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TBLA - Tata Business Leadership Awards 2016 - Customer Centricity
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Tbla 2014
- 1. Amit Arora I Mahesh Kumar Chinnappan I Shreyas Desai I Sriram Seshadri Driving Business Growth through increase in customer centricity – Tata AIG Team Transformers Company :- Tata Consultancy Services (TCS) 1
- 2. Overall Agenda TBLA Challenge Share our findings on practices used by a best in class company focussed on customer centricity Providing a strategy focussed on customer centricity for a TATA group of company 1 2 2
- 3. ❖Knowing GEICO Business ❖The “GECKO ®” Story ❖Learnings from GEICO Section 1 - Agenda 3
- 4. What is GEICO all about ? ❖ 2nd Largest private auto insurer in USA ❖ 12 Million In forced auto policies ❖ 20 Million vehicles insured ❖ Offers other insurances such as ❖ Travel ❖ Home ❖ Boat ❖ Commercial auto Government Employees Insurance Company (GEICO) ‘A Jewel in The Warren Buffet Empire’ Source – SNL Research and GEICO Website 4
- 5. The “GECKO ®” Story ❖ Customer Service Focus - A pioneer in opening a 24 hour, 365 days for claims and sales service center ❖ Brand Focus - Warren Buffet publicly announced in 1996 that they would be focusing on advertising to the end consumer in a big way ❖ Brand Building - The GEICO Gecko® made its first appearance during the 2000 television season and quickly became an advertising icon ❖ Redefining the “Sales Channel” - In 2010, GEICO provided mobile users with a first in the insurance industry — the ability to quote and buy a policy from mobile-friendly pages on their iPhone and Android mobile devices Government Employees Insurance Company (GEICO) ‘Pioneering in creating an non-agent model for customer service by connecting directly to the end customer’ Customer Satisfaction Comparison (Source:Tech Media Network) 5
- 6. “Customer Focus” – The Heart of GEICO Success Government Employees Insurance Company (GEICO) ‘Mantra - Stay Close to the customer’ Innovative Products Brand Awareness Understanding the Customer Needs (Segmentation) Customer Pricing GEICO introduced novel customer service concepts like – GEICO Auto Repair Xpress™ where after an auto accident, the insured needs to visit a GEICO certified repair shop to enable hassle free repair and claim adjustment. GEICO – Strategy Targeting ads and promotions towards Baby Boomers, GenY and Gen X differently and providing products based on their needs. GEICO has minimal agent commission expenses compared to all the other insurance careers, its overall profitability and revenues are more . This enables passing on the benefits to the customer (competitive pricing) Tag Line "15 minutes could save you 15% or more on car Insurance.“ for the past 10 years and spends more than any other insurer in US A on marketing and advertising 6
- 7. GEICO Performance ‘Superior Market Performance’ ❖ For a Commoditized product like private auto insurance two factors are key to gain share:- ❖ Low Cost ❖ Effective Marketing ❖ GEICO does well on both parameters due to the fact that it has minimal agents and focusses on direct selling ❖ GEICO is the top insurance company in advertising spend, enabling it to put in the required marketing muscle Results ❖ GEICO’s current growth rate in the last quarter was 11.4% compared to an industry average of 4.6% ❖ GEICO’s expense ratio is hovering at 16% for the past decade compared to an industry average of 25% 7
- 8. ❖ Macro Factors Influencing the Indian Economy ❖ GDP Growth ❖ Consumption Patterns ❖ Changing Dynamics in Automobile Sector ❖ Growth of Indian Insurance Sector (Non-Life) ❖ Growth Trends/Opportunities ❖ Competitive Landscape ❖ TATA AIG – Current Analysis and Recommendation ❖ Financial Analysis ❖ Customer Centricity Assessment ❖ Recommendation Section 2 - Agenda 8
- 9. Macro Factors Influencing Insurance Needs in India India Growth Story ‘India Growing – Projected To Be Third Largest Country Based on GDP Projections’ 9 Source – Booz and Company
- 10. Macro Factors Influencing Insurance Needs in India India Growth Story ‘Lifestyle Changes are creating new needs for Indian Consumers ’ 10
- 11. Indian Growth Story ‘India and China to be powerhouse of Automotive Industry by 2020’ Macro Factors Influencing Motor Insurance Needs in India Source – Booz and Company 11
- 12. Non-Life Insurance Growth Story Indian Insurance Industry ‘Overall growth of 19.10 % in Non-Life Insurance sector ’ Motor Business - Largest Non-Life Insurance segment with 47 % share Source – IRDA Annual Report 2012-13 12 Gross Premium – Non Life Insurance
- 13. Notable trends in the Indian Insurance Sector Indian Insurance Industry Source – IBEF 13 Emergence of new distribution channels New distribution channels like Bancassurance, Online distribution and NBFCs have widened the reach and reduced costs Firms have tied up with local NGO’s to target lucrative rural markets Growing market share of private players In the non-life insurance sector, share of the private sector increased to 42.9% in FY13 from 14.5% in FY04 Launch of innovative products New products in the Life and Non-Life Insurance space Other traditional products have been customized to suit the needs of the customers Mounting focus on EV (Embedded Value) over profitability Large insurers continue to expand, focusing on cost rationalization and aligning business models to realize reported embedded value (EV) , and generate value from future businesses rather than look at present profits NBFC – Non Banking Financial Company NGO – Non-governmental organization EV – Embedded Value
