I bought a new apartment. I immediately arranged for new home insurance cover with a reputable insurance company with which I have had for several years additional insurance policies. I had no reason to think of another insurance company, even if my new insurance would come out a little cheaper from the competition, I was a satisfied customer.
The premium was payable yearly, the first instalment was to be paid within 30 days of policy signing. I forgot. The euphoria of the new apartment, relocation, many other formalities… as you can well imagine. So, for the whole year I lived under the impression that everything was fine and that I had full insurance coverage for the new equipment in the apartment.
After 12 months had elapsed, I wanted to make the next annual payment and so I called the customer service line to clarify payment details. To my surprise, I learned that my insurance was cancelled half way through the year, that I owed the remaining proportion of the premium and that the insurance company had already handed over the case to an external debt recovery firm.
So what happened here? Whose fault is this?
The insurance company’s perspective
They tried to send reminders to my permanent address, but I did not respond. In response to my protestations that I clearly no longer lived at the original residence address (I had bought a new apartment) and that there were another three ways to reach me listed in the contract (phone, e-mail, address of the insured property), I received a written statement from the director of the department:
“… We regret to inform you that we normally communicate with clients using written documents, not by phone. In this case, we sent you a reminder by registered letter with acknowledgment of receipt, but you did not pick up the letter in due time. According to the General Insurance conditions, such document is considered delivered. Sorry, but from our side there was no misconduct.”
The insurance company therefore did not err – from their perspective their employees acted strictly in accordance with procedures and it was my fault that I had failed to make the payment. With this conclusion I can finish this story. The insurance company closed the case, I paid outstanding premiums and, of course, have arranged for new insurance cover. However, there is one crucial difference with regard to the setting up of the new policy. This new insurance of mine (and I think also any possible future insurances) is and will not be signed with this “my” insurance company.
The customer’s perspective
As a customer, I was disappointed despite the fact that the fault was on my side. For more than half the year I was not insured and I did not know about it (I was lucky enough not to experience any insurance incident during that time). The insurance company acted mechanically, from four different communication options they chose to use only one. I was a long-standing (not to mention prompt in paying) customer, so customer service representative could spot it and conclude, that the unpaid premium for the new insurance was most likely a mistake. I would have expected an active effort to keep the policy alive. Although I was only a grain of sand in their insurance portfolio, according to logical criteria I must have been a profitable customer that they should be interested in keeping. You might say that I acted emotionally when I switched to a competitor and maybe partly rightly so. But how can I be sure that in the future for any other possible problem in my policy a customer service representative would use the brain and sound judgement to resolve the matter in favour of both sides as much as possible? I chose therefore to change. I have had no assurance that this possible problem would be resolved in a different way, but I have a chance at least.
The manager’s perspective
Resolution of huge amount of “incidents” that large companies operating in the mass market must daily cope with require automation, precise rules and the elimination of errors resulting from the “human factor” which could cause a loss. Most of those “reputable” brands have mastered this step and as customers we can count on them to be fair and act according to the contract.
The reality of today’s market, however, dictates a different perspective. It is not enough just to be “good” or “fair” and avoid mistakes. Excellence is required, especially where the product itself no longer guarantees sales success and customer loyalty. The step from good to excellent is difficult and requires a mindset change. Even a “grain of sand” shall have the same attention as the “lump of gold”. Otherwise it can easily happen that an insignificant problem turns out to be just the tip of the iceberg of a deep crisis in customer relations with major consequences. Strong attachment to the procedures, an effort to achieve 100% control, low competencies given to customer service staff, and possibly low attention to the selection of people to the contact positions, while leading to effective action and low error rates, prevents employees from “using their brain” and seeing a real “live” customer behind every problem.
The next challenge for the manager of a customer service department therefore is to maintain “quality” but also free up hands among the front line staff. Their main task should be to solve the problem with the customer so that he or she leaves the conversation with better feelings than those he or she had at the beginning of it.
Sometimes it only requires listening well and satisfying a customer request even only slightly beyond the rules, at other times it may require a small financial benefit that the CFO does not like to see. It is possible that sometimes the customer receives “more” than he or she should, on the other hand, such an investment strengthens the long-term customer loyalty and brand reputation. The CFO should not therefore have the veto in this case.