huge pressure to cut costs and are facing unpredictable supply and demand?
Customers who trust a company and are pleased with its products and services are unlikely to look for alternatives. This loyalty ensures they will continue to spend with a trusted partner even in hard times. However, if savings do need to be made, organisations can make cuts and service their customers better if they take a closer look at customer behaviour. Internal inefficiencies can cause friction in the purchasing experience, and processes that frustrate customers should be automated, changed or cut altogether.
Customers are at their happiest when they feel that businesses not only understand their needs but are able to pre-empt them. In a time when guaranteeing supply requires major foresight due to restriction on movement and insatiable customer demand, what better capability can there be than the ability to be proactive when understanding customer needs?
Today, customers desire more reciprocal relationships from partner businesses. They want to be valued for their purchases and for their loyalty, and demand companies understand their motivations and be in tune with their entire experience. With that comes an expectation that employees need to contribute to the customer journey and offer value to the relationship at every touch point. To make this happen, companies need to support their frontline employees with ways to anticipate customers’ needs and provide them with the right tools to make their interactions more authentic and aligned with the brand promise.
New demands placed on businesses during COVID-19 are creating new challenges for traditional organisations. Going virtual, decreased spending, internal cost-cutting, and unpredictable supply chains are further adding to the pressure to transform into the digital service customers demand. However, difficult it may be to make changes within an organisation, businesses that embrace digital transformation that is centred on humans can achieve both savings and excellent customer experience. This will make them future-proof and increase their ability to survive in an increasingly disruptive economy.
Insurtechs are winning the race with legacy system companies
Nestled in its own place within the world of financial services, insurance is arguably more unpopular than retail banking.
That’s hardly surprising given that, from a customer service perspective, insurance is something of an off-kilter transaction. You pay a sizable premium in exchange for a service you hope you will never have to use. This image problem is exacerbated by ubiquitous tales of insurers not paying out when it is time to make a claim.
The insurance sector has long been due to an overhaul, and this is where the disruptive force of insurtech comes in - one of fintech’s most upwardly mobile subcategories. Accordingly, last year, insurtech in the UK alone attracted £262m in investment, a growth of 60% on 2019, according to Tech Nation. Insurtech’s momentous growth has been captured in a new report by The AI Journal exploring this burgeoning sector.
What exactly is insurtech?
Put simply, insurtech refers to technological innovations that seek to make insurance cheaper to buy and more efficient to use. In a similar vein to fintech, the large, established institutions have been dipping their toes into insurtech, but it’s the disruptors who are genuinely looking to shake up the status quo, diving into and exploiting those areas that traditionalists have little imperative to explore.
Examples are price comparison sites (one of the earliest forms of insurtech that was eventually snapped up by the insurers it initially sought to disrupt), claims software, customisable policies, or even smart-tech-enabled dynamic policies whose premiums can fluctuate depending on changing circumstances.
The latter, for instance, could use someone’s fitness tracker or smartwatch to monitor fitness levels, thus reducing the premium of a life insurance policy; or track a GPS system that records the location of a car and assesses risk levels accordingly.
Most consumers tend to shop around for their insurance needs and perhaps end up buying their contents insurance with one provider, their car insurance with someone else, and their pet insurance with yet another underwriter. Managing all these different policies, with their varying renewal dates and payment terms can be complex. This has led to the increase in apps that pull everything together.
More prosaically, insurtechs are developing AI that uses machine learning to act as an insurance broker, eliminating the need for a human intermediary and therefore offering more cost-effective and impartial advice.
Insurtechs and risk
But there are some obstacles in the way of insurtech’s continued evolution.
Insurance companies are averse to risk. Understandably so, as at the crux of the industry is the role of the actuary, whose job it is to analyse and measure the probability and risk of future events. So it’s little wonder that there’s a reluctance among the traditional players to welcome the disruption that insurtech brings.
Insurance is heavily regulated, a minefield of legality and labyrinthine jurisdiction, which means the idea of shaking it up can be anathema. And why would they, when their old-school business models are working perfectly fine?
There’s an understandable nervousness and unwillingness to work with startups, who themselves need to work with the bigger firms in order to underwrite risk.
While it seems like a catch-22 situation, there is growing, if cautious, interest from insurance companies, who can see the benefits of insurance with a friendlier face, innovative solutions, and a competitive edge through differentiation. As that tentativeness dissipates, the growth of insurtech will gather even more momentum.
Tom Allen's analysis is based on the findings of a new report on the fintech and insurtech industries produced by The AI Journal.