Tag: University of Mumbai BMS Notes

Globalization is the word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information. Countries have built economic partnerships to facilitate these movements over many centuries. But the term gained popularity after the Cold War in the early 1990s, as these cooperative arrangements shaped modern everyday life. This guide uses the term more narrowly to refer to international trade and some of the investment flows among advanced economies, mostly focusing on the Asia and Europe.

The wide-ranging effects of globalization are complex and politically charged. As with major technological advances, globalization benefits society as a whole, while harming certain groups. Understanding the relative costs and benefits can pave the way for alleviating problems while sustaining the wider payoffs.

Globalization or globalisation is the process of interaction and integration among people, companies, and governments worldwide. As a complex and multifaceted phenomenon, globalization is considered by some as a form of capitalist expansion which entails the integration of local and national economies into a global, unregulated market economy. Globalization has grown due to advances in transportation and communication technology. With the increased global interactions comes the growth of international trade, ideas, and culture. Globalization is primarily an economic process of interaction and integration that’s associated with social and cultural aspects. However, conflicts and diplomacy are also large parts of the history of globalization, and modern globalization.

Features of Globalization

1. Liberalization

It stands for the freedom of the entrepreneurs to establish any industry or trade or business venture, within their own countries or abroad.

2. Free trade

It stands for free flow of trade relations among all the nations. It stands for keeping business and trade away from excessive and rigid regulatory and protective rules and regulations.

3. Globalization of Economic Activity

Economic activities are be governed both by the domestic markets and also the world market. It stands for the process of integrating the domestic economies with the world economy.

4. Liberalization of Import-Export System

It stands for liberalization of the import-export activity involving a free flow of goods and services across borders.

5. Privatization

Globalization stands for keeping the state away from ownership of means of production and distribution and letting the free flow of industrial, trade and economic activity among the people and their corporations.

6. Increased Collaborations

Encouraging the process of collaborations among the entrepreneurs with a view to secure rapid modernization, development and technological advancement, is a feature of Globalization.

7. Economic Reforms

Encouraging fiscal and financial reforms with a view to give strength to free trade, free enterprise and market forces of the world. Globalisation stands for integration and democratisation of the world’s culture, economy and infrastructure through global investments.

Globalization Background

The progress of industrial revolution in the 20th century was accompanied by a replacement of the police state by a welfare state. The state came to be an active actor in the economic life of the society. In the socialist states, state ownership of means of production and distribution became the rule.

State-controlled command economies were operationalised and regarded as the best means for rapid socio-economic development. In several other countries, nationalization of key industries and enterprises was undertaken with a view to provide goods and services to the people. State began performing several socio-economic functions.

India, like several other new states, adopted a mixed economic model. Ownership and control over key industries was entrusted to the public sector. It was deemed essential for securing a better mobilisation of resources and for providing better services to the people. State regulation of economy and industry was practiced and the public sector was patronised by the state. Private sector was given a lesser role in the economic system.

However, the experience with the working of command economy and mixed economy models was found to be inadequate slow and unproductive. By 1980s economies of socialist countries began collapsing. Around 1985, Indian economy also began showing big strains. Indian public sector now appeared to be a liability and foreign exchange reserves came to be in very bad shape. Industrial growth became very slow and inflation assumed alarming proportions.

In 1990s, the world witnessed the collapse of socialist economies, in particular the Soviet economy and political system. In 1991, the USSR suffered a disintegration. The weaknesses of all socialist economies became fully clear and all socialist countries began witnessing a process of overthrow of socialist systems.

Liberalization of politics and economy came to be recognised as the necessity of the day. All countries of the world began realising the merits of the market economy, free trade, privatization, liberalization, delicensing and deregulation of trade, industry and business.

In July 1991, the Government of India decided to go in for liberalization of economy. A new economic policy was formulated and implemented with an emphasis new upon economic reforms. These were governed by the principles of liberalization, privatization, market economy, free trade, deregulation and delicencing. These reforms paved the way for initiating the process of liberalization and globalization of Indian economy. Similar changes were adopted by other states.

At the international level, all the states agreed to freely develop financial, business, trade and industrial relations among their people. Adoption of new trade and tariff agreement leading to the establishment of World Trade Organisation was made. Globalization became the order of the day.

