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OPERATIONAL STRATEGY: Sustaining customer experience Yageshree Moodley 18 November 2015 Actuarial Society 2015 Convention 17 18 November 2015 Agenda Customer experience Legacy management Your role Customers get the best

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Actuarial Society 2015 Convention 17 – 18 November 2015

OPERATIONAL STRATEGY:

Sustaining customer experience

Yageshree Moodley 18 November 2015

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Actuarial Society 2015 Convention 17 – 18 November 2015

Agenda

  • Customer experience
  • Legacy management
  • Your role

 Customers get the best value-for-money experience,

sustained over the entire contract term

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Actuarial Society 2015 Convention 17 – 18 November 2015

Customer experience

what is it, and why does it matter

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Source: 2014, Forrester. Menzies, C.

Why now?

Manufacturing (Price/ cost) Information Distribution (Location)

Exceptional customer experiences

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Actuarial Society 2015 Convention 17 – 18 November 2015

Customer experience (CX) is… “..the perception of what a customer thinks and feels about a collection of all

the interactions they have had with a

company.” Forrester

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Enjoyable Easy Effective

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Feels

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REALITY Perceived reality

EXPECTATION

Mental models

Perception

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All the interactions

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  • Research
  • Application
  • Underwriting
  • Purchase
  • On-boarding

Acquire

  • Policy values
  • Personal details
  • Policy changes

Serve

  • Claim as per

insured event(s)

  • Voluntary

withdrawal

Lose

Cross-sell/ upsell

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107.50% 72.30% 27.60%

0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% Top10 S&P500 Bottom10

Cumulative total return (2007 - 2014) Customer experience score

Strategic value

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Source: 2015. Watermark Consulting

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Strategic intention

11 VALUE RISK COST

Exceptional customer experiences

  • Desirable
  • Distinctive
  • Consistent
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Pick three things

that stood out for you?

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Legacy management

sustaining customer experience

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Product Platform Process

Perceived as suboptimal

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Legacy: identify the problem

** Depends on the significance of the business and the “gap” relative to current expectations

  • Increased risk and capital requirements
  • Contributes to broader insurance industry challenges,

such as TCF challenges and cost

  • Opportunity cost – operational drag, contagion

=> => strategic risk?

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Standardise Migrate Segment Sell?

Legacy: develop the solution

Vary Freeze Upgrade Merge

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Legacy: selecting the solution(s)

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Consideration Vary Upgrade Merge Migrate Fair to customer Financial impact Complexity reduction Requires prior consent? Reputation risk? Execution – scalability? Execution – difficulty? Execution – time?

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Stakeholder value propositions

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Customer Advisors Employees Regulators Trustees Management Shareholders

Risk/ reward payoff Re-intermediation. Ongoing advice fees Learn, create, move Communication Scale, focus, delivery Sustained value Safe, inclusive

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Vote now

Are you involved in product development?

  • A. Yes

B. No

CX INNOVATION

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Legacy: monitor and manage

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  • Communicate
  • Share perspectives on value
  • Use existing touchpoints
  • Organise
  • Management focus (reporting

lines, segmentation?)

  • Knowledge management
  • Design
  • Simple and modular
  • Price the servicing
  • Exit strategy / “living will”
  • Maintain
  • Standardise and integrate,

especially on M&As!

  • Simpler, better, faster, cheaper

(on commercial terms)

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Your role

what can you take from this?

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Summary

22 VALUE RISK COST

Product Platform Process

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Reframe your role

  • Grow the value of new business
  • Design experiences, across enterprise value chain and time
  • Launch “beta” versions and iterate designs
  • Distribute by pulling customers e.g. through networks
  • Maximise VIF
  • Value of existing customer relationships
  • With a weighting for the most valuable (target) customers
  • Minimise risk
  • Opportunity cost and strategic drag
  • Downside variability in customer experience

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REPORTING!

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Contributors

24 Mark Barberini (Liberty) Marquerithe Schreuder Beth Richmond (Old Mutual) Alex Thomson (EY) Pieter Pienaar (MMI) Danie Gryffenberg (Sanlam) Tienie Hamman, Riona Lall, Calvin Quan, Sharm Naidoo, Lynette Sasto

Yageshree Moodley Liberty Shared Operations yageshree.moodley@liberty.co.za

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Vote now (1)

What is your primary specialisation?

  • A. Long-term insurance

B. Short-term insurance

  • C. Risk Management (EFRM)
  • D. Other

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Vote now (2)

What does “legacy” mean to you?

  • A. Closed products

B. Outdated systems

  • C. A bequest / inheritance
  • D. All of the above

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Vote now (3)

In building customer loyalty, emotional factors account for:

  • A. About 32% of customer loyalty score

B. More than all other factors combined

  • C. As much as rational factors (price, location, etc.)

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Legacy rationalisation case study

  • Full operational integration by merging and migrating:
  • Product: System products and system portfolios
  • Platform: Operational systems and associated applications
  • Process: End-to-end business processes and servicing
  • It can be done in steps, but must be aligned to strategy

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CURRENT

Invest 1 Invest 2 Risk 1

TACTICAL

Invest 3 Risk 2

STRATEGIC

Invest 3 Risk 2

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Why/how does this happen?

  • Environment and expectations change, but contracts don’t
  • M&A, without operational integration or standardisation
  • Complexity, with scarce skills and poor knowledge

management

  • Proprietary IT, with limited functionality and flexibility
  • Focus on new business diverts resources from managing existing

business

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Critical factors

  • Technology
  • Transformation
  • Team
  • Timing
  • Transparency

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2015, Liberty (Barberini, M). Liberty Active migration 2015, McKinsey. Transitioning to standard software: Lessons from ERP pioneers