- 14. Competitive Landscape Indian Insurance Industry ‘TATA AIG – Opportunity to be in Top 3’ Source – IRDA Annual Report 2012-13 ❖ ICICI Lombard Market Leader ❖ TATA AIG at 5th place ❖ Increase in new entrants ❖ Overall increase of market share of private companies ❖ 25.25 % growth in Written Premium by private insurers in 2012-13 ❖ Due to PFRDA bill (that allows foreign companies to hold 26% of insurance sector), FII has improved within the industry 14
- 15. TATA AIG –Situation Analysis ‘TATA AIG – Positioned to be Market Leader’ 0 200 400 600 800 1000 1200 2013 TATA-AIG 2012 TATA-AIG Gross Premium By Segment(In crore) ❖ Motor Segment for TATA AIG increased by 3 % vs. 19% growth(premium from direct business written) for ICICI Lombard for FY14(Market Leader) ❖ Health and Fire segment growth in double digit for the group and fastest growing ❖ Majority(43%) of policy issued through Direct Channel but premium earned is (29%) vs. ICICI Lombard (56%) and (43%) respectively ❖ Combined Ratio of 99% Source – TATA AIG Website Distribution Channel – Premium Earned and Policy Issued 15
- 16. TATA AIG –Financial Analysis (Auto Segment) ‘Focus on Customer Centricity will enable TATA AIG to increase net premium and overall profitability’ TATA AIG – Auto segment details ❖ Advertising expense of Tata AIG is lower by 50% as compared to ICICI Lombard ❖ Commissions paid to premium earned is higher in TATA AIG as compared to ICICI Lombard indicating that TATA AIG pays more commission per policy premium earned ❖ The Auto segment of TATA AIG contributes to 48% of its total commission across all segments compared to 37% for ICICI Lombard Source – TATA AIG Website, ICICI Lombard Website ICICI Lombard – Market leader in auto segment Opportunities for TATA AIG ❖ Increase in Marketing spend ❖ Focus on direct sales through a multi channel strategy and customer segmentation ❖ Reduce agency costs 16 FY 2014 FY 2013 % change Gross Premium underwritten 1074.8 1044.1 3% Commissions Paid 52.5 47.9 10% Advertisment and publicity 24 21.8 10% TATA AIG(Rs crore) FY 2014 FY 2013 % change Gross Premium underwritten 3213.8 2705.7 19% Commissions Paid 109.4 89.6 22% Advertisment and publicity 48.2 25.4 90% ICICI Lombard (Rs crore)
- 17. ❖ Customer Centricity Maturity Model proposed by Ernst and Young for assessing an insurance company for relative maturity of key capabilities ❖ We have attempted a mapping of TATA AIG in this model (shown below) Stage 1: Undeveloped Stage 5: Leading Stage 4: Advancing Stage 3: Developing Stage 2: Emerging Brand and market positioning Customer segmentation Distributor management Propositions Service delivery Customer lifetime value management Culture Source: Ernst and Young report, 2013 ‘Focus on customer-centric operating models, advanced segmentation, data analytics and digital strategy’ TATA AIG – Customer Centricity Assessment (Dipstick) 17
- 18. How TATA AIG can be the Market Leader in Motor Segment? ‘Focus on Customer through Innovation , Improvement in service and Increasing the visibility’ Recommendation – 3i Strategy Customer Centricity innovate improve increase Use emerging technologies to engage customer, and launch new products Efficient business processes, use of predictive analytics, and focus on Direct Channel Increasing brand awareness, targeting new customers in different segments, increase business from direct channel 18
- 19. ‘Use technology to change behaviours and provide incentives to the End Customer’ innovate Source – TCS Insurance Offering, Copyright 19
- 20. improve 20 Utilizing data analytics at customer touch points to gather useful insights, which can be used to provide personalized and effective service to the end customer increasing customer retention and helping increasing revenue through the direct channel Using predictive Modelling focused on customer behaviour to target customers who may leave – adjust ‘offers’ and service actions accordingly for them as well as to help decrease premium by offering relevant options to loyalists Enhanced focus on Customer lifetime value management with customized value adding interventions at key life changing stages , maturity, etc. with a clear focus on meeting needs of the profitable customer segments through their lifecycle ‘Focus on Customer Delight’
- 21. ‘ Top of mind recall of the TATA AIG Brand – The Goto Brand For everyone’ increase 21 Increase Brand Awareness ❖ Explore all social media channels to engage customers ❖ Marketing of awards in both print and social media ❖ Focus on “Omni Channel” – Anytime Anywhere ❖ Enhance affinity group focus towards Defence, Corporates (TCS) etc ❖ Tap in “Gen Y” through awareness and attractiveness in terms of ease of doing business ❖ Focus on needs of different demographics ( female vs. male , age) ❖ Increase customer engagement through better informed agents Increase Penetration – Customer Segments Based on Demographics
- 22. “Key Takeaways” 22 Business Models Products & Services Customer Segments Channels Business Processes Revenues Customer Profitability Market Leadership ‘ To Be India’s most preferred General Insurance Company’ TOP Quartile performance for TATA AIG Brand Equity
- 23. THANK YOU !!!