For the third consecutive year, customer experience (CX) quality has declined. According to Forrester, which has been ranking CX quality via their CX Index for the last nine years, this year, it hit an all-time low. The decline, exacerbated by rising inflation and price increases, spans many sectors, including retail, healthcare, financial services, and yes, insurance.
In fact, insurance is among the industries seeing some of the sharpest CX declines. In a world where so many industries, including insurance, have spent the last decade-plus touting the importance of customer experience and investing billions of dollars in improving it, how is it that customer experiences are getting worse?
Enshittification and customer experience
It’s a trend related to and happening in parallel with another: Enshittification. The neologism”—coined by writer Cory Doctorow—was named 2023’s word of the year and describes the process by which a once-beloved platform, which first attracted users with its exceptional product and customer experience, goes to shit—ultimately prioritizing profit and efficiency over its users, and squeezing out every last penny of value to hand over to its shareholders. Doctorow describes the enshittification process this way:
“It’s a three-stage process: first, platforms are good to their users. Then they abuse their users to make things better for their business customers. Finally, they abuse those business customers to claw back all the value for themselves. Then, there is a fourth stage: they die.”
Enshittification—and the logic that defines it—has masked itself in the language of CX while simultaneously contributing to its demise. As enshittification becomes the law of the land and the most ubiquitous, dominant platforms sacrifice their users and business customers at the altar of shareholder value, it only makes sense that CX quality would suffer universally–even among companies we wouldn’t necessarily define as “platforms.” The now enshittified platforms are the standard setters, signaling to industries worldwide what businesses can and cannot get away with when it comes to how they treat their customers.
Below are some of the ways the logic of enshittification has infected customer experience:
Efficiencies at the cost of experience
While creating efficiencies can improve customer experiences by streamlining processes and reducing wait times, they can also have the opposite effect. Efficiencies implemented solely for cost-cutting can lead to impersonal interactions and a lack of empathy in customer service. Additionally, efficiencies that worsen employees’ jobs ultimately harm customers, as frustrated, demotivated, and devalued employees are less likely to provide high-quality service.
The kinds of A.I. systems commonly in use, namely A.I. chatbots, exemplify this problem. Pitched as a tool to make it easier for customers to get answers and support, these A.I. chatbots have, in many instances, instead become a roadblock to customers accessing the help they are looking for..
According to another recent study, 52% of respondents cite difficulty reaching a live agent as their top CX complaint. While efficient for handling routine inquiries, A.I. chatbots often fail to address more complex or nuanced customer issues. Unable to bypass these systems to reach a human representative, customers become increasingly frustrated and dissatisfied. The same study found that only 26% of consumers expect a successful resolution through messaging, while a mere 17% trust the value of a chatbot or web self-service interaction.
As companies continue to pursue efficiencies, it’s critical to keep in mind the way these same efficiencies, meant to improve customer experience, can easily backfire when they fail to serve genuine customer needs.
The pitfalls of customization
Customization, which has been nearly universally embraced as a tactic for improving customer experience, can harm customer experience when in the service of profits over people. Instead of enhancing the experience, excessive personalization can create frustration, dissatisfaction, and even inequalities. Customization, for example, can lead to decision fatigue, where customers feel bombarded with options and struggle to make decisions. And when customers are charged a premium for customization, standard customer experiences suffer, and everyday customers take the hit.
The airline industry offers a resonant example. Once upon a time, a single ticket price included a range of services—checked baggage, seat selection, and meals. Today, passengers often feel nickel-and-dimed for once-standard services. From carry-on luggage fees to charges for seat selection, the focus on maximizing revenue has led to a degraded customer experience. Premium services (and often services that were once standard) are available for those willing to pay extra, but the experience has become increasingly unpleasant for the average traveler. This segmentation creates a stark divide: good customer experiences for those who can afford a premium and poor experiences for everyone else.
Insurance companies need to carefully weigh the benefits of customization to the customer and to the overall experience, not simply rely on customization as a tactic for charging their customers more. When personalization is implemented thoughtfully, it can significantly enhance the customer experience, which, even without nickel and diming customers, can pay dividends to the business. On the flip side, a customization strategy solely driven by the desire to increase profits and not the overall experience often leads to a fragmented and frustrating experience for customers, ultimately hurting the customer and damaging the brand.
Technology: A double-edged sword
Enhanced technology is a primary drive defining the companies most characterized by the enshittification lifecycle, providing a potent reminder that a tech-enabled solution isn’t necessarily better for customers.
While technology has revolutionized customer experiences in many ways, enabling seamless transactions and instant access to information, digital experiences, and cutting-edge technology are not a stand-in for a good customer experience. The truth is that technology can just as easily diminish the quality of a customer experience as it can enhance it. For example, automated systems, chatbots, and self-service portals may improve efficiency but often lack the human touch that customers desire and, in some instances, have come to expect. This is especially true in insurance, where policyholders looking for human, compassionate support when filing a claim are frequently met with automated, impersonal technology.
