The New-Age Customer with a Difference

In the summer of 1991, a single act of liberalization performed a personality transplant on the Indian customer. The Indian customer benefited from the shift from a suppliers market to a consumers market and the way he purchased and reacted to the levels of services offered to him changed. By the time the Insurance industry was liberalised, these changes were cemented in his buying behaviour. The changes were brought about by a variety of external factors. The five major aspects of change in customer behaviour and their change agents are as follows: 1. Information- The proliferation of mobile telephony and the internet brought about a social networking revolution (Karinthys six-degrees of separation) of a humongous magnitude and produced a huge appetite for information. 2. Customization- Better choice gave the customer the option to look for a more customized solution. 3. Participation- The increase in awareness of rights and grievance outlet forums has given the customer a voice and made him more comfortable with participation in the value creation process. 4. Time- Frame- The level of interconnectedness achieved has made progress exponentially faster, which has created a time-crunched customer. 5. Power to Penalize- The pro-customer regulations in every sphere (IRDA consumer interest protection regulations) and easy access to forums (industry tribunals, ombudsmen) has given the customer the power to penalize faulty service. Table 1 explains the Indian customer behaviour before and after the change with respect to each of the above aspects.
Table 1 Changes in customer behaviour- then and now

Aspect of Change Information

Then Was happy with the information given by the agent or the company

Now Actively uses a plethora of information channelsonline, print and electronic media, wordof-mouth networks. Switches choice of media as per

The Change Information flows without inhibitionwhich is willingly referred by customer

instantaneous convenience. Customization Was comfortable with the limited product range and made do with the Take-it-as-is situation Participation Wasnt very eager to participate or give feedback- found it a hassle Time- frame Wasnt that much concerned with timeframe as compared to work done Power to penalize Ignorant of rights, awareness low and had no forum for redressal Knowledgeable of rights, awareness high and has many forums for easy redressal Will sue and then shift to competition Comfortable with participation, engagement and interaction Gives equal priority to time- frame and quality of work done Is a time-crunched consumer Is ready to be a coproducer Has many companies falling at his feet with offerings with minute differences Looks for high level of customization

These change aspects can be practically linked to the dramatic demographic shifts that are occurring in the Indian market. The consumer segments are becoming more complex and layered. Each method of demarcation brings in a different response approach that an Insurer should adopt. For example according to Nandan Nilekani by 2025, north India's population will be very young with a median age of just twenty six; but the median age in south India would be 34 similar to Europe's in the late 1980s (Nilekani 2008). Hence, service delivery needs to be flexible to court both mindsets- one of independence, confidence and experimentation, and the other of responsibility, reality and more set behaviours. According to a recent McKinsey report there are three major demographic segments that are emerging in India and together constitute 62.97% of the population (Andrade, et al. 2012). The first segment is the Rising affluent whose annual household income is greater than Rs. 10 lakhs. They are roughly 0.097% of the population who earn 12% of the countrys

aggregate disposable income. They do not require saving instrument products, but would definitely buy products for wealth management and property risk protection. Primary influencers for this segment are wealth managers, not insurance agents, as they can provide third-party investment products, brokerage and other advisory services. This segment is concerned with accurate and timely informatory services, high customization- fitting in with their unique needs and on time service. The second segment is the Growing middle class which consists of the seekers whose annual income is Rs. 2-5 lakhs and strivers whose annual income is between Rs. 5-10 lakhs. They comprise 16% of the population. Their main concern is tax- planning, retirement planning, savings and risk protection. They need information- advisory services, customization- budget- need fit, participation- would be more vocal of his feedback, and on time service. The third and biggest segment is the Newly emerging bankable class which is 46% of the population. These are the aspirers with annual income of Rs. 90 thousand to 2 lakhs. Here insurance is used for statutory risk protection requirements, long term savings providing high return at low risk, given the lack of alternative investment options. This segment requires advisory and informatory services, participation and on time service. All of these segments have the power and inclination to penalize if they experience flawed information and deficient service. With each segment having different prominent needs, an Insurer needs to be flexible in the extent of his service offerings.

Satisfying the New Age Customer- Approaches

Now that we have understood which segment has what prominent needs, we need to understand what an insurance company can do to satisfy them in a cost- effective way. As we know that the battleground has shifted from designing better weapons, i.e. products to deploying these weapons better, i.e. the service delivery. The following is a simple checklist for all service delivery propositions.

Accurate and Consistent Information

An Insurer has to take ownership for the information, about its products, services and itself, available to the consumer across all media. Most consumers do not verify the accuracy of the information and place onus on the company to provide them with the correct version. Also, with the proliferation of social networks, a bad experience report can do serious damage. Another issue is that consumers associate the intermediary with the company wholly. The Insurer must take ownership for its intermediaries actions. Once you get the customer to hear what you want, your promises are clearer and better deliverable.

Customized Solutions
Different customer segments require different options in the product range. But what they require even more than that is a good reliable advice as to which product variant to purchase to suit their need and budget. The Insurer has to enable the intermediary to offer better customized advice. This can be done simply by classifying products according to different requirements and making such information available to intermediaries dynamically through internet access etc.

