Think Cutting Costs Is Your Best Bet for Dealing With Inflation? Think Again!
Supply chain disruptions are gradually easing. Inventories of new and used cars are improving. Gas prices are lower. For the time being, unemployment is staying low.
But the recent failures of SVB and Signature banks have many of us wondering… should we look to cut costs ahead of an economic downturn?
In uncertain times like this, it’s typically a good idea to cut costs, at least temporarily. But when considering what to trim, don’t forget to consider the consequences!
Will cutting costs cost you customers?
The last thing you want to do is to lose business. When inflation rises, nearly everyone is looking for ways to lower their expenses, including your customers.
Fortunately, most people consider insurance essential and are unlikely to drop their coverage altogether. That doesn’t mean they won’t shop around for less expensive policies, though, especially when they have less disposable income.
A survey by Bain & Co. found that more than 1 in 10 consumers shop for a new property and casualty insurer annually, and more than a third of those shoppers do switch.
That could actually be good for your business, but make sure itis you who gains the new customers.
If you slash your advertising budget — which is often the first expense businesses eliminate — you’ll make it harder for potential customers to find you, or even know your business exists.
Maybe you’re thinking about reducing your staff. But ask yourself this: Can you really provide efficient service to current customers and prospects with fewer employees? And what happens when your business grows? With talent being in such high demand across the industry, you’ll likely spend more in salary and training costs when you need to hire new people again.
What else can be cut? Or should you cut anything at all? Instead, why not optimize your costs with digital technology?
The benefits of digitalization are countless
Digital technologies can streamline virtually every aspect of your insurance business, from product development and sales, to billing, to claims management. Smoother processes increase both employee and customer satisfaction and loyalty.
Automation can make a tremendous difference by:
• Allowing for quicker, more accurate responses to requests for quotes
• Enabling product personalization and faster time to market for new products
• Automating routine tasks, freeing up underwriters’ valuable time for more advanced analyses and increasing the volume of business they can approve
• Shortening the claims cycle; claims management technology has a significant impact on the overall claims experience and managing claims cost
• Improving transparency; electronic notifications (e.g., through a secure portal) keep the insured/claimant informed throughout the process, reducing the need for follow-up calls
• Improving fraud detection
• Potentially lowering premiums (e.g., through personalized policies and telematics), providing a competitive advantage
Prioritizing the customer experience
Most people begin their insurance-buying journey with an online search. (By the way, if you’re not partnering with an insurance aggregator, you’re losing potential business to competitors who do have such partnerships.)
After conducting a preliminary search, some people then talk with an agent before making a decision to buy or keep looking. From the time they buy a policy, your technology has many opportunities to “touch” them, from getting proof of insurance documents, to paying their premiums online, to filing a claim, all of which determine how satisfied customers are with their choice.
Delivering a seamless experience with every interaction is not just good for business, it’s what customers now expect — particularly when they’re stretching their dollars.
Call us if you’d like to learn how we can help you meet those ever-increasing expectations.