In today’s time, all thanks to advancement in technology nothing or no business is restricted to one place, one city or even one country anymore. Everything is global. In the past few years e-commerce industry has taken a ride and has come to become the need of the hour. E-Commerce industry as a whole is evolving at a great pace and as for 2016 and 2017, it has already risen tremendously.

There are new trends emerging in this space, such as:

(1)  Moving to Mobile Commerce

As per a recent report, it is predicted that by the end of 2016 almost a third of the world’s population will have access to Smartphone. Having this feature has become more of a necessity. E-Commerce stores must fit in all screens in order to enhance customer experience or they may be losing on some serious business. As per recent Forbes study, 87 % of the gen-X people spend most of their time on digital devices every day than ever.

(2) Choose how you want to pay

Convenient and more payment options new businesses are emerging to facilitate new payment models to enhance online shopping experience. They aim not only to make wider options available but also to increase payment security for both buyers and sellers. In the past few years, many new models and gateways have emerged like e-wallets, Chip card readers, magnetic cards , EMV and cashback services.

(3) Multi Channel Model

Inspite of booming eCommerce market, retailers have come to an understanding that Omni Channel /Multiple channel is must for any business model. Though there has been a lot of buzz on online shopping comfort, in reality it has been recorded that many customers may surf net all day but at the end do need a brick and mortar store to make the final purchase. However, new technologies such as instore digital services are emerging to make the physical store experience better.

(4) Seamless Shopping experience

Many new features are being added by all companies to facilitate seamless shopping for example stores are now offering easy on the spot or online payments , easy wallets with discounts and coupons or unique store debit cards .

(5) Social Ecommerce

Retailers are adopting social media as their lead sales medium . Social network has come to play the most important role in the retail world lately , almost 40 % purchases are made because of social media handles . Thus , social network is sure expected to rise in the coming time.

(6) Quality rather than quantity

Retailers have come to an understanding that now having more variety will not win them customers, thus the focus has shifted to enhancing customized shopping experience by introducing new features. The emphasis is now being laid on unique online features like virtual trial rooms, zoom in pictures, 360 degree image view.

(7) Customer Relationship

With the increasing variety available the customer loyalty is now completely out of picture. It requires well integrated technology supporting easy payments and high tech shopping experience. The focus is now being shifted from discounts to better integrated technology services.

(8) Customer service

With the increasing online shopping, people are becoming more and more comfortable with the concept of choosing amongst great variety at the comfort of their own space anywhere, anytime 24/7 . Thus , there will be a rise in customer support service feature in the coming time .

(9) Smarter Customers

With more shopping and payment options than ever , customers are more informed and empowered now the stakes are much highe. It is utmost important to win their trust now than ever, but maintaining quality and logistics.

(10) Merging online and offline

It has become important to merge online /offline systems to facilitate easy working. A well integrated technology is crucial.

“Change is the essence of life” in order to survive and make a mark in today’s time retailers must be extremely flexible and mouldable towards the smart customers changing needs. It requires tools like social media monitoring , customer feedback & so on . It is the need today to stay upbeat with the changing trends and technology to stay long.

In this model, a consumer approaches a website showing multiple business organizations for a particular service. The consumer places an estimate of amount he/she wants to spend for a particular service. For example, the comparison of interest rates of personal loan/car loan provided by various banks via websites. A business organization who fulfills the consumer’s requirement within the specified budget, approaches the customer and provides its services.

Consumer-to-business (C2B) is a business model in which consumers (individuals) create value and businesses consume that value. For example, when a consumer writes reviews or when a consumer gives a useful idea for new product development then that consumer is creating value for the business if the business adopts the input. In the C2B model, a reverse auction or demand collection model, enables buyers to name or demand their own price, which is often binding, for a specific good or service. Inside of a consumer to business market the roles involved in the transaction must be established and the consumer must offer something of value to the business.

Another form of C2B is the electronic commerce business model in which consumers can offer products and services to companies, and the companies pay the consumers. This business model is a complete reversal of the traditional business model in which companies offer goods and services to consumers (business-to-consumer = B2C). We can see the C2B model at work in blogs or internet forums in which the author offers a link back to an online business thereby facilitating the purchase of a product (like a book on Amazon.com), for which the author might receive affiliate revenues from a successful sale. Elance was the first C2B model e-commerce site.

