In today’s omnichannel environment, positive customer experiences are increasingly reliant on digital solutions. It’s time for the insurance industry to adopt the omnichannel sales journey to improve customer satisfaction and boost sales.
Less than a decade ago, offline-only used to be the dominant channel for customer purchases. However, with the rapid advancement of technology and the effects of the recent pandemic, digital adoption has accelerated and gained prominence. Customers are increasingly demanding digital services and solutions, and as much as 86 percent1 of all customer journeys involve some form of digital touch. Further, around 50 percent 1 of all customer journeys are hybrid in nature, where customers switch between channels, emphasizing a need for omnichannel experience.
This development has also been prominent in the insurance industry. Insurers are investing heavily in digital transformations, re-designing the customer journey to include more digital touchpoints in an omnichannel setting to meet demand.
The impact of offline-first legacy on realizing omnichannel sales journey
Fragments of the traditional offline-first mentality are still deeply rooted within many organizations, preventing them from fully utilizing the potential of omnichannel sales.
As a result of the offline-first legacy, we experience that insurers typically face several challenges preventing a successful implementation of the omnichannel distribution model:
- Unclear customer journey preferences. Customer journeys have become increasingly complex with the evolving digital ecosystem, preventing insurers from gaining visibility on customer needs and improving experience.
- Offline-first sales force. While insurers have largely embraced new digital sales channels, internal capabilities are lagging behind with many insurers not adequately equipping sales with the right resources to successfully promote digital sales.
- Channel silo-thinking. Traditional organizational structures are often divided into channel teams, and with little to no overlap in strategic initiatives and cross-functional operations.
- Unfit offline products for omnichannel. Many existing insurance products are too complex and require detailed information to arrive at a final offer, preventing it from being effectively sold digitally as-is.
- Counterproductive incentive models. A typical pitfall for digital implementation projects is an insufficient connection between the new digital strategy and the employee incentive model, resulting in failure to encourage lead sharing across channels.
These challenges prevent customers from experiencing a seamless customer journey. With multiple points of entry and interactions across several touchpoints, customers need fit-for-digital offerings and quick access to advice options to lower drop-off rates when switching between channels. Our recent study shows only 53 percent of insurances can be purchased online, with eight percent of providers offering online sales meetings and 13 percent offering chat support for prospective customers. This leaves customers with purchase barriers, hampering conversion rates.
For a smooth sales process, digital tools should be utilized to ensure a seamless transition between offline and online channels. The future omnichannel distribution model must adopt a holistic channel approach, offering a unified customer experience (CX) from need development to claim services.
Five key requirements for successful omnichannel implementation
1. Understand and track the customer journey
To offer a unified CX, the first step is to understand customer behavior, which has become increasingly complex with the evolving digital ecosystem. Insurers can leverage data analytics to map individual customer journeys, touchpoints, preferences, and pain points across channels. This process helps us understand what drives purchase decisions and what causes drop-offs, providing opportunities to enhance experience and improve engagement and conversion.
For instance, potential customers may research insurance products online in the initial step of the purchase journey. If a customer receives help from an advisor but ultimately opts for an online purchase, they will have to provide their information again if the website is not set up to save the customer’s information. This example illustrates the complexity of a customer journey and how the current setup of many insurance providers does not account for the long duration from initial research to final decision.
It is imperative for insurers to understand the customer journey, from the usage of different channels, touchpoints, and pain points leading to drop-off. From this exercise, they can identify the most promising channels and touchpoints and decide which ones they want to actively pursue, in a ready-to-implement strategy. This ensures that investments in omnichannel are carefully considered and aligned with revenue pools and the preferences of target segments.
2. Ensure hybrid sales capabilities
The advancement of online brings convenience and speed to customers but requires a fully dedicated team to support customers’ online journey. Consumers still want to be advised on their purchase decisions as 81 percent 1 of customers’ interactions continue to have a human touch. However, some of these interactions can take place digitally, such as remote selling, where physical meetings are replaced by phone calls or online tools like video calls and chats.
Insurance players also offer more complex insurance products that cannot be sold online-only without proper support. This is due to the highly personal and sensitive nature of information required for a detailed assessment of needs and risk profile. However, this varies between insurance types. Online purchase options for car insurances stand at 88 percent, while more complex ones like health insurances are only at 25 percent2.
Hence, insurers can benefit from offering online-only purchases of simple coverages while retaining a team of experts to handle more advanced needs across channels. However, digital sales tools can also help improve customer experience and sales conversion during “offline” sales.