Technology can not just diminish customer experiences but introduce new problems. Self-checkout systems at retail stores offer a classic example. While these systems are designed to speed up the checkout process and reduce labor costs (which they sometimes do successfully), they frequently frustrate customers who encounter errors or have difficulties with the interface. Issues such as scanning problems, unexpected item errors and the need for assistance from a human attendant can turn a quick shopping trip into a time-consuming ordeal. These technological solutions, while efficient in theory, can create more friction and dissatisfaction if not properly managed and supported.
As insurance companies increasingly turn to technology to increase self-servicing in insurance, the impact on the customer–not just on profitability–must be carefully weighed and considered.
Scaling Challenges
Many companies excel at providing exceptional experiences to a small group of customers but struggle to maintain the same level of service as they scale. Rapid growth can lead to inefficiencies and degraded customer experiences.
A prime example is the MyChart,, which has been a game-changer in the healthcare space and tends to work seamlessly within a single hospital system, allowing patients to easily access their medical records, schedule appointments, and communicate with healthcare providers. However, when using MyChart across different hospital systems or provider networks, patients often encounter compatibility issues and fragmented information, leading to frustration and a breakdown in the seamless experience they once enjoyed.
The challenge lies in balancing expansion with maintaining the quality and personal touch that made the company successful in the first place. This is no easy feat, especially in heavily regulated environments like insurance and healthcare.
Enshittification and insurance
The insurance industry has long been a case study in poor customer experiences. Complex policies, cumbersome claims processes, and impersonal interactions have frustrated and disillusioned customers for time immemorial. It didn’t need enshittification to make it bad.
While insurance CX has seen improvement in recent years, unlike the big disrupters, who wooed their users with products that were too good to be true and customer experiences to match, the insurance industry is entering the era of enshittification with an already shitty experience.
As the industry continues to partner with and fold insurtechs (who are in full-on enshittification mode now that capital investment is slowing down) into their ecosystems, they, too, are tethered to this cycle. As a result, their customer experiences are likely to get even worse before they get better.
Meanwhile, it’s not just the insurtechs. The insurance companies themselves, in the face of challenges related to climate change and the race to adopt A.I., are not only investing in technology without fully considering its human and CX impacts but are raising premiums, prioritizing short-term profits, conducting mass layoffs in cycles that are increasingly faster and more destructive for their products and policyholders, and scaling back investments in customer experience (CX).
Customer service: a lost art
Somehow, in the scramble to improve customer experiences, good old-fashioned customer service has fallen through the cracks. It’s as if, in the transition from customer service to thinking more holistically about customer experience, the art of customer service, so critical to customer experience as a whole, got lost. While digital experiences get smoother and slicker, customer service gets worse, creating a smoke-and-mirrors situation in which glossy interfaces mask lackluster products and bad customer service.
Ironically, while so many companies have invested heavily in creating seamless, tech-enabled experiences in the name of customer experience, they have done so at the expense of genuine human connections, aka customer service.
According to one study, a whopping 55% of customers believe their service interactions have worsened, compared with 7% who say they have improved.
The decline in customer experience highlights the urgent need to revive a commitment to customer service. True customer experience goes beyond seamless technology; it encompasses human interaction, empathy, and understanding. Companies, and especially insurers, must remember that customer experience isn’t just about digital convenience; it’s about providing value to customers while at the same time making them feel valued and heard.
Can people and profits go hand-in-hand?
Despite all of this, it turns out that what is good for customers is still actually good for businesses (although not always, admittedly, precisely what shareholders are looking for). Forrester’s research found that customer-obsessed firms grow revenue, profit, and customer loyalty faster than their competitors. Only 3% of the companies reviewed in the index fell into this category.
One shining example of a company with a holistic commitment to customer experience—one that embraces positive in-person human interactions even above digital experience—is the beloved grocery chain Trader Joe’s. The grocery chain not only brings in $16.5 billion in revenue each year but also has a gross average revenue per square foot that is typically nearly double that of its competitors. Behind its success is its unbeatable customer experience, which has resulted in a profitable business and happy, satisfied customers. According to a recent study, 45 of the 50 top-rated grocery stores in the U.S. are Trader Joe’s stores.
So yes, a good customer experience, embodied by good customer service delivered by actual humans, and a successful business can go hand-in-hand. A business like Trader Joe’s offers us a straightforward path toward countering enshittification: a revitalization of customer service, not at the expense of customer experience, but as an invaluable aspect of it. This means investing in people, of course, but also in technology that not only improves efficiencies and reduces costs but also improves both customer and employee experiences by simplifying processes, increasing knowledge, and enhancing rather than simply replacing human interactions.
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