© 2015 NTT DATA, Inc.www.nttdata.com/americas

THINK SMART. ACT FAST. FLEX YOUR BUSINESS.

Fueling Growth in Insurance ThroughCustomer Centricity

Refined customer segmentation strategies powered through digitalization can increase product density, improve retention rates, and accelerate new customer acquisition.

February 2015Perspective

The OpportunitySuccessful carriers are evolving their customer engagement models to reinforce loyalty, nurture cross-selling opportunities, and build brand ambassadors. As customer engagement models put the customer at the center of the business, the very nature of competition among carriers is shifting from offering standardized products to delivering products tailored to meet individual needs of policyholders. By leveraging a core digital foundation and robust customer segmentation, carriers can serve existing customers better by identifying their behaviors, deepen product density by developing innovative new products that are tailored to specific customer needs, and understand buying habits to target and bind new customers faster.

The Age of the CustomerInsurance buying behaviors are evolving as consumers become more digitally empowered. With pervasively connected devices like smartphones and tablets providing

According to Gartner, “By YE16, insurers leading in digitalization will financially outperform slower digital adopters by 100%.”1 Increasingly, the Internet of Things is providing new sources of digital information, turning what was actuarial into actual. This evolution can further the transformation to customer centricity for those carriers that are ready to support it.

easier access to online information, buyers are leveraging non-traditional sources, such as search engines and YouTube, to learn about carriers and products. Instead of relying on traditional sales channels, prospective customers are turning to social media and peer reviews to inform and influence their insurance buying decisions.

As these sources grow in prominence and traditional methods, such as advertising and insurance industry literature, become less influential, we have entered the age of the customer – an era when customers seek to define their insurance experience and expect products to be tailored to their unique needs and preferences. While at first glance this trend may appear to be a threat to the insurance industry, it actually presents a new growth opportunity for those companies that can best respond to changing customer buying behaviors and preferences.

1 Gartner, Inc. “Predicts 2015: Insurance CIOs Need to Balance Opportunities and Risks of Digitalization,” Weiss, Juergen et al, 19 November 20142 “Competitive Strategy in the Age of the Customer,” Forrester Research, Inc., 10 October 2013

We Have Entered The Age Of The CustomerAge of the Customer

According to Forrester, the only source of competitive advantage is the one that can survive technology-fueled disruption – an obsession with understanding, connecting with, and serving customers.2

NTT DATA Perspective: Customer Centricity

© 2015 NTT DATA, Inc.

Aligning the Business with Actionable Buyer InsightBefore carriers can harness growth from these new buying patterns, they must develop the ability to segment customers more distinctly and establish the customer-centric operations to capitalize on new insights. That means reorienting their processes, technology, and resources to provide a more differentiated experience for each customer. Finer segmentation is necessary to better identify, target, and appeal to potential buyers based on their behaviors. By overcoming traditional data silos, internally focused business processes, and insular corporate cultures, insurers can remove obstacles that will inhibit them from achieving a customer-centric competitive edge.

Carriers can become more customer centric through four interdependent levers:

» Establish a Customer Segmentation Strategy. Moving toward demographically refined, behavior-based customer segmentation models enables insurance companies to better tailor products and services to customer needs and engagement preferences.

» Mine Policyholder and Household Data. Carriers possess massive amounts of household data, primarily accessible via event-driven views. This data can be more thoroughly mined to identify the most profitable policyholders and opportunities to increase product penetration per household.

» Apply Predictive Analytics. Robust analytics can help carriers determine a customer’s propensity to buy additional products at any given time, converting every customer touchpoint into a potential opportunity.

» Develop Customer-Focused Business Processes. A customer-centric insurance company organizes its processes to support a unified and seamless customer experience across channels, with differentiation provided by target segmentation.

Digital Business Turns What Was Actuarial Into ActualDigital Business – the use of technology as a primary driver of innovation – is key to achieving customer centricity. As noted by analysts, the insurers who lead in digitalization and outperform their peers are using new digitized sources

of information to turn real-world behavior into actionable insight. They’re looking far past the narrow scope of mobile and web media, and harnessing the power of digital information to become customer centric.

As you embrace customer centricity, you will discover that technology is no longer simply a business enabler, but a driver of innovation itself – spanning the virtual and physical realms, creating new revenue opportunities and new business models, and delivering greater value to customers. This new approach – called Digital Business – operates across applications, organizational structures, operating platforms, devices, networks, data sources, business entities, and physical locations, drawing resources as needed to satisfy the user’s needs.

Establish aCustomer

SegmentationStrategy

Mine Policyholderand Household Data

Apply PredictiveAnalytics

DevelopCustomer-FocusedBusiness Processes

The customer-centric transformation is built around behavior-based customer segmentation, better leverage of existing data, increased use of predictive analytics, and the reorientation of business processes to align better with customer needs and preferences.

The Path to Customer Centricity

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NTT DATA Perspective: Customer Centricity

© 2015 NTT DATA, Inc.

