When asked, insurance carriers can quickly articulate how embedded insurance advances their distribution goals. They can often name several benefits of embedded coverage for the customers who purchase that coverage as well.
Ask insurers how embedded insurance benefits their non-insurance business partners who offer that coverage with the purchase of a service or product, however, and silence may follow. Carriers do know how their business partners benefit from offering embedded insurance — but since they don’t deal with these benefits as immediately as they deal with the benefits to themselves or their insureds, it may take a moment to articulate what’s in it for other businesses.
Insurers that can explain why a business partner’s chief customer officer (CCO) needs to embrace insurance as part of their customer retention management (CRM) system can more easily build strong relationships and create value through better distribution.
The role of a chief customer officer is to focus on a business’s customers. Service, retention and relationships all fall within the CCO’s wheelhouse, and it is the CCO’s job to create and champion a unified vision for every customer-facing department and team.
Different customers have different relationships with various businesses. Some involve themselves with a business only sporadically, when they have a specific need that business can meet. Others develop a deeper relationship over time.
This has long been the case. In examining the behavior of theater ticket buyers, researchers Ellen Garbarino and Mark S. Johnson found that occasional customers maintain their relationships with a business based on satisfaction with their most recent purchase or interaction. Committed customers such as subscribers, however, maintain their relationships with a business based on loyalty and trust.
Every business — insurance or otherwise — seeks to build those deep, loyal relationships with customers. Trust thus becomes an essential consideration for chief customer officers.
For many customers, trust depends on the perception that the business in question is reliable, especially when customers face trouble. Customers who trust a company “know they can expect to be in good hands should they run into trouble,” writes HubSpot’s Jay Fuchs.
Insurance offers a way to build this kind of customer trust. It does so by demonstrating that, should something go wrong, customers have a safety net. The coverage they purchase alongside the product or service — coverage specifically tailored to that product or service — provides the reassurance that the customer will be in “good hands” if trouble strikes.
Embedded insurance, which is included in the purchase of a product or service, relies heavily on technology to work well. This is particularly true in the case of risks that are more complicated to underwrite.
Chief customer officers rely on technology to help their teams succeed as well.
A customer relationship management (CRM) system is a tool that allows businesses to track details about customers and manage relationships with those customers. CRM software is one of the fastest-growing software types, with an estimated global market value that topped $40 billion in 2018, writes Marshall Hargrave at Investopedia.
Data collected in a CRM may include:
CRM data helps customer service staff make connections by providing relevant information about a customer at any given moment. These connections are the foundation of customer trust.
Defining customer trust can be difficult; measuring it can be even harder. According to Barbara Bukovac, vice chair of consumer markets at PwC, three themes reappear consistently in customer and employee discussions of trust:
Embedded insurance can help CCOs communicate each of these themes to customers.
Customers are willing to share their data. A 2020 report by Formation.ai found that 81 percent of respondents were willing to exchange basic personal information with a company in order to get a more personalized experience. When a company is transparent about how they will use that data, 83 percent of customers say their willingness to share information increases, with 34 percent saying they are extremely willing.
But personalization isn’t all it takes. A large majority (77 percent) of respondents said that companies aren’t doing enough to earn their loyalty. “Consumers want to receive something in return” for their information, writes marketing consultant Eileen Brown at ZDNet.
A well-executed embedded insurance program can meet customers’ needs for transparency and data protection while also giving them a return on their shared data. A business that offers embedded insurance, for instance, can also offer transparency by showing how information related to the coverage will be used to provide that coverage. When insurers and their business partners’ CCOs work together to address data security concerns, the result is a more robust offering — and a source of trust-building for customers.
Treatment of employees also affects consumer loyalty. In an Edelman study, 27 percent of respondents said a company’s treatment of its employees is a major consideration when deciding to make a first purchase, and 29 percent said employee treatment affects their decision to become a loyal customer. When asked how their purchasing has changed due to the pandemic, 31 percent said they care more about how companies treat their workers than they once did.
Consumers tend to receive information about employee treatment in two ways: Through a company’s public communications, or through their own individual interactions with an employee. Individual interactions are a big source of trust. In the Edelman study, 45 percent of respondents said that they considered employees to be a “credible spokesperson for brand trust” due to their personal connection to the brand and the topic being discussed.
Customers’ willingness to trust individual employees is crucial to building an embedded insurance relationship. When customer service staff have access to insurance information through the CRM, they can offer an informed perspective to customers who may benefit from the embedded coverage. Customers are more likely to trust both the purchase and the insurance when it comes from an employee who speaks directly to them.
The pandemic also spurred new focus on ethical behavior, especially among businesses. According to Chief Experience Officer Amelia Dunlop and fellow researchers at Deloitte, 82 percent of customers said they were more likely to patronize businesses that focus on protecting the safety and well-being of employees.
Business ethics is a broad topic, and embedded insurance cannot address it all. Yet offering embedded coverage sends a strong message on one ethical point: This company and its products can be trusted.
Customers are familiar with insurance. They know that insurers evaluate risk — and that if a risk is too great, no insurer will offer coverage for it. Embedded coverage available for a product or service signals that an expert has evaluated the risk associated with that purchase and deemed it not too big to insure.
Offering embedded coverage also boosts transparency. A company that offers coverage admits that its products or services may not be perfect — but that it, and its insurance partner, stand behind them.
The pandemic appears to have had a positive net impact on customer trust. More customers report greater trust in businesses now than before 2020, writes J.C. Lapierre, U.S. chief strategy and communications officer at PwC. Embedded insurance can help both insurers and their business partners continue to build and strengthen these trust relationships.
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