Source: "Introduction to Customer Loyalty Strategies" Naoki Endo, 2015
Sony Assurance ~ Japan's No.1 direct P&C insurer growing by focusing on Good Sales
Boasting the top position in the direct-type insurance industry, Sony Assurance always introduces innovative products/services into the market with customer centricity in its mind. As a result, it is always ranked as one of the top companies on CSAT and NPS surveys published by external organizations. In recent years it has moved customer satisfaction a further step forward, and has launched CX activities with us to increase customer loyalty.
Main approaches in CX enhancement
- Establishment of CX Design Department
- Holding of workshops creating customer journey maps, and discovery of issues and opportunities seen from the customer's viewpoint
- Cross-departmental implementation of improvement with respect to issues
- Creation of policy prototypes and the showing of the same to customers to examine their reactions and verify policy suitability (UCD thinking)
- Conducting of regular NPS surveys, and the assessment of improvement results
- Company-wide deployment of activities to understand customers, such as executives or managers directly calling to seek feedback from customers who gave low evaluations on NPS surveys
Case study 1: Showing an obsession for Good Sales ~ E-mail messages sharing empathy in times of misfortune
When there is such a natural disaster as a typhoon or a heavy snowfall that could cause damage to cars, Sony Assurance sends out e-mails to customers in the affected area - to express its empathy as well as to let them know that they will be compensated under their vehicle insurance. While people with car insurance know it can be used in the case of a traffic accident, a surprising fact is they don't know that vehicle insurance can also be used for damage to their vehicle caused by natural disasters such as a heavy snowfall. That is where the advantage of being a direct-type insurance company - being able to communicate directly with customers - is put to good use. It makes customers very happy by letting them know right away that they can use their insurance. And the actual reaction from customers is extremely positive.
From the company's perspective, however, it is not easy to make this kind of policy a reality. Insurance payouts will increase. The call-centers normally are at bursting point with calls about damage from the snow and road-service callouts. The probability of a flood of phone calls, because of the e-mails, would be very high. Most of top management would probably hesitate to implement such a policy. In reality, the majority of rival companies go no further than to put some information on their websites.
Sony Assurance ensures the continuity of its activities by focusing on customer loyalty and long-term profit and by assessing the results with the customer loyalty index after implementing its policies.
Its empathetic e-mails, which were sent out after the record-breaking heavy snowfalls in the Kanto area in February of 2014, not only enhanced customer loyalty but also prevented accidents. Because some customers who read the e-mails immediately removed the snow from the roofs of their carports and prevented damage before it occurred. Those customers who were moved by the empathetic e-mails shared their experiences on the Internet. It is not hard to imagine this kind of word-of-mouth having a certain effect on customer acquisition, indeed.
Case study 2: Showing an obsession for Good Sales ~ Helpful information about changes in age conditions
Car insurance premiums change accordingly to the driver's age. Even if they have a birthday during the life of their policy and can change their age conditions, however, many of the insured parties forget to go through the process, or don't even know that they can change their age conditions during the life of the policy and end up expiring them with no change being made. Those who expect lower premiums and a refund of partial premiums already paid due to changing their age conditions would definitely want to go through that process.
Sony Assurance picked up on the latent needs of customers, and has implemented a service whereby it contacts customers who would receive a premium refund from changing their age conditions. It was initially implemented on a trial basis with limited customers before the full-scale implementation, as there were concerns within the organization that it might be annoying to some to get unexpected phone calls. The reaction from customers was good: The NPS of those customers who had received the service increased by 40% points from those who hadn't. After the impressive result, the full-scale deployment was embarked on. Customers must be impressed and moved by its service because they had completely forgotten about their age conditions, and were contacted one day and told they could receive a refund.
As the same as the previous case, this case is also only a happy one for the customer, yet will bring about a negative impact on profit through sacrificing its sales due to the refunds. Since whether or not the age conditions to be changed depends upon the customer-side, basically, the customer needs to notify the insurer of any change to their conditions and there is not much need for any kind of notification from the insurer. Top management at other insurance companies would probably say: "We can't afford to inform the customer of any refunds if no liabilities on our part." On the contrary, Sony Assurance prioritizes providing customer value over its immediate profit. The insurer believes that while there may be a temporary loss of profit due to the refunds, customers who became empathetic with its corporate value through the service and would highly likely become repeated customers will shortly bring more profit than what it has lost.
To do something because it is profitable, or because it is right? ~ What the case studies show
Many people might argue that the insurer did not lose its short-term profit, but instead invested in customer loyalty creation. To us, it is not "investing," but it is a "healthy service" that arose from customer-centric business management. The excess insurance premiums (refunds) and insurance payouts paid to customers is the amount the customers should legitimately receive, if they correctly understand and remember about their insurance policies. In other words, from the company's viewpoint, it is the amount that the company shouldn't have in the first place. It can be interpreted as simply being returned to where it belongs to.
For a more familiar example, it will be a question of whether you would return the money or not, when you go shopping and realize afterwards that you were given too much change. Would you give it back because it is the money you should not receive, or keep it because it is their fault for making the mistake? In Sony Assurance cases, we can see that Sonny Assurance made its corporate decisions based on the former. Unfortunately, however, most of the financial institutions are closer to the latter. There would be many excuses with respect to the latter, such as "It's written in the terms and conditions," or "It was explained in advance." In actuality, it is difficult for the customer to understand and remember all of the terms & conditions and details of financial products. The company's considerate attitude toward the customers' reality and its mentality of pursuing only sales earned in exchange for the value provided to customers, so-called Good Sales, can embody its true nature of customer-oriented management. In other words, what sets Sony's approach apart is clearly getting through to the customer, which has led to the results of its high level of CSAT and of its long-run top ranking in sales among the direct insurance companies.