Participative Control
According to Philip Kotler, the cost of attracting a new customer is five times higher than that of keeping an existing customer happy, and the success of an Insurer depends on how low his customer attrition is. Most customers do not voice their grievances, and thus an opportunity to better our service delivery is lost. Hence, an Insurer must engage his customers to be comfortable with feedback. By creating a trust of improvement within the customer, the Insurer will not only give the customer a sense of participatory control, but would also benefit with a constant initiator for service improvement.

Immediate Delivery
Immediate delivery is the speed and ease with which the customer can avail the service. Simple things like providing intermediaries with a claims document checklist for each type of loss, can help quicken the process of claims settlement. Such enabled decentralization is not only cost effective for the company, but also ensures that fast service delivery is not an irritant for the customer. Also, it is important for every department to render organizational support to the next department in the service- delivery chain by treating it as a customer (Next Department Customer).

First Time Right

Being right the first time is more cost-effective in the long- run. For one, corrective actions are not required- no additional costs. Also, there is a lesser chance of customers leaving the company thereby reducing the retention costs (also attracting more customers). Accountability for all actions enables quicker damage control and also reinforces to the customer the commitment to serve. Table 2 provides a cost- benefit analysis for each of the discussed approaches.
Table 2 Cost- benefit analysis of delivery propositions to satisfy new- age customer needs

Customer Need Accurate and Consistent Information

Delivery Proposition

Cost

Benefit

1. Control quality and accuracy of informationa. Ownership mentality- accountable for intermediaries (mis-selling) b. Keep an eye out for positive (exploit opportunities) and negative press (engage damage control)

Cost of coordinating information at all levels and media, included in product training for intermediaries

The customer hears what you want, less chance of threat to reputation

Customized Solutions

2. Ensure easy customization advice a. Adaptable, low-cost systemic customization

Some costs in enabling intermediaries to offer customization

A more loyal customer- better differentiator, makes closing of deals easy

Participative Control

3. Engage customer a. Make system more friendly and approachable b. Give voice to mute shifters c. Build trust of improvement

Some costs in establishing interactive

Dynamic flow of critical information from

feedback evaluating customerssystem competitive edge, less attrition

Immediate Delivery

4. Enable immediate service delivery a. Decentralization towards front-end of service delivery chain b. Two-point information flow-

Cost of enhancing existing system with robust backup support

Service differentiator, competitive edge, cost- effective

accuracy c. Render organizational supportNext Department Customer

and efficient disbursement

First Time Right

5. Be right first time a. Accountability of actions

Training costs which can be included with existing product training

Minimized threat of legal action, less shift to competition

Inculcating Customer Experience Management Culture

Most organizations are concerned with Customer Relationship Management (CRM) which is designed to focus on product, price and enterprise process, with negligible focus on customer needs and desires. Customer Experience Management (CEM), on the other hand focuses the operations and processes of a business around the needs of the individual customer. Its goal is to move customers from satisfied to loyal to advocates (Rao 2008). It is famously said that a satisfied customer is the greatest brand ambassador (Jawaharlal 2006). CEM is a more holistic approach but requires the company to provide a memorable experience to the customer at every service delivery touch- point. Making service more about experience requires concrete organizational commitment. Commitment to inculcate such a culture within the organization requires initiation from the top management, the direction of the middle management and the drive of the front-line. It is also very important for the top managements strategy to be aligned with the front- lines reality, facilitated by the middle management. For CEM to work, the customer needs need-specific and correct guidance. The correct and accurate information has to be consistent across all touch points. To serve all kinds of customer segments, the company needs to ensure delivery of promised service regardless of the channel chosen by the customer. At the end of the service- delivery chain the customer should be enabled to freely interact with the company and give his two bits.

Conclusion
Inculcating such a culture within the organization would ensure that superior service is delivered on automaton. Such a discipline would become subconscious. Acknowledging the specific requirements of the new age customer is job half done. By providing accurate and consistent information, customized solutions, participative control, immediate delivery and being right the first time an Insurer can reap rewards of happy and satisfied customers for years to come. Its all a question of conducting a cost- benefit analysis and coming up with an approach with a manageable initial investment. Taking the first step is always the hardest, however here is some food for thought. 1. How well do you know the customers needs? 2. In what form does he want his solution to be delivered? 3. Is he receiving small delights at every service delivery touch point? 4. What does he feel about you?

Works Cited
Andrade, Nigel, Ramnath Balasubramanian, Tilman Ehrbeck, and Anu Madgavkar. India Life Insurance 2012: Fortune Favours the Bold. Research Summary, McKinsey & Company, 2012. Jawaharlal, U. Customer Service: Challenges Ahead. Edited by K. B. S. Kumar. Insurance Customer Service (ICFAI University), 2006: 46- 50. Nilekani, Nandam. Imagining India: Ideas for the New Century. Allen Lane, 2008. Rao, S. V. Ladder of Relationship Loyalty. Pune, October 2008.