Incentivizing End Customer for Digital Adoption

By Baljinder Singh, Global CIO, EXL

Customers now expect companies to provide an array of digital channels for resolv­ing their complaints or inquiries, increas­ing the pressure on businesses to provide consistent, customizable service across every medium. This change in how customers interact with organizations is disrupting the traditional channel of call centers as the primary source of customer care. Executives need to reassess their business models and prioritize instituting a digital agenda.

The reward for organizations that succeed at digital customer care is vast

When run well, digital channels can increase customer satisfaction by up to 33% and generate savings of 25- 30% by reducing call center volume. Still, less than one in five companies have a detailed migration strategy, more than half have little or no migration budget and apply very basic migration initiatives. There are often in­sufficient incentives for switching to digital self-service channels, no monitoring for migration performance, designate who is responsible and accountable for migrat­ing customers to digital channels.

Customers prefer self-service options

Consumers are not running away from self-service options — just poorly implemented ones. There are stark contrasts in what customers expect from a self-service channel and what organizations think is im­portant.

Customers consider convenience to be of utmost importance for self-service options, while companies rate convenience as significantly less important than accuracy. Many self-service success stories focus on making a utilitarian task faster. The speed of transactions rates as the strongest influence on customer satisfaction for customers, while managers rated it significantly less important.

How to turn the digital game around Offer positive incentives

Companies can motivate customers to change their trans­action behaviors by providing positive incentives that en­courage moving to digital support channels.

Surveys showed that more than half of customers would be willing to switch to low-cost digital channels if they were given positive fee-based incentives -- such as increasing annuity rates by 0.25% -- or positive incentives that enhance the functionality of digital channels – such as live video interaction with agents on mobility enabled portal.

Set positive defaults

Another approach organizations can use to encourage digital adoption comes from behavioral economics research, specifically the concept of positive defaults. For example, au­tomatically setting digital channels as the optimum default for custom­ers buying or renewing a policy is an effective way to encourage using this lower-cost medium

Creating a unique digital customer journey

To ensure future positive customer experiences, companies need to ensure a seamless omni-channel customer experience throughout the entire customer journey. This re­quires examining the purchase pro­cess from a customer’s viewpoint, straight-through service and claims management, improving retention and generating awareness and posi­tive word-of-mouth advertising.

A one-size-fits-all customer ap­proach must be replaced by person­alized product solutions.

Exploiting mobile solutions to reach customers everywhere and anytime

Mobile channels open up mul­tiple opportunities for insurance companies to enrich the customer journey anytime, anywhere. For ex­ample the health insurance startup Oscar offers its customers a mo­bile interface as well as highly transparent products and services.

Beware of unintended consequences

Defining an optimal channel use strategy is crucial for organizations that want to encourage customers to switch channels. But there can be unintended consequences to an increased reliance on digital transac­tion channels.

When customers use digital channels for simple tasks and trans­actions, they tend to rely on human channels like branches and call cent­ers for complex or difficult transac­tions. Front-line employees must now spend more of their time ad­dressing these complicated activities. If organizations don't take steps to ensure that staff members are armed with the tools and skills to resolve the most challenging customer problems, they won't realize any sig­nificant cost benefits from moving customers to digital channels.

Another unintended conse­quence is the remote user paradox when customers begin to prefer us­ing digital channels over in-person channels. Once this preference is established, each in-person interac­tion with a company employee can have a disproportionate impact on that customer's relationship with the company. When a customer who mostly interacts over digital channel has a critical need to visit a branch, that one interaction will have a dis­proportionate effect on how the per­son perceives the branch experience -- and it could determine the future of their relationship with the organi­zation.

It's important for organizations to be wary of these paradoxes when they begin encouraging customers to use digital channels. What initial­ly looks like a benefit could quickly become a liability if the switch caus­es customers to become less engaged -- or to switch their business to an­other organization.

Though there are viable tactics for migrating customers to less expensive digital channels, organizations must approach this task with care. Under­standing how customers are likely to react to these impending changes is a critical first step -- and one that can help them avoid a drop in customer engagement, revenue, profitability, and customer retention.

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