Insurers need to establish a team fully dedicated to supporting and increasing online sales, thereby also emphasizing the importance of digital growth within the organization. The team should provide real-time customer support via chat, email, or calls, guiding customers through the purchasing process, suggesting needs-based solutions, clarifying policy details, and addressing concerns. The online sales representatives need in-depth product knowledge, strong communication skills, and an understanding of the differences between face-to-face and online communication for a personalized customer experience.
3. Break-up channel silos to improve CX
Insurers must break down traditional channel silos, integrate data, and foster collaboration across channel functions to create a seamless omnichannel experience for customers. Data sharing enables customers to initiate interactions in one channel and seamlessly move to another, without having to repeat information. Importantly, customers should be able to move freely between online and offline channels during their purchase journey and not be ‘locked-in’ a single channel because of an irreversible move.
To achieve this, insurers should use a centralized customer relationship management (CRM) system, which tracks and provides a 360 view of every potential customer’s online and offline interactions. This CRM system should be shared across the distribution and support channels, serving as a foundation for cross-functional teams, such as online and offline sales.
Cross-functional channel teams can collaborate effectively by using rich data and diverse expertise to achieve their shared goal of an omnichannel journey and adapt to changing customer responses. It enables them to quickly track customer engagement, preferences, and potential drop-off points, prompting actions for the sales team to convert sales. The end-result should be to seamlessly move customers from online to offline sales teams, using the same data to provide personalized advice across the purchase journey.
In addition to the technical aspects, organizational collaboration should follow with shared objectives, language, and a customer-first mentality across channel teams. The importance of proper change management in these transformations is often understated, eroding the potential of omnichannel sales. Senior leadership must act as ambassadors for change, promote a uniform message within the organization, and address resistance to change continuously throughout the transformation.
4. Develop omnichannel products and prices
Insurance products can be complex and nontransparent for customers as products, coverage, and policies vary across providers and channels, with prices tailored to each customer. This makes many offerings unsuitable to be offered online as-is and need to be re-designed to be fit-for-digital and delivered across multiple touchpoints.
To achieve this, products can be simplified, and policies and prices communicated clearly and transparently, making it easier for customers to navigate product options based on their needs. This can entail a shortlisting of questions in the underwriting process to increase conversion rates.
For simpler insurance products; coverages, prices and discounts should be aligned across channels, offering customers a unified experience regardless of touchpoint. In contrast, highly complex products might remain unfit for online sales but information and features should still be consistent across channels to avoid confusion.
One way to simplify products and improve CX can be to leverage customer data to create personalized content and product recommendations based on a needs assessment. This requires a standardization of the insurance products, breaking it down into individual features which can be mixed and matched according to customers’ needs via an automated process to arrive at individual product recommendations and prices. The customer will receive only a few personalized recommendations instead of a large range of irrelevant insurance options, simplifying and shortening the decision and purchase process while reducing customer confusion.
5. Ensure an omnichannel incentive model
Lastly, the shift to omnichannel needs to be supported with a proper redesign of incentive models in the organization to ensure sustainable change. Traditional incentive models often focus on individual channel performance, failing to consider current hybrid channel trends.
Using a football analogy, most insurance firms today only reward the “goal scorer” closing the sale. However, this leaves little incentive for salespeople to pass on leads to another channel, even if the lead can be handled more efficiently there. Hence, insurers need to start rewarding the “assist maker” so that agents pass on leads when it is in the company’s best interest. One way insurers can shift toward omnichannel incentives is to have individual incentives for different parts of the customer journey. This involves rewarding individual contributions for lead generation, advisory, and ultimately the sales closing.
There is a need to revise the incentive model to reward collaboration across channels and encourage the entire organization support the shift. The focus should be to motivate employees to prioritize the overall customer experience.
Best practice omnichannel incentive models involve both collective and individual performance-based bonuses. These models simultaneously promote collective efforts to increase overall sales and individual work to avoid freeloading and reward successful lead generation and quality advice.
Insurers can stand to gain much by rethinking the traditional distribution model in favor of a more holistic omnichannel approach providing a unified customer journey from start to finish.
Doing this requires a strategic focus from senior leadership and a considerable change management effort for an omnichannel transformation challenging traditional distribution models.
Based on our experience, omnichannel distribution will be essential to win and retain customers in the future. While many have started the omnichannel distribution model journey already, few master it. Therefore, it is imperative for insurers to invest and build a leading omnichannel distribution for the future.
- Customer study by Simon-Kucher N=1,000 customers
- Nordic insurance study by Simon-Kucher, N=16 insurance providers