As a concept, the Experience Economy is not new. A 1998 article in Harvard Business Review titled ‘’ highlighted how leading companies understood that “the next competitive battleground lies in staging experiences.”ĚýProducts and services were no longer seen as differentiators.

By 2017, McKinsey had declared ‘’ as their research confirmed how consumers had gradually shifted their expenditure from products to experiences. In their report, McKinsey found that personal consumption expenditure on experience-related services had grown 1.5 times faster than total personal consumption spending and nearly four times faster than expenditure on products.

Gartner even declared that 2019 would be the year that as the main competitive differentiators for brands and businesses. Positive, hyper-personalised experiences were now required to sweeten the deal for consumers.

Rise of Intelligent Experiences

In line with the rise of exponential technologies such as Artificial Intelligence, Big Data and the Internet of Thing, the concept of the Experience Economy has also evolved over the past few years. Today, successful businesses manage their experiences as a core strategic business capability. They have seen how customers are willing to pay more for experencies. They understand that the value needle has shifted.

This new approach is powered by Intelligence. Intelligent Experience Management leverages the power of exponential technologies – AI, IoT, advanced analytics – to drive a more optimal customer, employee, product and brand experiences. This relentless focus on value delivery through enhanced experiences, is what will allow enterprises to win in today’s market.

And these exponential technologies powering differentiated business capabilities, are vital to the long term success of enterprises, because of the volume and nature of data that informs modern Experience Economy strategies. Traditionally, organisations relied heavily on operational data – revenue, inventory, suppliers, workforce – to make decisions, but today they need insights from a different type of data to augment the value their provide to their customers; they need experience data.

Experience data provides insights into the sentiment and emotional aspects that influence a customer, employee, partner or supplier decisionsĚýtowards a brand. In short, operational data reveals what is happening in an organisation, and experience data reveals why and how it is happening.

An Intelligent Experience Management strategy would measure and track operational data and experience data and use AI in combination with other exponential technologies to construct and augment individualised profiles of customers, employees, brands or products. Predicitve or Prescriptive actions can then be taken in order to optimally drive outcomes that matter.

Put another way, instead of reacting to problems when they occur, increasing the ‘experience gap’, companies can now get ahead of the curve and address challenges before they have a lasting negative impact on the organisation.

The impact and advantage of this type of capability will be indispensable to organisations as they adapt to changing customer behaviour in the wake of the pandemic. While adoption of digital services has exponentially increased across the globe, the events of 2020 and the resulting shift in consumer behaviour, will put additional pressure on organisations to transform how they engage with customer and employees.

And nowhere is this shift as apparent as in the financial services sector.

ĚýExperience Economy transforming banks, insurers

Banks’ relationships with their customers have largely been built on the basis of compliance: often a box-ticking exercise that ensures the bank’s conduct is in line with a robust set of rules and standards and that the consumer adheres to a strict set of principles.

This dynamic prevailed until the emergence of the internet and other digital technologies that created new channels for customer engagement. According to a recent Qualtrics study, of all the time customers spent interacting with their bank, . The same study found that ‘Poor Service’ was the second-most important factor in consumers considering leaving their bank for a competitor.

The banking industry is extremely competitive. Most banks generally offer the same types of products and services. The real differentiation lies in the experience that customers have when interacting with the bank. And the cost of a poor experience I this industry has become increasingly significant: Ěýa 2018 survey by Forrester Research found that, for every one-point decline in its customer experience score,.

Banks, competing with more agile fin-techs and a growing ecosystem of non-traditional financial services providers – including the powerful telco industry – have taken note of this and have been making significant investment into their Experience Economy strategies. By 2018, McKinsey found that were committed to some form of customer experience transformation.

Insurers are also taking note.

Insurance provider Allianz recently leveraged Qualtrics, the experience management platform, to collect experience data from customers in 22 countries. Using the platform to filter and priorities insights by location, and function, Allianz could empower their customer-facing teams with the certainty to know what action to take to deliver a seamless and positive experience at every step of each customers’ engagement with the company.

Allianz has also used the experience data to develop entirely new products to help protect businesses from emerging risks, improve its reputation for quality consultations and become integral business partners to its customers, building lasting loyalty.

Financial services companies that have not invested in transforming their customer and employee experiences will be left far behind their competitors in a post-2020 world. Leaving experience management to chance is a recipe for failure.

Instead, organisations should seek ways to improve their collection and processing of experience data and combine that with operational data to make informed decisions over the future of their companies.

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Leading-edge consumer brands have transformed reactive, legacy service into proactive care-focused experiences, establishing a new consumer expectation benchmark.

