An Insurance Customer-Facing Value Chain

Quick Summary

Every business, regardless of industry, only has two processes: getting customers and keeping customers. Every other process a company uses must support one or both of these two processes.

Insurers, and the technology vendors that (want to) support insurers, should accept that reality by managing the insurance value chain entirely as a set of interconnected, interdependent customer-facing activities. The insurance customer-facing value chain consists of two interconnected, interdependent systems: systems of engagement (SoE) and systems of record (SoR).

Stuck in a tar pit of silos

Silos, silos, seemingly everywhere and always. Many years ago, an executive from a Fortune 500 company told his colleagues that “just because we are a multi-SBU, multi-division, multi-department-organized company is not our customer’s fault.” Insurance companies know that this is true (we hope) but they don’t act on this knowledge. As folks say in Texas, most insurers are “all hat, no cattle” when it comes to actually providing world-class (or really, even decent-class) customer service.

To help insurers meet, if not exceed, customer needs and expectations, I offer an insurance customer-facing value chain in this post. I suggest that insurers use this customer-facing value chain or something similar to get and keep customers.

There are no front, middle, or back-offices

Insurers, and the technology firms that support them, unfortunately use the terms “front office” and “back office.” I have occasionally come across the truly horrible term: “middle office.” One of the problems with this mindset of compartmentalized “office activities” is that it provides people working in the “back office or middle office” with a too-ready, and totally erroneous, excuse that they are not responsible for taking care of customers. Taking care of customers, they say, is the responsibility of the “front office.” But the reality is that everyone is responsible for taking care of the customer. 

Sorry, folks. Thanks for playing. But there are no front, middle, or back-offices.

There are only processes which exist to get and keep customers, or support either or both of these customer-supporting processes.

John Hancock recognized the importance of being customer-facing (in the mid-1980s)

In the mid-1980’s when I was working at John Hancock in their Corporate Market Research department, the Hancock executives decided to implement a customer-facing initiative called ServiceLine.

Personally, I thought it was more of an initiative to reinforce for those of us working at Hancock that our customers thought of John Hancock as, wait for it, John Hancock.

Not as a life insurer, an annuity provider, a short-term disability provider, or ‘whatever lines of business Hancock sold’ provider. Not as a group of employees from front-office, middle-office, or back-office areas. Not as anyone from any silo but people who were John Hancock employees.

People from various Hancock lines of business as well as horizontal operations (like market research or marketing or distribution) were selected to spend one week on the ServiceLine initiative. The main number telephone operators taking calls from customers were asked to direct a variety of the customer calls – but not calls about claims – to the ServiceLine telephone number.

And there we were: a divest crew of Hancock employees from all over the insurance company taking service calls from customers of whatever lines of business they had purchased.

The ServiceLine rules for us were straightforward:

• strive to resolve the customer’s request at the time of the call, or
• inform the customer you would get back to him/her the next day either with the resolution to their request or a time estimate of when you would have the answer they needed.
• do not send the customer to another person or to call another telephone number: if there is running around to do to get the answer, it was our responsibility as ServiceLine participants to do the running around. (And yes, I did a great deal of running around that week to get answers for our customers.)

It certainly reinforced for me that customers don’t care about company SBUs, divisions, departments, functional areas, or lines of business.

An insurance customer-facing value chain: a modest suggestion

I have no idea if ServiceLine or something like it is still in use by Hancock or any insurer.

However, perhaps insurers could create a similar initiative based on the insurance customer-facing value chain shown in the visual below … a more up-to-date digital repository of customer data, product data, producer data, and previous customer service requests (whatever channel was used that the customer used to contact the insurer).

My proposal divides the insurance customer-facing value chain, for the sake of management of resources and measurement purposes, into two “sub” value chains: Systems of Record (SoR) and Systems of Engagement (SoE).

The SoR activities are what most insurers and technology firms consider as “middle or back office” activities. The SoE activities are what most insurers and technology firms consider “front office” activities.

However, I purposely separate “sales” from “distribution.” Before the mobile, digital marketplace came into existence, this separation might not have made sense. I strongly believe the separation of the two functions makes sense in our current mobile, digital marketplace. Insurers have to consider the various ways in which customers want to purchase insurance (i.e. sales) and access the insurance product (i.e. distribution).

SoR = SoE = SoR = SoE = …

As mentioned above, I separate the two types of systems which comprise the insurance customer-facing value chain for management and measurement purposes. But the two customer-facing systems are actually all part of the one insurance customer-facing value chain of connected, interdependent activities.

There are a myriad of issues for insurers using my proposed insurance customer-facing value chain. Three of them are:

• Insurers must fuse SoE and SoR activities closely together with information continually gathered from the customer interaction.
• Insurers should not fall into the tar pit of silos yet again by creating a new department responsible for social media customer service or mobile customer service or digital customer service: customer service is customer service regardless of the paths or platforms customers use to interact with insurers.
• Technology vendors that are so bold to state they support the entire insurance lifecycle, or want to create a long-term agenda building solutions which address a so-called “full insurance lifecycle” need to honestly assess which activities they currently support or have a road map to support.

Your insurance firm: what are you doing to be customer-facing?

How is your insurance firm reshaping itself to be truly customer-facing?

Or are you managing customer service as if it is their fault your insurance firm is a multi-SBU, multi-product, multi-divisional, multi-departmental firm?