This paper analyses the company I am most familiar with, Marsh & McLennan Companies, which is a UK based global leader in innovative risk management and insurance for risks, people and strategy (Marsh & McLennan Companies, 2). It comprises of Marsh (used in this case), Oliver Wyman, Guy Carpenter and Mercer companies, which all aim at enabling the client build long-term business success, solve problems and challenges, and grab opportunities in the currently active operating environment.
From its inception in 1871, the company operated in a single office before expanding organically and globally and became among the first insurance brokers to buy insurances on behalf of the clients instead of selling insurances (Marsh & McLennan Companies, 1). It also established the idea of self-insurance, which had risk mitigation actions to manage exposure.
The company has approximately 35,000 colleagues worldwide and 1,500 employees in its 45 locations in the United Kingdom. The employees advise more than 150,000 commercial and individual clients in the UK. It operates in more than 130 nations worldwide and generated an annual income of more than $15 billion in its last fiscal year.
Insurance brokers and agents should have a clear understanding of their client’s business needs and also aim to provide quality service (Henley, et al., 3). To effectively respond to these needs, the organization needs to understand the buying pattern and behaviour of the client. This knowledge will influence the relationship between the organization and the client and also allow for the provision of quality services. Customer loyalty is essential to success in any competitive market as it helps the organization to trade within a sustainable competitive advantage.
According to Denning (2), businesses can only make profits when they are able to create a solid consumer base. Insurance sector entails provision of services, and therefore the customers do not have the opportunity to feel, touch or engage with a good directly, thus the provision of customer service must be a vital factor in the industry. It is argued that in firms that provide services, the competitive advantage is linked to intangible values like customer service.
According to the 945 study on marketing insurance goods and services, the aim of customer service is to ensure customer satisfaction (Wicks, 80). In this case, the right level of customer service should be the priority of the company, which takes into consideration customer interest at all levels. This is the main challenge that many organizations face as they try to align the right level of customer service with their strategy. Good customer service is important to ensuring growth of customer loyalty as it offers an experience that aligns with customer experience and expectation. Poor customer service, on the other hand, can cause loss of sales and the whole business as competitors will grab all the existing customers.
Satisfactory customer service should encourage the long-term connection of a client to a company and involves the availability of enough successful connection between the employees and the clients (Maynard, 11/2). In the case of Marsh insurance, the customers will benefit from quality customer service as the organization will be meeting the experience and expectation. On the other hand, Marsh insurance will benefit as happy customers will most likely stay with the company. Nevertheless, achieving quality service involves a lot of investment in processes, systems and staff, and takes a lot of time to attain consistency in its provision. As such, good customer service is vital in ensuring customer loyalty and thus creating a successful business.
According to the FCA (Financial Conduct Authority, 1), Marsh should consider improving their interaction with the client, creating a trustable client relationship, and putting customer interest first. It further notes that fair treatment of customers is of high significance to a firm and firms should ensure they at all times first consider the interests of the customers to the way they run their business. The customer must be an integral part of an insurance broking business, their trust must not be forced, but earned through integrity and professionalism. Marsh must as well highlight their importance to the customer (Green, 2).
To achieve its competitive advantage and maintain client loyalty, Marsh discloses the following to its clients:
- Any possible equity interest associated with it in the insurers,
- A list of all insurers it aims to approach on behalf of the client,
- Its role in an insurance transaction,
- A clarity of its mode of payment
It has as well utilized various commonly applied and unique operational activities that aim at enhancing customer trust and loyalty.
Two Operational Activities that Influence Client loyalty
Marsh maintains customer loyalty in a variety of ways. This paper has identified the following two ways as the key operational activities that influence its client loyalty.
- Being the expert link between the insurer and the client
- Utilization of technology in cost and risk reduction
These factors influencing client loyalty are discussed below.
Utilization of Technology in Cost and Risk Reduction
My choice of organization (Marsh) has invested greatly in technology to allow its clients to manage risks efficiently, simply and effectively. To businesses, the technology allows for analysis, collection, management, and reporting on workflow and data linked to claims, risks, legal matters and insurance within the firm. It further enhances the relationship between Marsh and insurers, and clients and Marsh.
The most commonly applied technological innovation in the organization to effectively satisfy clients and enable their recurrence trading with Marsh is the Marsh Analytics Platform (MAP), which utilizes unmatched data combination, technology and analytics to allow customers to manage and calculate risks. Clients can access trained sales experts, and Marsh’s proprietary worldwide loss database through the iMAP. Additionally, the company’s website is user-friendly and allows clients to access the iMAP through Marsh ClearSight available under My Applications. Availability of trained sales professionals via iMAP allows for faster and easy client and Marsh engagement and communication thus providing a platform for customers to trust the firm.
