Abstract
The face of customers of the General Insurance industry in India has been changing .The customers are no longer diminutive nor mute spectators of the yore. They are demanding and their expectations have been growing with every passing day. The paper assesses as to what constitutes the customer expectations and what fires these expectations in the perspective of health insurance business in India.
In order to survive in today’s very stiff competitive scenario, a business entity needs to have a thorough understanding of the prevailing Customer expectations. “Customer expectations are beliefs about service delivery that serve as standards or reference points against which performance is judged”. (Zeithaml, Bitner Gremler & Pandit 2011). Customer expectations are reference points or standards that customers bring into the service experience.
Service experiences lie at the core of service expectations. The Healthcare customer experience is shaped by a combination of influences (PwC’s Health Research Institute). Creating favourable service experience, therefore, is critical to competitiveness for business entities looking to deliver quality service.
The moot point here is how does a customer bring her reference point or how does a customer form her reference point?
As stated earlier, a customer judges the performance of a service delivery in the context of reference points she brings in the service experience. How will a customer who intends to buy a health insurance policy for her family and who has a wide array of product choices from different companies go about making her choice? The choice will depend on her expectations. This expectation may vary between the highest level and minimum tolerable level. Here the customer experience comes in the play.
At the highest level, the customer may be expecting a health insurance product that covers most ailments, with zero waiting period and also provides a cashless facility with a wide network of hospitals and doctors. There should be no deductibles and copay. She takes the Mediclaim Policy 2012 from The New India Assurance company Ltd – India’s biggest health insurance company based on her earlier experiences, referrals or words of mouth. Her ideal expectation is based on trust, reliability, speed and a very wide accessibility. If she is looking for specific disease policy for diabetes – she goes for Star Diabetes Safe Insurance plan from Star Health. The reason being once again the experiences and referrals gathered over a period of time.
Similarly if she is looking for minimum cover at a lower cost -she may settle down for a scheme policy. The level of cost sharing in the form of deductibles and copay serves as a reference point as it has renewed customer experience. All of a sudden, there is a surge in queries about the quality of healthcare service rendered by customers who have to share a certain portion of the cost. The quality of hospitals and doctors, hitherto not talked about all of a sudden, becomes the focus of selection of a health insurance cover.
The participation of the customer in choosing a health insurance cover has also increased due to this cost sharing. Today the choice of sum insured and premium depends on this vital variable. If the cost sharing is less or minimal, the customer may be willing to pay a higher premium and may settle down for a sum insured that is reasonable as per her healthcare needs. On the other hand, if the cost sharing is high – the customer may be unwilling to pay a higher premium. She may also be forced to go for a sum insured which is more than her health care needs just because of the higher deductibles or co-pay.
Customer expectations are the beliefs that a customer holds about a service -as to how it will happen or how it should happen. A customer compares her perceptions of performance with these beliefs . Therefore what constitutes these beliefs are critical components for service providers who are constantly looking for improving their service delivery. If service providers fail to measure these expectations adequately, they may soon go the way of a dinosaur.
The highest level of customer expectation is known as ‘Desired level’- the level which a customer wishes for or she believes that this should be the ideal level of service. For example in the case of health insurance – it should mean cashless, hassle free experience and where patients are treated with empathy – in reality, all encounters leading to moment of truth should create indelible imprint on the minds of customers.
On the other hand, lies the ‘Expected Level ‘- the level with minimum tolerable expectations. It is the lowest level of tolerance acceptable to a customer. A health insurance customer wants an insurance company to treat her fair, provide all relevant pieces of information and pay claim on time and protect her from catastrophe (Parasuraman, Berry & Zeithaml 1991).
Services deliveries that lie below the desired level or fall above the adequate level are the Zone of Tolerance level – the level up to which a customer is willing to accept the service delivery variation. Any service delivery above the desired level would delight the customer. Similarly any service delivery below the adequate level would prompt the customer to discontinue the service. Any patient going for an elective operation can wait for 8 to 12 hours for getting the pre-authorization approval from a TPA.
If he gets the order within one hour, he would be delighted but if he doesn’t get the order even after 12 hours, he would be terribly disturbed. His zone of tolerance was 8 to 12 hours in this case. The service variation up to this level doesn’t get noticed. The service performance gets noticed beyond this level either positively or negatively. However, this level can change -for instance if a customer goes for an emergency operation. The customer expects a quick response from the TPA. Her zone of tolerance narrows in case of an emergency operation. Therefore, the concept of Zone of Tolerance is very dynamic and keeps on changing depending upon the intensity of the requirement. A health insurance company must understand this dimension of service very well.