C2B is a kind of economic relationship that is qualified as an inverted business type. The advent of the C2B scheme is due to:

• The internet connecting large groups of people to a bidirectional network; the large traditional media outlets are one-directional relationships whereas the internet is bidirectional.
• Decreasing costs of technology; individuals now have access to technologies that were once only available to large companies (digital printing and acquisition technology, high-performance computers, and powerful software).

Positives and Negatives

Nowadays people have smartphones or connect to the internet through personal tablets/computers daily allowing consumers to engage with brands online. According to Katherine Arline, in traditional consumer-to-business models companies would promote goods and services to consumers, but a shift has occurred to allow consumers to be the driving force behind a transaction. To the consumers benefit, reverse auctions occur in consumer to business markets allowing the consumer to name their price for a product or service.

A consumer can also provide value to a business by offering to promote a business products on a consumers blog or social media platforms. Businesses are provided value through their consumers and vice versa.

Businesses gain in C2B from the consumers willingness to negotiate price, contribute data, or market to the company. Consumers profit from direct payment of the reduced-price goods and services and the flexibility of the transaction the C2B market created. Consumer to business markets have their downfall as well. C2B is still a relatively new business practice and has not been fully studied.

Data Aggregation

Aggregation of data is a common C2B practice done with many internet corporations. In this instance, the consumer is creating the value of personal information and data to better target them to the correct advertisers. Businesses such as Facebook, Twitter, and others utilize this information in an effort to facilitate their B2B transactions with advertisers. Most of these systems cannot be fully utilized without B2C or B2B transactions, as C2B is usually the facilitator of these.

In B2C model, a business website is a place where all the transactions take place directly between a business organization and a consumer.

In the B2C model, a consumer goes to the website, selects a catalog, orders the catalog, and an email is sent to the business organization. After receiving the order, goods are dispatched to the customer. Following are the key features of the B2C model:

• Heavy advertising required to attract customers.
• High investments in terms of hardware/software.
• Support or good customer care service.

Consumer Shopping Procedure

Following are the steps used in B2C e-commerce:

A consumer:

• Determines the requirement.
• Searches available items on the website meeting the requirement.
• Compares similar items for price, delivery date or any other terms.
• Places the order.
• Pays the bill.
• Receives the delivered item and review/inspect them.
• Consults the vendor to get after service support or returns the product if not satisfied with the delivered product.

Disintermediation and Re-intermediation

In traditional commerce, there are intermediating agents like wholesalers, distributors, and retailers between the manufacturer and the consumer. In B2C websites, a manufacturer can sell its products directly to potential consumers. This process of removal of business layers responsible for intermediary functions is called disintermediation.

Nowadays, new electronic intermediary breeds such as e-mall and product selection agents are emerging. This process of shifting of business layers responsible for intermediary functions from traditional to electronic mediums is called re-intermediation.

A website following the B2B business model sells its products to an intermediate buyer who then sells the products to the final customer. As an example, a wholesaler places an order from a company’s website and after receiving the consignment, it sells the end product to the final customer who comes to buy the product at the wholesaler’s retail outlet.

B2B identifies both the seller as well as the buyer as business entities. B2B covers a large number of applications, which enables business to form relationships with their distributors, re-sellers, suppliers, etc. Following are the leading items in B2B eCommerce.

• Electronics
• Shipping and Warehousing
• Motor Vehicles
• Petrochemicals
• Paper
• Office products
• Food
• Agriculture

Key Technologies

Following are the key technologies used in B2B e-commerce:

• Electronic Data Interchange (EDI): EDI is an inter-organizational exchange of business documents in a structured and machine processable format.
• Internet: Internet represents the World Wide Web or the network of networks connecting computers across the world.
• Intranet: Intranet represents a dedicated network of computers within a single organization.
• Extranet: Extranet represents a network where the outside business partners, suppliers, or customers can have a limited access to a portion of enterprise intranet/network.
• Back-End Information System Integration: Back-end information systems are database management systems used to manage the business data.

Architectural Models

Following are the architectural models in B2B e-commerce:

• Supplier oriented marketplace: In this type of model, a common marketplace provided by supplier is used by both individual customers as well as business users. A supplier offers an e-stores for sales promotion.
• Buyer oriented marketplace: In this type of model, buyer has his/her own market place or e-market. He invites suppliers to bid on product’s catalog. A Buyer company opens a bidding site.
• Intermediary Oriented marketplace: In this type of model, an intermediary company runs a market place where business buyers and sellers can transact with each other.

