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40 years in insurance and 20 years specialising in conduct and customer service. Find out more about me. 

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The importance of understanding your customer experience

6th October 2020

The importance of understanding your customer experience

When you design products do you think about it from the perspective of your customers? 

It's not just a regulatory requirement but it's also a commercial necessity. If you understand your customers then it's easier to find them, connect to them and provide them with a service that delights them. If you can do all that they will stay with you and that's key nowadays.

The problem is not just about understanding what they need but making sure what you provide actually meets their needs. The reality may not match your intentions nor satisfy their needs.

Using Apps are a good example of this. Firms come up with this great idea to use Apps for all the service needs. this is great if the customer has a Smartphone and also if the service needed is on the menu list. If not then how can the customer get help? Usually the App comes at the cost of employing people to provide help on the telephone. I had a problem with my PayPal account earlier this year and they just couldn't help me on the phone and kept referring me back to the auto/menu system online, I was met with a brick wall. In the end I gave up and now rarely use PayPal.

How can you understand the customer experience?

There are three ways to understand the customer experience:

Firstly, you need to look for red flags. These will usually be in your reports, maybe there's a breach in service standards, or an increase in complaint numbers or claims rejections. You then need to start asking some questions. The 5 why's (keep asking "why" until you get to the nub of the issue) are one good way to do this.

The next two are so simple you'll wonder why you don't already do it, they are:

  • Ask your customers. This is usually in the form of a feedback questionnaire but another option is to get a mystery shopper to go through the experience and report back to you. 
  • Listen to your customers. If they tell you they aren't happy, listen to why this is. Learn from their feedback and be better. 

So why does it matter?

I'm going to assume you all know this is a regulatory requirements. If not then I will say that again "it's a regulatory requirement!".

But other than that I would say there are two far more compelling reasons.

It's part of a good culture to do this. It makes sense that your staff want to work in a place that treats its customers (and so staff too) with respect. Insurance is a service industry.

It makes good commercial sense. It means you get things right the first time for the customer, they can easily get to you and get the service they need. If they don't then it will cost you time and money to sort things out and you are likely to lose the customer at next renewal. There's also the damage to your reputation as unhappy customers are more likely than happy ones, to share their bad experience.  

There's plenty of research showing us that it costs far more to attract new customers than to keep existing ones. For example this research by Invespcro showing new customers cost 5x more than the cost of keeping an existing customer.

If you want to grow as an organisation, you need to listen to what your customers are telling you. You need to know the good, the bad and the ugly of customer experiences.

Customer experience drives loyalty and positive word of mouth and the figures speak for themselves.

Author: Sally Pearce (Conduct Matters Ltd)

Sally Pearce started Conduct Matters in 2014 after 35 years working in the insurance industry. She was originally an underwriter, but since 2000 has worked in dispute resolution and helping Insurance firms understand how to treat their customers fairly. Her experience includes working for the Financial Ombudsman, in the Lloyd’s market and dealing with regulators. Sally is ACII, a qualified mediator and yoga teacher. She is also available for public speaking.

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