Other parts of this series:
- Insurers need to respond quickly to win and retain customers in a market hugely disrupted by Google and Co.
- Insurers are equipped to meet rising consumer demands, but their advantage could be eroded
- Insurers can learn from Google and Co how to disrupt and dominate a target market
- Insurers must become constantly relevant to their customers or they will lose revenue opportunities
- Digital enablers help insurers nurture innovation and develop products to fuel revenue growth
- Insurers should align their market roles with key digital enablers to drive up revenues and curb costs
Insurers should follow the example of Google and other digital giants that have aligned their market roles with key digital enablers. This has greatly enhanced the value of their businesses by increasing the cross-selling of products and services; improving customer acquisition and retention; creating new revenue streams; and curbing costs.
To compete successfully in the new consumer-to-business (C2B) era, where consumers are becoming increasingly influential, insurers require a comprehensive digital agenda. It must balance the need to digitize existing systems and processes (“Go Digital”) with preparations vital for future digital products and services (“Be Digital”).
Google, Apple, Facebook, Amazon and Alibaba (GAFAA) are excellent examples of organizations that are successfully managing this tension. Their well-established digital businesses are market leaders generating colossal revenues. Yet, they’re constantly positioning themselves to quickly respond to new, often unexpected, opportunities and challenges.
Earlier in this blog series I urged insurers to take a close look at the GAFAAs and learn how they compete so effectively in the C2B environment. I highlighted the way they adopt different roles in a variety of markets. By focusing on these tightly-defined roles they’re able to disrupt and dominate their target markets.
There’s another significant characteristic. The GAFAAs align the roles they select with powerful digital enablers. Key digital enablers, as I described in my previous blog, include a diffused digital culture, fluid customer engagement, liquid IT architecture and comprehensive digitization throughout the organization. By combining the correct market role with the most effective digital enablers, the GAFAAs are adding substantial value to their businesses. They’re able to push up revenues by increasing the cross-selling of products and services; improving customer acquisition and retention; creating new revenue streams; and curbing costs.
To succeed in the C2B era, insurers need to follow the example of the GAFAAs. They have to transform their businesses into agile and flexible digital organizations that balance Go Digital and Be Digital initiatives. For many insurers, especially those with long histories, well-set cultures and substantial legacy systems and processes, such a shift will be challenging. A reliable guide to chart the way forward, as shown below, is essential.
We’ve identified four inter-acting steps that are vital for insurers embarking on digital transformation.
Confirm strategic direction: Evaluate digital opportunities, as well as past decisions, to reach a single strategic vision. This will require an assessment of digital roles and associated enablers.
Design the digital agenda. Create a blueprint for digital transformation. New performance metrics will need to be drafted, business initiatives prioritized, customer engagement strategies selected, and processes and systems overhauled. Furthermore, investments in digital technology and services will have to be reviewed, ecosystem opportunities assessed and fintech partnerships explored.
Implement digital governance. Roll out governance systems and procedures that address and manage the risks of the new digital environment. This can be a lengthy process and may, for example, require governance structures and practices to be consolidated and centralized.
Begin digital enablement. Create three-year execution plans, which focus for example on transforming customer engagement, and incorporate Go Digital and Be Digital agendas.
Implementing these steps will be challenging for most insurers. But they’re all essential. They provide a pathway to the digital transformation that is so vital in the new C2B era.
For further information about the changing role of the consumer in the insurance industry, take a look at some of these links. I’m sure you’ll find them helpful.