Portals are online platforms that allow businesses to conduct interactions and transactions with customers and suppliers instantly, facilitating a more intuitive and connected operation. An integrated portal solution allows organisations in the agriculture supply chain to have one interface shared across their business community.

At a basic level, web portals make ordering easier and more reliable, with full visibility and 24/7 order placement. Suppliers, for example, can receive orders via their online portal, offering automatic status updates and other functionality as required. This allows businesses to make transactions more efficient and effective, no matter the size of the order or the customer. Going beyond a simple eCommerce option, a portal solution delivers a more professional and smooth business experience for all parties.

Notable improvements to business operations include:

• Reduced errors: No more wasted time or correcting the fallout from simple mistakes. Portal solutions remove the need to manually input data, eliminating errors and their resulting costs.
• Ease of business: Smoother transactions and communications between businesses, with no need to make radical changes to current Enterprise Resource Planning (ERP) systems.
• Increased customer loyalty: Portals don’t just make the ordering process more reliable and robust. Businesses seeking to remain competitive can offer attractive benefits via their portal, such as loyalty schemes and seasonal offers.

Portals are best suited to businesses that need to deal regularly with multiple buyers or sellers especially for customer ordering. In particular, manufacturers benefit from the streamlines ordering and tracking granted by a portal solution.

Web Store and Horizontal /Vertical portals

• A Web Portal is a website which works as a single source for different information on a particular domain. It is a useful access point which helps the users to go easily from one page to another while navigating for information which they are in search of.
• Web Portal gives a list of information arranged well for the accessing purpose of the users. Placing the right amount of keywords in the pages at the right positions also can make a difference to your website traffic. Ultimately what matters in content development is to understand and provide what customers search for the most online.
• Portals have information stored which links to various topics like business, new, finances, travel, entertainment, shopping and so on. The popular portals on the internet are Yahoo!, AOL and Google. These portals can be termed as personal portals, as it stores the history data, emails and profile information of the user.
• High resolution images and big files of videos may be required to attract people but it’ll be of no use if the page takes long time to load. An ideal portal depends mainly on search and navigation, notification, personalization, task management, work flow and collaboration.

Enterprise portal development can be divided into two divisions:

• Horizontal Enterprise Portals or Mega Portals or HEPs
• Vertical Portals or Vertical Enterprise Portals or VEPs.

Horizontal Enterprise Portals (HEPs)

A Horizontal Portal is a website that is public and helps to give its users all the necessary services they are in need of. Examples of horizontal portals or HEPs are NetCenter and MyExcite. Horizontal Enterprise Portals include chat groups, horoscopes, weather, stock prices, news and shopping.

These send requests to users for making their page the first page one sees while using the web. These personalizes the page one sees by selecting the city one chooses for knowing the weather, selecting the new sources and stocks one likes to be displayed on the page and alter the web page appearance.

Thus one is able to build multiple stock portfolios and see the updated valuations very often. It has to be noted that if one access HEP from another computer, it loses all the personalization characteristics.

HEPs does not give any kind of information related to any organizations, as they are not connected to any data sources of any organization other than their own. It delivers access to all the web information one needs on one’s own organization.

Vertical Enterprise Portals (VEPs)

Vertical Enterprise Portals or VEPs deliver information related to any organization.  A Vertical Enterprise Portal is an enterprise portal which is used in a specific department for particular business functions like accounting, customer service or e-commerce. When a user logs to a VEP, a customized portal page is produced. This is linked to the user who is logged on to.

Steps in setting up Business on Internet

1. Create a great site: This is No. 1 for a reason. You have to have a great-looking, intuitive, easy-to-navigate site if you are going to be taken seriously by potential e-customers. Your site must look professional. Pictures and content must load quickly. There can be no dead links. Have a robust “About” page.

The good news is that it is easy and affordable to create a great site look for online hosts that have pre-made templates you can customize.

Web surfers who come to your site will judge it in about three seconds. That’s all you’ve got. You better impress them the moment they hit it.

