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 value-for-money experience, sustained over the entire contract term 2 Actuarial Society 2015 Convention 17 – 18 November 2015
Customer experience what is it, and why does it matter 3 Actuarial Society 2015 Convention 17 – 18 November 2015
Why now? Information Distribution (Location) Exceptional Manufacturing (Price/ cost) customer experiences Source: 2014, Forrester. Menzies, C. 4 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 .” Enjoyable Forrester Easy Effective 5 Actuarial Society 2015 Convention 17 – 18 November 2015
Feels 6 Actuarial Society 2015 Convention 17 – 18 November 2015
Perception REALITY Mental models Perceived reality EXPECTATION 7 Actuarial Society 2015 Convention 17 – 18 November 2015
All the interactions Serve • Research • Claim as per • Application insured event(s) • Policy values • Voluntary • Underwriting • Personal details withdrawal • Purchase • Policy changes • On-boarding Acquire Lose Cross-sell/ upsell 8 Actuarial Society 2015 Convention 17 – 18 November 2015
Actuarial Society 2015 Convention 17 – 18 November 2015
Strategic value 120.00% 107.50% Cumulative total return (2007 - 2014) 100.00% 80.00% 72.30% 60.00% 40.00% 27.60% 20.00% 0.00% Top10 S&P500 Bottom10 Customer experience score Source: 2015. Watermark Consulting 10 Actuarial Society 2015 Convention 17 – 18 November 2015
Strategic intention Exceptional customer VALUE experiences • Desirable • Distinctive • Consistent COST RISK 11 Actuarial Society 2015 Convention 17 – 18 November 2015
Pick three things that stood out for you? 12 Actuarial Society 2015 Convention 17 – 18 November 2015
Legacy management sustaining customer experience 13 Actuarial Society 2015 Convention 17 – 18 November 2015
Process Platform Product Perceived as suboptimal 14 Actuarial Society 2015 Convention 17 – 18 November 2015
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? => 15 Actuarial Society 2015 Convention 17 – 18 November 2015
Legacy: develop the solution Segment Sell? Standardise Migrate Vary Freeze Upgrade Merge 16 Actuarial Society 2015 Convention 17 – 18 November 2015
Legacy: selecting the solution(s) Consideration Vary Upgrade Merge Migrate Fair to customer Financial impact Complexity reduction Requires prior consent? Reputation risk? Execution – scalability? Execution – difficulty? Execution – time? 17 Actuarial Society 2015 Convention 17 – 18 November 2015
Stakeholder value propositions Re-intermediation. Ongoing advice fees Risk/ reward Advisors payoff Shareholders Employees Learn, create, move Sustained value Customer Management Regulators Safe, inclusive Scale, focus, Trustees delivery Communication 18 Actuarial Society 2015 Convention 17 – 18 November 2015
Vote now Are you involved in product development? A. Yes B. No CX INNOVATION 19 Actuarial Society 2015 Convention 17 – 18 November 2015
Legacy: monitor and manage Design Communicate • • Simple and modular Share perspectives on value • • Price the servicing Use existing touchpoints • • Exit strategy / “living will” • Organise • Maintain • Management focus (reporting • Standardise and integrate, • lines, segmentation?) especially on M&As! Knowledge management • Simpler, better, faster, cheaper • (on commercial terms) 20 Actuarial Society 2015 Convention 17 – 18 November 2015
Your role what can you take from this? 21 Actuarial Society 2015 Convention 17 – 18 November 2015
Summary VALUE Process Platform COST RISK Product 22 Actuarial Society 2015 Convention 17 – 18 November 2015
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 • REPORTING! 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 • 23 Actuarial Society 2015 Convention 17 – 18 November 2015
Contributors Yageshree Moodley Liberty Shared Operations yageshree.moodley@liberty.co.za 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 24 Actuarial Society 2015 Convention 17 – 18 November 2015
Vote now (1) What is your primary specialisation? A. Long-term insurance B. Short-term insurance C. Risk Management (EFRM) D. Other 25 Actuarial Society 2015 Convention 17 – 18 November 2015
Vote now (2) What does “legacy” mean to you? A. Closed products B. Outdated systems C. A bequest / inheritance D. All of the above 26 Actuarial Society 2015 Convention 17 – 18 November 2015
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.) 27 Actuarial Society 2015 Convention 17 – 18 November 2015
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 • CURRENT TACTICAL STRATEGIC Invest 1 Invest 3 Invest 3 Invest 2 Risk 2 Risk 2 Risk 1 28 Actuarial Society 2015 Convention 17 – 18 November 2015
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 29 Actuarial Society 2015 Convention 17 – 18 November 2015
Critical factors Technology • Transformation • Team • Timing • Transparency • 2015, Liberty (Barberini, M). Liberty Active migration 2015, McKinsey. Transitioning to standard software: Lessons from ERP pioneers 30 Actuarial Society 2015 Convention 17 – 18 November 2015
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