Therefore, it cannot treat all cases in the same manner. The ‘Turnaround Time’ for claim settlement needs to be compatible with the zone of tolerance level. Even if a company believes it is very fast in settling claims – it needs to look at whether customers consider the service performance fast or not. The chances are that customers are looking for even faster turnaround time and are not willing to tolerate the current level of performance. Managing customer expectations, therefore, calls for continuous evaluation.
What fires Customer Expectations?
Customer expectations are fired by factors such as product offerings, price, advertising and sales promotions – factors mostly controlled by marketers. Infact a marketer communicates with the customers with all the components of market mix i.e. all the Ps. A marketer communicates with his product, price, distribution (place) promotion, people, physical evidence and process. Each of them is capable of firing the customer’s expectations. A product itself can build and enhance customer expectation.
Health insurance policy for example today in India triggers only in case of hospitalization (barring a few cases). For instance a health insurance company promises to deliver healthcare services in the form of telemedicine, mobile health, social media and retail clinics- the company in fact is raising the expectation of the customers by providing healthcare anywhere, anytime. In such cases, other Ps like distribution (place), promotion and price acts in unison to raise customer expectations. However, customer expectations are also shaped by non-marketing factors such as distinctive personal needs and referrals.
The desired service expectations are influenced by Personal needs and Enduring Service Intensifiers (zeithaml, Berry & Parasuraman 1993). Enduring service intensifiers are guided by stable factors that lead to higher expectation of services. It has often been observed that the choice of a healthcare provider is often decided by the family members instead of the ailing person.
Similarly choice of hospital for treatment is also guided by the treating doctor’s choice. These are examples of derived service expectations. In the B to B scenario (business to business service) customer expectations are generally shaped by own customers as well. If a health insurance company wants to revamp its processes through modern technology – the technology supplier needs to look at the derived expectation of the insurance customers. The supplier cannot merely concentrate on the needs of the IT department of the insurance company.
Personal needs based on personal philosophy are another enduring service intensifier. The attitude of the customer is an important component which shapes this need. For instance, a corporation takes a health policy from a well-known broking firm. The expectation of the company is that the broker would properly explain the health related behaviour of his employees to the underwriter. The broker should, therefore, develop in-depth knowledge of the health behaviour of his client firm. The broker would not just negotiate the price as is commonly perceived but also needs to develop complete understanding of the health behaviour in order to better serve the customer expectation. The underlying attitude that drives the expectation is very clear.
The adequate level of customer expectation is determined by five factors (Zeithaml, Berry &Parasuraman 1993) . Transitory Service intensifiers are ephemeral in nature but generate heightened expectation. A patient encountering an accident wants the health insurance company to be highly responsive. The service expectation also demands empathy in behavior from the employees of the insurance company. It may be noted here that the zone of tolerance narrows in such cases.
Perceived service alternative is another factor that influences the adequate service expectation. It is an estimation of the customer about the different sources from where the service can be obtained .If the availability of alternative services is high, in that case the level of adequate service expectation is high. On the other hand, where the options are less, the customers settle down for whatever is offered. A health insurance customer settles for a lower amount towards reimbursement claims when there are no other options. This lowers the level of adequate service and widens the zone of tolerance.
The Self Perceived Service Role of a customer is the third factor that impacts the level of adequate service expectation. Every person plays a role in the service he or she expects from others. If the role played by the receiver of service is explicit – the expectation is high.
Suppose a health insurance customer is very clear in what she wants from the service provider and complies with all the requirements as desired by the provider. In such cases the zone of tolerance contracts as the expectation is very high. On the other hand, a health insurance customer who doesn’t comply with the requirement of the provider and doesn’t fulfill his/her self-perceived role – her level of expectation in that case is low and her zone of tolerance naturally widens.
Situational factors also impact the adequate customer expectation level. When a customer realizes that certain situational factors are beyond the control of the service provider – the zone of tolerance increases. Recent examples of demonetization explain this factor very well. People knew that there was a dearth of legal tender currency due to demonetization of 500 and 1000 notes. Therefore most of them waited for hours to get their money without much grumbling.
The zone of tolerance clearly got widened. During epidemic breakdowns which affect many people , most people realize that hospitals have a tough time dealing with the problem. Such incidents as the above lower the level of adequate service expectations -thus in the process increase the zone of tolerance. But the experience reverses when an individual customer afflicted with a fatal disease approaches the hospital. His service expectation is high given the criticality of his problem – the zone of tolerance naturally narrows in this case.
Predicted service is another variable that impacts adequate service expectation level. Predicted service level is the level of service that a customer expects. A health insurance customer has high level of adequate service expectation when he predicts good service from a hospital. His zone of tolerance naturally is low.
Conclusion
In order to manage customer expectations, a provider needs to understand the various variables that affect the expectations of his customers. The zone of tolerance is a vital concept. Service deliveries get noticed only when they fall outside the zone of tolerance. Managing the zone of tolerance is the key to managing the service expectations.