2. Pick your products: You should try to find the right product at the right price, he will make a profit. Where do you find great, inexpensive products? It depends on what you plan to sell. It may be a matter of spending weekends picking up some good, cheap stuff. If you want a more formal arrangement, there are wholesalers and distributors for almost any product you need.
3. Have an online catalog or store: When you shop online, there is usually a catalog of products to choose from: Tiny pictures with product descriptions. That is what you have to do. Happily, you do not have to create this from scratch. Your e-commerce site host (see below) will offer a store creation tool, with point-and-click ways to add products, pictures, and descriptions.
4. Have the ability to process payments: This issue is two-fold: The financial ability to process credit card payments comes when you have a merchant account. Search for that term online. The physical ability to process such payments is, again, something your host will offer. Search for “online merchant services” or “E-commerce hosting.”
5. Market and promote your site: All these steps are important, but this one may be a little more important. People have to find your site. No matter how nice it looks or how cool your products, if no one knows about the site, it is a waste of time, money, and effort.

Master search engine optimization (SEO) techniques. Engage in viral marketing. Tweet. Have a Facebook fan page. Try pay-per-click. Advertise.

6. Fulfillment: You have to deliver what you sell, on budget and on time. Don’t forget to add the cost of shipping to your prices.
7. After-sales support: How will you handle returns? What should you upsell? Support is the difference between a one-time sale and creating a customer for life.

The insurance organization developed in different forms with fee advancement of insurance practices.

1. Self-Insurance

The plan by which an individual or concern sets up a private fund out of which to pay losses is termed “self-insurance”. The person lays aside periodically certain sum to meet the losses of any contemplated risk. While it may be called “self-insurance”, it is not, as a matter of fact, insurance at all because there is no hedge, no shifting or distributing of the burden of risk among larger persons. It is merely a provision for meeting the contingency.

Here the insured becomes his own insurer for the particular risk. But, it can be successfully worked only when there is a wide distribution of risks subject to the same hazard, it may be lesser expensive, provided the amount of loss is tremendous.

The fund, as it accumulates, belongs to the insured and he can invest it as he may deem prudent.

He pays no commission to agents, no extra expenses for maintaining office.

So, on the one hand, the return on an investment will be higher and on the other, the cost of operation will be lesser.

The self-insurance will be successfully operated where;

1. There are several properties such as machine, motor vehicle, house factories, etc.,
2. The properties or units are widely distributed,
3. These are under the influence of varied risks, and;
4. The risks are greater at one place and lesser at another place.

So a shipping company owning a large number of ships can profitably employ this scheme or an automobile firm having numerous motor vehicles can successfully operate this scheme.

Certainly, a concern about limited risks and resources should not attempt to operate this scheme.

The self- insurance cannot be effectively utilized by those concerns where the losses cannot be easily estimated, no proper management of the accumulated funds can be practiced, and the accumulated funds prove to be inadequate at the contingency.

2. Individual Insurer

An individual like other business can perform the business of insurer provided he has sufficient resources and talent of the insurance business.

The individual organization has been rare in the field of insurance.

3. Partnership

A partnership firm can also carry on the insurance business for the sake of profit.

Since it is not an entity distinct from the persons composing it, the personal liability of partners in respect of the partnership debts is unlimited.

In case of huge loss, the partners have to pay from their own personal funds and it will not be profitable for them to start an insurance business. In the early period before the advent of joint stock companies, many insurance undertakings were a partnership or unincorporated companies.

They were constituted by deed of partnerships which regulated the business.

Before the formation of joint-stock companies, the crown had empowered to grant application letters patent to such unincorporated companies to operate the business with limited liabilities.

Sometimes, the policy-holders were permitted to share the management of the concern.

These forms of insurance had been completely disappeared with the advent of joint stock companies.

4. Joint Stock Companies

The joint stock companies are those which are organized by the shareholders who subscribe the necessary capital to start the business, are formed for earning profits for the stockholders who are the real owners of the companies.

The management of a company is entrusted to a board of directors who are elected by the shareholders from among themselves. The company can operate insurance business and the policy-holders have nothing to do with die management of the concern. But, in life insurance, it is the practice to share a certain portion of profit among the certain policy-holders. The participating policy-holders are getting the bonus. Before nationalization, according to insurance act, 1938, the policy-holders had a right to elect their representatives to the board of directors to the extent of one-fourth of the total number of directors of the company. The provision enabled the policy-holders to have an effective voice in the management of the company. Most of the insurance businesses were done on a joint stock basis before nationalization.

They were operating within the memorandum of association and articles of association framed by them.