Now, this transformation is rewriting the rules for customer experience (CX) in the insurance industry. In the highly competitive industry, delivering best-in-class customer experiences can be a critical differentiator. Combining operational data (O-data) with experience data (X-data) provides the insights that enhance the customer experience offerings and give insurers a competitive edge.

CX Imperative: Why the Insurance Industry Lags Behind

Customers typically have few – if any – interactions with their insurance company. In fact, without a claim or policy change, there is often no interaction at all. This means when an interaction does occur, it takes on a greater level of importance. Furthering this challenge, consumers are becoming more discerning and less forgiving. One in three customers will walk away from a brand they love after just a single bad experience, .

How can insurers get a broader picture of the customer journey? The first stop is O-data, which reveals the what. Policy renewal rates are decreasing, attrition rates are increasing, new customer acquisitions are decreasing. This data tells us the insurance company has a problem, but we don’t know why the problem exists.

This is where X-data comes into play, revealing customer pain points — a difficult claims process, a poor digital experience, a slow reimbursement process — that are causing the problem. Together, this data can help insurers uncover the causes of customer churn and identify actions to best address pain points, such as automating the claims process, reducing call wait times, or optimizing digital channels for claims submission.

Combining O-data and X-data makes it easier for insurers to unlock powerful business outcomes and:

• Improve the claims process, reducing attrition and increasing renewal and revenue
• Deliver a superior digital experience, increasing revenue and acquisitions
• Strengthen insurer-broker relationships, increasing policy renewals, revenue, and acquisitions

Bringing X- and O-Data Together for True Insight

three components critical to customer experience in the insurance industry: effectiveness, ease, and emotion. These components are critical to building a strong customer relationship, shoring up existing market share, and capitalizing on new business opportunities. And they are best assessed through a combination of X- and O-data.

Consider what happens when a customer files an insurance claim. This process can be emotional: Property may have been lost or damaged and a customer’s day-to-day life is directly impacted. O-data tells us about how the claims process is handled while X-data tells us what the customer feels about the claims process.

The X- and O-data from these interactions must be part of a customer’s profile. No matter with whom a customer is speaking, this agent or representative is empowered with the background knowledge they need to be as responsive as possible to a customer’s concern. When insurers have these insights at their fingertips, agents and other front-line employees can provide a better experience, improving engagement and strengthening customer loyalty. These exceptional experiences turn loyal customers into brand advocates, giving insurers a critical competitive edge.

Turning Insights into Business Success

Here’s how three companies put the power of X and O to work for them.

Allianz: Predictive Power of Democratized Insights
is one of the world’s largest insurance providers, but despite being a market leader, the company recognized it was operating in a market with excess supply and declining rates. Rather than staying the course and risk falling profits and market share loss, Allianz proactively put customer experience at the heart of its strategy to earn lifelong loyalty from clients who see them as an integral, forward-thinking business partner. Working with Experience Management solutions from 51ˇçÁ÷(Qualtrics), they collected experience data from customers in 22 countries and 16 languages. The company now has a wealth of insights, filtering and prioritizing based on location and function. These insights have led to new products, such as protecting customers from risks like cyber crime; new approaches, such as elevating claims processing from back-office to client-facing function; and new reputation management strategies, such as above-and-beyond consultations.

MetLife: Boosting Brand Engagement
MetLife, Inc. is a leading global provider of insurance, annuities, and employee benefit programs. The company is digging deeper into its data for actionable insights that drive brand engagement. For example, in a recent MetLife-sponsored Earth Week contest, participants needed to answer a series of questions to be eligible for a gift card. From the reporting, MetLife was able to determine three winners and the process sparked significant brand engagement.

SwissRe: End-to-End Customer Experience Ownership
merged all its customer experience, voice of customer, and market data from more than 11,000 clients, 25 markets, and 11 languages onto a single, secure platform. The company now has a Web-based, highly secure insights platform that gives users 24/7 access to data. The intuitive interface makes it easy for all stakeholders to become experts on customer experience. This centralized, in-house approach led to a 90 percent decrease in research costs, a five-times increase in speed and productivity, and a seven-point Net Promoter Score increase.

Next Steps: Enhancing CX with Data-Driven Insights

Experience matters. We live in a world where insurers are disproportionately rewarded when they deliver a great experience and punished when they do not. Experience Management solutions from 51ˇçÁ÷unlock the power of business operations data (O-data) with experience data (X-data) to transform customer experience and drive business success.

As part of the 51ˇçÁ÷C/4HANA suite, 51ˇçÁ÷now makes it easier for insurers to combine X- and O-data and gain actionable insights at every step of the customer journey. .

Toni Tomic is global vice president of Insurance at SAP.

This article first appeared on the 51ˇçÁ÷News Center.

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