Aligning Organizations with Customer CentricityOnce target business outcomes and desired buyer behaviors are defined, NTT DATA works with organizations to develop a roadmap that aligns defined business outcomes, such as increasing quote-to-bind rates, with customer centricity investments. The roadmap reflects a company’s business goals, as defined by measurable business metrics, and the particular obstacles it faces in achieving customer centricity.

Know Your Best Customers… So You Can Find More Like Them

Achieving a granular level of insight about your policyholders and prospects is key to driving targeted growth:

» Who are our best policyholders?

» Where do we find more of them (demographic data, social ecosystems)?

» What buying patterns and engagement characteristics do customers demonstrate? What strategies are we using to exploit those patterns?

» What up-sell/cross-sell/advocacy characteristics do they demonstrate and we want to replicate?

While each organization’s solutions roadmap is unique, key components of a roadmap typically include:

» Data Framework: Combine external data from social media, government, and aggregation sites (LinkedIn, Facebook, Zillow, Trulia) with internal data to achieve a 360-degree view of the customer.

» Technology: Create operational data stores, business intelligence, and workflows, and enable customer-centric/digitizalization strategies.

» Integration: Unify customer experience and capabilities across channels and devices to provide the mechanisms for opportunistically presenting targeted customers with the best-suited products.

» Analytics: Bring customer segmentation strategies to life, complementing them with capabilities to support predictive analytics; dashboards; key performance indicators; service level agreements; lifetime value (LTV); recency, frequency, monetary (RFM) value; and continuous optimization.

» Tools: Provide support for marketing automation, social listening, customer advocacy for prospecting, marketing databases, engagement- and performance-based media, and video marketing.

Driving Transformation via the Digital Enterprise FrameworkNTT DATA helps organizations better control the levers that propel a company toward a mature customer-centric model using our Digital Enterprise Framework. Regardless of your starting point, the framework assists us in helping clients quickly define the business outcomes that can drive your transformation, quickly identify requirements, and measure and improve business performance.

Digital Enterprise Framework

Define Business Outcome, Identify Challenges

• Identify business performance metrics that anchor transformation

• Articulate business challenge to be solved

• Understand desired impact of customer centricity

• Assess current client maturity and gaps

• Develop customer-centric business transformation strategy based on:

• Omni-channel alignment

• Targeted segmentation and predictive analytics

• Configurable product and service delivery

• Identify gaps and define requirements in technology, organization, processes, skills, and culture

• Define value and ROImetrics

• Build holistic transformation roadmap

• Migrate to customer-centric business model

• Launch omni-channel and process transformation

• Establish flexible Digital Business technology foundation

• Manage value delivered and organizational impacts of change

• Measure and report business performance metrics

• Refine and adjust operational design, as appropriate

• Sustain operational benefits through continuous customer-centric improvement

• Realize digital enterprise transformation

Build Transformation Strategy

Define Impacts,Value, and Roadmap

AchieveCustomer Centricity

RealizeBusiness Outcome

The Digital Enterprise Framework helps us accelerate your transformation to customer centricity by enabling us to define and focus on the target business outcomes, to understand the technology enablers and investment required, and to assess data and analytics needs that deliver on the customer segmentation strategy.

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© 2015 NTT DATA, Inc.2015_02-P-Customer_Centricity

www.nttdata.com/americas

THINK SMART. ACT FAST. FLEX YOUR BUSINESS.

About NTT DATA

NTT DATA is a leading IT services provider and global innovation partner with 75,000 professionals based in more than 40 countries. NTT DATA emphasizes long-term commitment and combines global reach and local intimacy to provide premier professional services, including consulting, application services, business process and IT outsourcing, and cloud-based solutions. We’re part of NTT Group, one of the world’s largest technology services companies, generating more than $112 billion in annual revenues and partner to 80% of the Fortune Global 100. Visit www.nttdata.com/americas to learn how our consultants, projects, managed services, and outsourcing engagements deliver value for a wide range of businesses and government agencies.

NTT DATA Perspective: Customer Centricity

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Author Biography

Rob Golden leads the Financial Services Customer Centricity Solutions group at NTT DATA. This group assists clients in advancing measurable business outcomes by applying customer-focused business practices across their sales and servicing channels. Rob has worked extensively throughout the financial services sector in both advisory roles and industry leadership positions. He has been a leader in the development of industry best practices for channel optimization strategies and has collaborated with analyst firms on solution papers concerning enterprise portal solutions and trends.

Rob Golden Senior Director Financial Services and Insurance

Your Digital Business PartnerThe pace of change in the insurance industry is accelerating, and the requirements for future success are becoming increasingly clear. As you embrace customer centricity and the Digital Business revolution, NTT DATA is ready today to help you turn your vision into action and achieve measurable business growth. Benefits include: improved targeting capabilities, marketing databases, and lead flows; better targeted marketing strategies and alternatives and increased net new lead volume; greater value through new policyholders, premium growth, and LTV through better targeting and engagement strategies; and increased velocity of new customer acquisition.