It is an undeniable fact that better customer experiences lead to better engagements and set apart organizations offering unparalleled service from those that fall short on the metric. The idea is universal to all industries. However, I feel pension providers may not be up to speed when it comes to better customer experience, evident in the fact that engagement continues to be low in the sector. Given my experience working within the industry, I estimate in the UK, a low percentage of automatically enrolled members actively register with their pension provider directly. However, I also feel the situation may be set to improve going forward.
Why have pension plans not seen better uptake?
The key issue with the current scenario is that the vast majority of Automatic Enrolment (AE) members, and of course, most people saving into a pension plan, feel this money becomes untouchable, and that leads to a minimal interest in their pot. Additionally, it has been found that most of the existing subscribers prefer primary pension providers that offer simple plans. This in turn means the customers do not feel compelled to shop around for better plans and a key reason for low switching rate.
Better customer engagement can potentially drive the uptake of pension plans as well as further additions to existing plans and subsequent conversions, thus helping deliver benefits for both customers and pension providers. This would also help subscribers gain greater insight into their pension plans and providers can benefit from a better understanding of their client base. Eventually, this could potentially increase assets under management (AUM) for the providers.
Improving engagement for better goals
A good starting point towards better customer engagement for the providers could be aggregation of existing customer data from various sources such as regulators, InsureTechs, banks and other participants in the ecosystem. This data can be analyzed by market and behavioral researchers and pensioners classified according to their life-stages and styles, helping derive meaningful insights. Further, when providers adopt appropriate tone and address individual customer circumstances (paydays, important occasions, holidays, business plans etc.) uniquely, they can influence customers and prospects to listen to them.
Alongside easy-to-understand-and-follow pension plans, customers are likely to feel far more actively involved with their pension savings if providers are able to change their mindset that their pension pot 'can be actively controlled' rather than when it seems out of reach. A more flexible control over their money can foster the idea that they have chosen an investment best suited to their life and lifestyle.
Using data analytics, providers can not only analyze data to coincide their communication with the customer's circumstance, but also build new business models that enable channelizing of their savings towards retirement plans. Building on the Business 4.0TM behavior - mass personalization - this model can play an important role in empowering customers pursue their passions, while future-proofing their investments for long-term savings. For instance, a customer known to be supportive of environment-friendly causes on social media could be encouraged to invest in ‘green’ investment vehicles that back a similar cause.
Providers could also include details about pot size in their communications to individual customers outlining if the product would yield income in line with the customer expectation, based on their current living standard. This information could potentially encourage them to revise their contributions to the plan.
Bettering customer engagement intelligently
Adding the AI application and robo-advisory services to the business model can potentially aid pension providers educate their customers about their investment pool and underline the benefits of additional investment. I firmly believe these measures would improve engagement with pension customers. As active engagement starts to help customers move to ‘self-service’ it would automatically help streamline many transactions and reduce supervision and also benefit the providers. Robo-advice has also helped solve customer queries based on their transactional journeys, thus reducing the overall cost of operations for the providers.
With the implementation of AI, insurers can learn the ways customers wish to engage and ensure that these channels and subsequently relevant information are personalized for them. Each of these channels will need to be continually evolved to provide information related to pensions, enable fund selection, encourage and aid transactions and present benefits of adding to the retirement pool. Robo-advisory support can also be used to help customers with complex queries and decision-making within the regulatory framework and as per customer consent.