The widower and the roof – would you buy from this insurance company?
How does a customer journey impact customer retention, and how might internal IT issues be impacting the customer’s experience?
Would you buy from this company? A retired widower contacts his insurance company because recent snow fall has dislodged a roof tile and water has brought down part of an upstairs ceiling. The insurance call centre operator appears to pressure the widower into not making a claim, by asking leading questions and not establishing the facts. Members of the family insist on contacting the insurance company again, getting a different operator who agrees to send an assessor. The assessor arrives a week later, says he’ll get back in 48 hours and then doesn’t get back for 10 days.
Would you buy from this company? Probably not. What’s more statistically people share bad experiences with 10 people, compared to 3 that have good experiences. Bad customer experiences result in “don’t buy from …” messages, which mean reduced marketing effectiveness. Conversely missing out on positive customer experiences results in a missed opportunity of word of mouth referrals.
Customer Retention vs Customer Acquisition
Typically, there is a high cost of acquiring new customers compared to retaining customers, with cost per customer acquisition spread across marketing, sales and customer on-boarding. High customer retention means that you are more likely to be growing your business through sales, rather than much of sales replacing lost customers. The aggregated revenue that customers generate year after year, the customer lifetime value, will dwarf acquisition costs in a high growth business. As increasing customer retention and customer lifetime value results in higher revenue with less cost, this revenue can be invested into the business, to improve operating efficiency, innovation or other growth strategy.
Analysing a customer’s journey from the first time they encounter a company through to sales and post-sales support is a technique that uncovers the facts, the moments of truth, that will determine when a customer is likely to be positive and become a loyal customer, or negative and must be replaced through expensive customer acquisition.
Painful truths of analysing a Customer Journey
Let’s assume you’ve done the painful work of analysing a customer journey, to see the shortfalls, the inefficiencies, the poor communication – what then? It seems to me, there are two options. Option one is to look at the way you currently work and incrementally improve the systems. Option two is to re-imagine the customer journey, looking at new and innovative operating models. An example of Option 2 was an insurance company that invested heavily in technology so that car insurance claims could be processed automatically in under 20 minutes using pictures uploaded from a smart phone.
Avoiding the lost opportunity cost
Whichever option is decided, Information Technology either becomes a powerful enabler or a frustrating stumbling block. As organisations and complexity have grown, and the world has moved on, often Information Technology is geared up to solving the problems of the past instead of the challenges of the future. The following are problems in IT Organisations that can be a big stumbling block to IT being part of the solution:
- Failure to deliver business value
- The silo & blame culture
- Poor coordination
- Failure to adapt to a changing world
- Missing Roadmap
- Tactical solutions that seemed a good idea at the time
- Bloated system portfolio
Although these issues result in high cost and less value, it’s the Customer Journey and resulting lost opportunity cost that will hurt the business hardest. Could IT improve the Customer Journey and solve the poor customer service problem for the widower and the roof? Perhaps, but there may be other issues such as staff training. However if systems are smart enough, the systems could guide call centre staff to ask the right questions, assessor visits could be logged and monitored so that that service level agreements can be monitored and issues escalated.
What’s the lost revenue caused by customer churn, and what percentage was caused by system issues? Did customer facing staff have the information they needed to do their job well? Were systems intuitive enough for customers? Did customers get the information and functionality they needed? Did customers get wooed by a new app or digital experience from a competitor?