All insurers are familiar with customers that occasionally or constantly pay late. The reasons often vary. For example, an invoice remains unpaid because of an error due to an unresolved complaint or payment problems on the customer’s part. However, if a policyholder or insured party is in arrears in paying the premium, that can have negative consequences. These consequences often have a negative impact on customer satisfaction and retention. It is therefore important to deal with these customers as effectively as possible and ensure that outstanding invoices are paid quickly whilst maintaining customer satisfaction. But how? In this blog Stephan Schoon, VP Customer Success at Onguard, shares three business hacks to keep the customer satisfied and on-board, even in challenging times.
1. Know the insured party
We describe the process of taking out an insurance policy through to paying the premium as the ‘order-to-cash’ process. This process consists of many different steps. As a finance professional in the insurance market, you are primarily concerned with the last two steps: invoicing and credit management. In these steps, you can add considerable value for both the customer and the insurance company.
There are always various interests involved. As an insurer, you want to minimise the default risk and keep your Days Sales Outstanding (DSO) as low as possible. Fast payment of invoices is essential. At the same time, you also want to maintain a good relationship with the customer. Meeting the customer’s needs and doing everything possible to enable them to pay the invoice on time is a must for insurers. It is therefore important to know as much about your customer as possible. Examine the customer’s reputation. Does he pay on time? Does he have credit elsewhere? Or debts? Also, find out how a customer would prefer to receive invoices and reminders.
2. Add value through personalisation
By identifying customers’ preferences, you as an insurer can employ a personal approach. In the digital era, policyholders prefer convenience, personal contact and self-service. By using the available data from your ERP system such as payment behaviour, payment methods etc about an individual customer, you as an insurer can – for example – tailor your invoicing and credit management process to their needs and requirements. With all that data you can assign your customers to different segments and create workflows respectively. If certain customers, based on user behaviour analyses, pose a high risk you can adopt a different approach than when dealing with the low-risk customers. On one hand, personalisation allows you to meet the customer’s needs, thus ensuring customer satisfaction. On the other hand, you know exactly which customers may have payment problems and you can respond immediately.
3. Focus on the exception and act as a relationship manager
When you as an insurance company clearly identify who your customers are and what their preferences and characteristics are, you can initiate a personal approach using automated workflows. Once these workflows have been designed, the credit management process can automatically be executed virtually in the back end.
However, there is a certain degree of ‘dropout’ within any organisation – the exceptions, customer who are not able to pay in time. This implies that not every customer can always be served using automated processes. It is important that the credit manager pays extra attention to these exceptions. These are the customers who require a more bespoke approach. In such cases, it is important that the credit manager takes control as a relationship manager and ensures that the problems are resolved in collaboration with the customer. This creates understanding and maintains a good relationship with the customer. As a result, customers will pay their invoice more quickly next time, and that is precisely what you as an organisation want to achieve.
The business hacks set out above are the start of a long and good customer relationship. Adapt a customer-centric approach; let your customers know that you really are there for them. Including for customers who currently can’t meet their payment obligations. Because ugly ducklings can turn into beautiful swans.