The clients have access to all the information they need concerning their business risks and the insurance broker they are choosing. This helps them reduce risks and transaction costs and thus boosting Marsh’s client loyalty. Furthermore, the utilization of technology allows the company to be trusted by the younger generation, which is comfortable using the new technology in acquiring products and services. To maintain technology as a key operational activity that influences its client loyalty, the company though has to frequently up-date its technology due to its evolving nature.
Being the Expert Link between the Insurer and the Client
Being an expert link between clients and the insurer entails not just being the broker on behalf of the client, but also being the knowledge base between the two parties, where the broker or agent gets answers for all enquiries of the insured.
Marsh is an organization that aims to help businesses and consumers access better and cost-effective insurances. It influences and acts as the client to provide an efficient communication channel between the insured and the insurer. It also ensures that the needs and requirements of the client are met by the insurer. Marsh effectively links its clients to the best alternative of insurers available in the market and thus maintaining customer trust. With these operations, it improves client experience and thus improving the relationship between the two parties. Marsh maintains records of its new and continuing clients in a segmentation that characterize businesses in terms of their sizes and classes and understands the competitiveness of all the insurance providers in the UK and in other nations in which it operates. This information is made available to its clients saving clients from extensive research and falling trap of unsuitable insurers. Insurance brokers are an important part of insurance as they help minimize costs and reduce risks by being an ‘on the ground’ presence for clients to access insurers.
Challenges Encountered by Marsh Employees
Employees are the sources of knowledge and activities of a firm and their most notable inputs in a company are their individual talent/effort and intelligence. Association of British Insurers (OKETCH, 12) indicate that all insurers and insurance brokers build systems with quality customer service, yet increase in consumer expectation of product and service delivery, and the technological evolution makes the relationship between the client and the broker/insurer public in case of mistakes. Insurance companies and brokers are disabled when trying to match their satisfaction rating and other sectors, as well as when adapting to new challenges where communication with the clients is of high significance.
The main objective of every business is to be a leading force within the industry. The insurance industry is one of the most challenging and unique services that require effective management and total employee output to ensure customer retention and loyalty. This means that Marsh must put on the appropriate measure, and its employees must survive through the challenges and make very minimal mistakes to achieve total client loyalty. Nevertheless, employees are still facing challenges that affect customer loyalty in the company. This indicates that the shareholders and the board of management of Marsh should review the challenges employees face to assist the company to improve customer loyalty. This is beneficial to the shareholders and the company at large.
The Two Challenges Faced by Marsh Employees
- Client experience and expectation
- Employee Motivation
- Client Experience and Expectation
The perceived benefit or value that a client expects when purchasing a product or a service is known as customer expectation. The first impression a client gets before purchasing a good or service matters a lot in determining what a customer will expect from an employee or a business. Customer experience, on the other hand, is the holistic perception of a customer’s experience with a product, service or business. It mainly results from the experience they achieve while interacting with the business or business employees.
Customer expectation in the recent decades has emerged as an important factor to understand in business, insurance business included. Clients aim for great customer experience and are willing to part with more cash to achieve it.
Consumer’s knowledge has greatly grown and currently customers expect a higher service level and a customer tailored experience. The availability of advanced technology and social sites offer clients the opportunity to research before purchasing products and services. Consequently, the existence of online reviews allows them to avoid or pick a service or product.
Employees of Marsh insurance experience challenges when trying to balance customer’s expectations and the need to achieve customer loyalty. The company targets a certain group of customers, especially in terms of business size and class. These customers share basic requirement of a service or product but are also characterized by differing desires when making purchases. Employees are tuned to deliver on the strategies of the company, and therefore they are not sufficiently trained on handling customers with personal preferences, expectations, opinions and their non-negotiable on products and services.
Achieving client loyalty also depends on consistency in delivering on client expectations (Infinit-O, 2). Customers demand for great customer service at all times and to all customers. The experience of each and every customer must be viewed as being equally important. The executive level of the company continues to manage customer experience and expectation aspects, while the real situations occur in customer support, sales and professional services departments. This has left many employees, especially at the sales, customer support and professional departments short on knowledge on the effective means of engaging with the customers in order to achieve their trust.
The employees of the organization are thus insufficiently equipped, enabled and empowered to adequately engage with the customers.
With assistance from the employer (Marsh insurance), employees should be provided with speech analytics insights. This advancement allows the employees to access fundamental aspects like comments, criticism and sentiments concerning service or product offered. It also allows the employees to have access to a sort of rating concerning their customer care, sales or professional capabilities. Equipped with significant and deep insights, employees can work on their weaknesses as observed in the analytics insights. The company can also prepare training programs based on the insights observed as well as being able to create customized trading opportunities. This directly influences the ability of Marsh insurance to retain and improve customer retention and loyalty.
