(Image credit: Ariel Robin.)
Organizations use digital strategies to rethink relationships between people, information, and processes by leveraging existing and evolving technologies to streamline and improve processes and experiences. Digital initiatives are a growing priority among insurers to meet new digital customer expectations that non-industry organizations have set (and that, in some cases, InsureTechs have matched).
Digital projects include building customer and agent portals, enabling online direct sales, as well as other market-facing initiatives. The costs of these projects are simple enough to assess, if not always to predict. The challenge for carriers comes in developing metrics that determine project benefits and value and then appropriately attributing these figures back to the project. If a new agent portal drives growth, for instance, will the insurer be able to measure and attribute that new revenue increase to the portal launch?
In practice, carriers have found that they can determine the success of digital investments by measuring business growth, efficiency, direct savings, and customer satisfaction. Each metric has its benefits, drawbacks, and caveats. Measurements like these are critical for understanding digital project success and value; organizations should plan ways to distribute credit across multiple business units.
Categories of Digital Value
Growth in business and client counts is one of the more explicit benchmarks for success, as digital projects often have a more direct line to sales (e.g., portals for agents or policyholders to perform direct transactions). However, sales and growth are not always equivalent. Digital channels can redirect sales from non-digital channels rather than result in a net sales increase. Digital channels that launch to support a new line of business, on the other hand, will result in all new sales—but the organization cannot give sole credit to the digital project for this growth.
Another common measurement of success is the increase in efficiency or capacity. Many digital projects involve the launch of new channels for agent or policyholder interactions, including Web portals and mobile apps. Insurers can focus on multiple organizational goals by leveraging efficiency improvements to add to business capacity. Greater efficiency does not always increase in capacity, and increased capacity does not always grow sales. Growth in an organization’s capacity to review and underwrite incoming submissions, for instance, can help review business that the organization would have de facto rejected in the past. New risks replace rather than add to the overall book in this case.
Increasing efficiency may also contribute to customer satisfaction, though it is a valuable metric on its own. Customer satisfaction is the most direct validation of customer-centricity. The bar for satisfactory digital interactions is higher than ever—and while customer experience improvements drive many digital engagements, it can be complicated to measure. Organizations can assess customer satisfaction via online surveys or with user groups and forums. Digital initiatives can pass on savings that can influence customer satisfaction, and customer-centricity increases can improve carrier ability to target the types of risk their organizations value most.
Beyond growth and efficiency, insurers often understand the bottom-line impact of digital efforts by measuring direct savings. Digital projects can reduce the need for high-cost manual processes (e.g., print, mail), can simplify processes that require user or agent training, or can cut real estate costs by eliminating storage rooms. Direct savings are easier to understand, though they may not always be easy to measure. Insurers need to plan for digital effort cost savings and must follow through on those measurements after projects go into production.
Measuring project success
The first step for insurers to measure digital initiative success metrics is to measure current state processes. It’s difficult to validate the impact of a new project without understanding the organization’s baseline. Businesses also need to decide which measurements they want the project to impact—and should determine this before the project begins. It’s easier for carriers to judge project success if they know and state their goals beforehand.
Project measurement involves a technical aspect, and it can be difficult to track or measure impact without building the instrumentation into the system in advance. Carriers should set up means of continuous measurement like data collection and reports once the project goes live. They should also conduct regular reviews of measurements and assess how well the project is performing against initial goals. Projects may succeed by one measure but not another.
Vendor involvement in digital projects can complicate the execution of these steps. Decision-making in advance improves the chances that all on the project will follow through with precise measurements of impact. Insurers need honest appraisals of project success and what it means beyond producing new technology. This perspective will allow them to adjust systems to achieve the best possible results, will help them validate goals, and will educate carriers on ways to improve in future initiatives.