Digital transformation has arrived and has people talking. Companies are continuously looking for new ways to engage, communicate, and sell to people using digital, social, and mobile technologies. This evolution is not driven by the companies selling. It’s almost entirely driven by the customers and their expectations.
Digital transformation is all about customer-centricity. It’s about crafting a customer experience that revolves around the customers’ needs and motivations. And, businesses have to play catch-up, if they want to have any significance in the customers’ decision-process. But two industries in particular are far behind, and they’re only just beginning to realize this.
I am talking about banks and insurance companies. Most are not yet providing what they could be. Their problems are growing at a staggering rate, and they’ve yet to take advantage of the technologies they have at their disposal to improve customer experience, and thereby drive greater loyalty and advocacy.
The pressure associated with not delivering the level of service customers demand is one of the Top 4 problems banks and financial institutions are dealing with today.
But that’s abstract, so let’s take a look at the problems and challenges in detail.
1 – Customers want and expect more
Customers want more. Of everything. Control, value, reliability, etc. This isn’t new.
Customers, especially millennials, are spoilt for choice now. They are a big driving force behind the way businesses operate now, purely because of their unwillingness to conform and accept poor service. They always want something better, else they’ll move on. If a bank or insurer doesn’t provide what they want, they can go over to the next bank or insurer down the street. And guess what? If that bank or insurer doesn’t meet their expectations they could easily just move on to the next one yet again.
However, this problem isn’t imminent. Not yet. Right now, customer loyalty towards banking and insuring institutions is as high as 50% according to a Spanish study conducted by Lukkap. But this loyalty is not out of satisfaction. Consumers are only loyal because they think it’ll be too hard to switch. This finding should be of special concern to service providers.
As we enter into a constantly evolving digital era in which customers are extremely connected, this perceived difficulty will diminish. Switching and comparing will become a breeze. And that loyalty? It’ll disappear. Unless banks and insurers understand that they have to make better use of digital technology to offer a truly different experience – an experience their competitors cannot deliver. There are really only 2 options:
- Be one of the first to make it insanely easy to switch, by utilizing digital technology effectively.
- Provide an insanely effortless and easy user experience that satisfies your target group’s needs and expectations when it comes to their banking or insuring needs.
2 – Products are too complex to understand
Customers don’t know exactly what they want.
Customers often don’t know how to choose between the vast selection of options they’re being given when evaluating banking and insurance products. According to a Global Consumer Insurance Survey by Ernst & Young, only 31% of insurance customers are active researchers of the services they’re buying.
This is a significant and critical value, considering that selecting the wrong insurance policy or banking product will have far more serious implications than picking the wrong pair of sneakers.
The widespread confusion of customers when it comes to banking and insurance products, leads to a number of sub-problems, that all need to be addressed:
- Banks and insurers will not convert prospective clients at a rate that they could, or should, if they were to reduce this confusion and assisted people in making choices.
- Customers are not on packages or accounts that suit their needs specifically. One large national bank actually conducted a survey and found that as much as 30% of their customer base were not on the optimal account type available to them, due to the customer being unaware of their options.
- Customers are not getting what they want. They know they want something other than what they’re getting, but they’re not sure exactly what that is. Driving down satisfaction rates and ultimately losing current customers when an easier or clearer option comes along.
It’s also worth mentioning that upwards of 50% of Americans asked by Ernst & Young, feel like they need expert advice before making decisions impacting their policy. This need for personal advice highlights another significant problem:
- People want valuable input from their product providers. They’re going to them because they trust their knowledge and expertise. If they don’t get that to a satisfactory level, it’s quite unlikely that they’ll ever be truly convinced to purchase – at least not confidently.
Not addressing these problems cost the banking and insurance industries. Big time. But, not only that, they also rob people of their best banking and insuring experiences possible. It truly is a lose-lose situation. But, there is a solution to all of this that will be explored at the end.
3 – Service providers are expected to educate and inform
A massive 65% of all customers doesn’t have a favorable view of the insurance industry.
This suggests that something has to change. Desperately.
Service providers are generally expected to provide knowledge and highly customized products that fit the customers’ individual needs and goals. They have to ensure, for both parties’ sake, that their customers understand what they’re signing up for. But beyond educating people on their products, service providers are especially expected to grow, evolve and adapt to the changes in people’s personal lives or businesses.
Even your local supermarket does more than just offer products these days. They provide knowledge bases for better recipes, wine pairing and even things like suggesting the best mobile plan for you. They’re no longer only selling to you, they’re informing and educating you too.
If supermarkets are offering this kind of knowledge, it goes to show how far most insurance and banking institutions are falling behind by not making their expert knowledge easily available to advice-seeking consumers. But, to their credit, they are starting to catch up now.
The key point to take away is that customers don’t just want to be sold to any more. They want to be educated. By the businesses. By the experts.
4 – Businesses don’t utilize digital technology effectively
Tying into all of the above points, banks and insurers are not using their digital channels well enough. Not to educate their audience, not to interact with them or to solicit feedback effectively.
According to a study by Deloitte, a whopping 80% of customers tend to interact with their insurers by phones, which is completely opposite to the trend: The majority of digital shoppers prefer using interactive systems to research and buy. It provides them with a far more fluid, flexible and quicker experience than a phone call could.
Related article: Self-Service: Meet the Demands of the Re-Wired Shopper
This implies that service providers are simply not offering digital services at all or are making them too difficult to use.
The study also discovered that over 50% of insurance customers were dissatisfied with how their insurers dealt with a claim. While utilizing digital avenues won’t magically solve this problem, it could definitely be used in a way to lessen the blow and make the service experience more comfortable and less stressful.
So the real question is, how can you solve the above issues most effectively?
There is growing demand for providers of banking and insurance services to offer a streamlined product choosing experience and personalized advice via their digital avenues.
Many banking and insurance companies are discovering Guided Selling as a way to tackle the challenges head-on and leverage technology to provide a more seamless customer experience to digital consumers. Combined with an omnichannel approach, this could be the greatest revolution for these industries in a very long time.
5 of the immediate advantages of integrating Guided Selling for banks and insurers are:
- Reduce the intricacy and effort customers face by making picking the right product look less like hard work
- Help your clients to purchase the most appropriate products in a way that takes revealed preferences into account
- Offer customers interpretations and explanations in simple terms that address their needs
- Make digital channels user-friendly for customer communication – Guided Selling solutions are richer, easier to use, more interactive, and seamlessly integrate with other channels
- Integrate customer-centric as well as interactive self-service and information options to reflect how today’s consumers prefer to navigate and communicate
Want to learn more?To see how SMARTASSISTANT Guided Selling can increase your sales effectiveness and help you avoid falling behind your digital customers’ expectations, request a meeting with a Guided Selling specialist or sign-up for a free 30-day trial.
As with other industries, the customer service experience will be one of the main differentiators as competition in the insurance and banking sectors grows and customers are becoming more demanding and discerning.
What do you think, is it time to rethink?