In a rapidly evolving business environment, the age-old term “customer is the king” is getting further reinforced. Generic customer segmentation and mass marketing campaigns are passé as the modern-day discerning customers look for tailor-made solutions based on individual preferences. A study [1] revealed that 80% of consumers are more likely to purchase from a brand that provides personalized experiences. Therefore, creating relevant and personal experience across all engagement channels becomes imperative in the modern-day digital world with relatively younger but empowered customers.
Personalization of offerings has a direct co-relation to better customer service/experience. Statistics reveal that companies with a strong focus on delivering exceptional customer-experience drive revenue 4-8% higher than their peers; and 84% of the companies that work to improve their customer experience reported increased revenue. Today almost every industry – from retail to BFSI sector is looking at wooing customers with tailor made offerings based on their research and searches. Personalization has gone up by a notch. It is the era of hyper-personalization – an extension of traditional personalisation methods using a wide variety of collected and provided data. Hyper personalized marketing strategies use many forms of customer information such as the demographic data, browsing patterns, geographic location, and real-time behavioural data across multiple channels and derive insights to tailor products, and services that fit every customer’s wants and needs. And there’s a lot insurance industry can learn from the concept.
It all begins with Data!
Decoding consumer likes, dislikes and preferences from the vast amount of data enables enterprises to better customise and personalize their customer offerings and this is the pre-requisite for creating a hyper-personalised experience. Among the host of sectors that personalize offerings, the insurance sector is fast emerging to join the bandwagon. A report by Forrester Global CX Industry [2] showed that 52% of insurers invested in technologies that helped them understand customer behaviour across channels. And about 38% are investing in resources to enhance customer engagement and, in turn – loyalty.
Hiscox, a UK based insurer, implements a hyper-personalized distribution channel [3]. This listed company provides advanced web services that allow small businesses across several countries to assess their own insurance risk and buy appropriate cover. These offerings can also be tailored to suit specific needs and risks. They use advanced data analytics to evaluate risk, calculate quotes, and issue policies online.
The Emerging Role of AI
In addition to Data Analytics, Artificial intelligence also plays a significant role in analysing data and personalizing solutions. Adaptation of AI to tailor-make solutions and offerings is increasingly becoming visible in the insurance sector. AI is not only being used to analyze an individual’s needs and develop personalized recommendations but also to support real-time decision making and streamline customer interactions, and deepen engagements.
Insurers can take away a leaf of learning from brands like Netflix, Airbnb, and Spotify. They have mastered the art of hyper-personalization by analyzing consumers’ search patterns, their likes and dislikes. Amazon is another classic example of how hyper-personalized solutions can work wonders for a brand. They track every customer’s purchase and view history before sending recommendations. The subscribers also have a personalized home page with products and recommendations based on their search history, shopping habits, and wish lists. They also send emails with relevant suggestions when a customer has searched for something but didn’t go forward with it. Hyper-personalization is one of the main reasons for Amazon’s success – Not only do they take it exceedingly seriously, but they also invest in it heavily.
Having said that, there are key considerations in implementing hyper-personalization for insurance companies. One of the points would be inappropriate biases and insensitive behavioural nudges, given that insurers often interact with their customers after a loss event, and AI isn’t really programmed or developed to consider these emotional states. Therefore, the insurers need to ensure smart data collection techniques and explore techniques to leverage AI to deliver emotional assistance. Another point would be to understand customers’ dislikes too. There is a very thin line between hyper-personalization and over personalization. While a data-driven approach does play a significant role in hyper-personalization, having the right strategy to segment and utilize this data is imperative.
While research continues to develop advanced models that can tackle complicated challenges like these, AI and Data Analytics provide an opportunity to evaluate existing business models and build strategies that could benefit all the parties involved. With more insurance companies adopting hyper-personalization, the complexities that come with it poses a huge opportunity for boutique firms which are uniquely placed to provide better service vis-à-vis the larger ones.
References:
- https://us.epsilon.com/pressroom/new-epsilon-research-indicates-80-of-consumers-are-more-likely-to-make-a-purchase-when-brands-offer-personalized-experiences
- https://www.forrester.com/report/The+US+Auto+And+Home+Insurers+Customer+Experience+Index+2018/-/E-RES142625
- https://www.forbes.com/sites/forbestechcouncil/2018/11/07/embracing-the-evolved-customer-in-the-era-of-hyper-personalization/#453da11d28e8
