Price will always play a major role in any consumer’s purchasing decision, most notably when looking to choose financial services products and insurance policies. However, it’s not the only determining factor between brand products anymore and today there are multiple elements competing against each other in the decision making process. The millennial generation in particular is time and cash poor, and therefore needs to be able to narrow down their buying options fast – so what is the key to winning their custom?
A recent survey conducted by Pegasystems and Capgemini has uncovered that 46 per cent of 18-34 year olds consider the reputation of a brand to be one of the most important factors when choosing an insurance provider. This is perhaps unsurprising for a generation that has traditionally been defined by its heavy adoption of new technologies and social platforms, and in our increasingly digital world reputation is arguably more important than ever.
Social media, in particular, has become an exacerbating factor for any chink in your businesses reputation, and can often highlight a problem if left unmanaged. Ultimately, brand reputation now comes down to a question of visibility. Before social media, customers were less aware of issues affecting the whole business and it was easier to keep negative feedback and process hiccups under-wraps, but now organisations really have nowhere to hide. More importantly, the study found that one in ten millennials are reportedly inclined to name and shame companies who had delivered bad customer service on social media. With this extra exposure, consumers could be forgiven for believing customer service is getting worse in the digital age, even if it’s getting better. The digital age has truly thrust customer service into the public limelight.
In August this year, HSBC was met with a mass of dissatisfied customers after their electronic payment system failed to deliver monthly salaries to hundreds of people. The result was an outpouring of complaints on social media and a fair share of negative headlines, which threatened to seriously damage the banks reputation. Had HSBC not met with customer feedback so meticulously, the crisis could have lead to a large customer migration to competitor banks. One in three millennials would also be inclined to cancel their insurance policy and switch provider immediately following a bad experience, according to the Pegasystems and Capgemini study – a frightening statistic considering how easy it is for a customer to get lost in the system.
This can also have an impact on an organisation’s business strategy in terms of lost revenue. It is estimated to cost a business five times more to attract a new customer, than to retain an existing one. Therefore, customer service begins to have a financial impact on organisations and dictate how they structure their day to day business strategy.
Surprisingly, IT infrastructure can have a large part to play in protecting brand reputation. If you consider a large organisation such as an insurance provider, whose IT systems have evolved into a Frankenstack of processes as consumer habits have changed over time. As we know, things didn’t exactly end well for Dr Frankenstein or his monster, and in the same way, insurers can become increasingly vulnerable to all sorts of different failings! Any small IT glitch may result in an incident that directly impacts some, or even all, of your customers. Such is the nature of modern business that day to day processes are increasingly dependent on effective, reliable and resilient IT systems. If an organisation doesn’t get this right, then it can have a knock on effect which dramatically affects your brand reputation.
Complex legacy systems are traditionally less adaptable to changing consumer habits, and in the financial services industry where mobile and digital services continue to grow, these systems are struggling to cope. If you continue to fail your customer in delivering a reliable service, they’ll be increasing inclined to divert to one of the new "challenger" brands whose modern IT systems offer a more reliable service – and they won’t necessarily hesitate to criticise your brand on social media while they do it!
The digital age has compounded the impact of bad customer service on business performance. The visibility of social media combined with increasingly digital consumer habits have created additional pressure on a brand’s reputation that didn’t exist previously. Traditionally, millennials have been perceived as a fickle consumer, who will happily flit between brands depending on the best deal for them at the time, but it would seem price alone is no longer a deciding factor. Customers of all ages want a reliable brand they can trust to be open and forthcoming. Looking ahead to how the consumer landscape will continue to shift and evolve, brand reputation may well turn into the most valuable asset your company has.
By Tony Tarquini, Director of Insurance EMEA from Pegasystems.
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