Employees should be encouraged and supported in order to meet customer expectations. Through the utilization of Big Data tools, employees can access and analyze the information concerning existing and potential customers, thus allowing for customization of the responsiveness of the client. This is a tailor-made method that allows Marsh insurance as a company and its employees to understand, collect client data, retain clients and communicate with them, with their expectations given priority.
Employees are intended to deliver consistent and good customer experience. The employee interface of iMAP should allow for data sharing and thus making it possible for employees to better understand the needs of the client. This will allow employees to sufficiently understand the clients, their expectations and experiences, and thus allowing them to respond to customer enquiries in a better way.
Employees should be able to deliver an outstanding and consistent experience to the client in all channels of communication provided by the firm. The interaction can be through emails, face-to-face, via call-centres, or even live chat. Enraged customers will go public quickly and thus tarnishing the company’s brand. Therefore, providing quality interaction between client and Marsh employees should be prioritized regardless of the channel of interaction.
The motivation level of individuals influences their attitude and commitment, and it is mainly impacted by other individuals (co-workers) or supervisors (employer). Employees are an important part of an organization’s customer perception through their actions and behaviour. Marsh has hugely invested in its operational activities but has greatly ignored the aspect of improving employee motivation. The insurance industry is experiencing high competition and therefore, employees are important in winning customers, both in heart and mind. The company has failed to provide a suitable environment that allows its employees the freedom to do their best, feel valued, and achieve their expectations.
Various factors affect employee motivation (Toppr, 4). They can be personal and as well as workplace environment-related, tangible remunerations like promotion, and intangible rewards such as being able to contribute to the common good of the company (Ahmad et al., 3). The first impression an employee provides a client influence the loyalty of the customer and thus it is a determinant of the quality of service, which causes customer satisfaction, retention and loyalty.
The reduced employee motivation in the firm is caused by their policy of rewarding positions, poor working environment, compensating for their medical insurance from their salary and lack of compensation for employees in the marketing department. Marsh insurance should understand that motivating employees will lead to better business performance since employees will always try to improve on their customer relationship in order to achieve the company objective of boosting customer loyalty.
The environment, the objective of the business, business culture, and internal communication structure of the company are key factors that contribute to employee motivation. The organization should employ a structure that rewards performance and skills instead of positions. Continuous training and the availability of an organizational environment that allow employees to best perform is critical in motivating employees and ensuring customer satisfaction. A satisfied customer will in many cases be loyal to a firm.
For Marsh to maintain or improve on its current growth trend and achieve a higher percentage of client loyalty, it is important for employees to be closer to the clients.
The solution to the increasing competition in the insurance sector is not fighting competition, but competing with other insurance brokers or risk dying. The fight step in fighting competition is ensuring that Marsh maintains a higher percentage of customer loyalty and retention. This has prompted the researcher of this paper to recommend that equipping employers with adequate and diverse knowledge in customer handling and sales should be prioritized. It is advisable for the company to fight and try not to pouching customers from other competitors.
The employees of the company are few and therefore, are not able to handle all the day-to-day tasks of the company, which includes client loyalty and retention management. Client loyalty and retention management being the first step in maintaining productivity, this paper recommends that Marsh should create a department within the sales team to deal with employee policies, challenges and client management to ensure the company is up-date with the expectations and experiences of its client. This can form part of the already existing customer service department. It is important for Marsh not to forget its existing clients at the expense of searching for new ones as this will reduce its success rate and thus lower its customer loyalty percentage with time. The moving clients are a thorn to the success of the firm as they poison the remaining clients both publicly and at personal levels.
The company employees must be equipped with modern ICT knowledge to help them effectively manage the renewal, customer interaction and manage customer reminders. The reminders should be automated to regularly inform clients on policy expiry and renewal. This will also save employees from constant client interactions, which leads to employees making mistakes that make clients migrate to other insurance brokers. The company should thus install mobile integration and modern computer systems to send automated messages to customers concerning their insurance status. Additionally, the messages can be used to alert customers on existing discounts and covers.
The company should create a service charter, which will highlight the service level expected from all its employees and remuneration they will achieve upon successful execution of certain tasks. The charter should focus on the departments that interact frequently and in a larger volume with the clients. These departments include the marketing and sales department, and the customer service department as it will ensure improvement in service delivery according to the expectations of the clients.
In order to maintain high customer loyalty in the future, Marsh insurance should consider employee motivation and customer expectations. The employees are an integral part of the company in ensuring it holds its existing customers as it tries to add it customer base. The company should understand the importance their sales, customer support and marketing departments in ensuring service excellence.
The insurance industry is a constantly evolving field and the next five to one decade ahead is an important period in the growth of the company. In order to stick with its existing clients and add others in this dynamic market, brokers like Marsh insurance should be able to continually adapt to the change associated with insurance industry and the new operational methods.
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