They used to distribute only 5 percent of divisible profit to the shareholders and more than 95 percent of the divisible profit was distributed amongst the policy-holders.

5. Mutual Companies

The mutual companies were co-operative associations formed for the purpose of effecting insurance on the property of its members.

The policy-holders were themselves the shareholders of the companies, each member was insurer as well as insured.

They had the power to participate in, management and in profit to the full extent.

Whenever the income was more than the expenses and claims, it was accumulated in the form of saving and was entitled to reducing the rate of premium.

Since the insured were insurers also, they always tried to reduce the management expenses and to keep the business at a sound level.

The theoretical base of the mutual companies is issuing of participating policies, i.e., the policyholders had full power in management and profit, whereas the joint-stock companies, strictly were to issue non-participating policies.

But, in practice, the joint-stock companies were also issuing participating policies.

It made them mixed companies i.e. where the features of joint stock companies and of mutual companies were present.

6. Co-Operative Insurance Organization

Co-operative insurance organizations are those concerns which are incorporated and registered under co-operative societies act. The concerns are also called ‘co-operative insurance societies’. These societies like mutual companies are a non-profit organization. The aim is to provide insurance protection to its members at the lowest reasonable price.

7. Lloyd’s Association

Lloyd’s association is one of the greatest insurance institutions in the world.

Taking its name from the coffee house of Edward Lloyd; where underwriters assembled to transact business and pick-up news, the organization traces its origin to the latter part of the seventeenth century.

So, it is the oldest insurance organization in existing form in the world.

In 1871, Lloyd’s act was passed incorporating the members of the association into a single corporate body with perpetual succession and a corporate seal.

The power of Lloyd’s corporation was extended from the business of marine insurance to other insurances and guarantee business.

The Lloyd’s association is an association of individual insurers known as ‘underwriters’. They are also termed as ‘syndicates’ or ‘names’.

Any insurer who wants to become a member of such association has to deposit a certain fee as security for the regular payment of his liabilities.

The association before enrolling the insurer as a member of the association will inquire about the financial position of the concern, business reputation, and experience.

On satisfactory proof, the association admits him in the association.

The business is affected by the insurers called underwriters, syndicates, or names.

The association is merely a controlling and guiding body. Anybody desirous of taking insurance will approach to the ‘underwriters’ and not to the association.

Each underwriter will be responsible for his business underwritten by a policy.

Thus, a policy will be underwritten by several underwriters but their share or portions of business are fixed individually.

When the policy becomes a claim, the insured realizes money from all the underwriters who had underwritten the policy according to their respective shares.

If an underwriter fails to pay his share of claim, the association will pay from his security which he had taken at the time of enrolment of the underwriter.

Never is one member or underwriter liable for the losses of other members either on a policy or in a syndicate. Underwriter assumes liability ‘each for himself and not for another’.

Lloyd’s as a corporation is never liable on a policy.

It does supervise the conditions under which its members may issue policies; it undertakes to provide collective protection for the commercial and maritime interest of its members.

The Lloyd’s has done commendable work not only in the field of marine insurance but in other insurances also.

War risk, election risk, export risk, aero-plane risk, etc. have been insured by Lloyd’s association.

The association also publishes, ‘Lloyd’s list’ and ‘register of shipping’ for the information of ensuring public and the insurers.

8. State Insurance

The government of a nation sometimes owns the insurance and runs the business for the benefit of the public.

The state insurance is defined as that insurance which is under the public sector put; more specifically it can be stated that when governments have taken over the insurance business particularly life insurance.

France had nationalized larger insurance companies in 1946.

In Brazil, Japan and Mexico, the insurances are largely nationalized.

Previously, the state undertook only those insurances which were regarded to be very vital for the public interest or where private companies were not able or willing to enter the field of insurance.

Social security, unemployment, crop insurance, war risk insurance, export credit insurance, aero-plane insurance were generally understate insurance.

In India, the life insurance business was nationalized in 1956 and the general insurances were nationalized in 1971.

Thus, the insurance business in India, today, is under the control and ownership of the central government although they are in different forms of insurances.

Direct marketing for the insurance sector is a marketing method used to generate leads for insurance agents. According to the Direct Marketing Association, insurance marketers spent $6.81 billion on direct marketing in 2008, the last year for which figures are available from the DMA. Given the plethora of marketing messages bombarding businesses and consumers, direct marketing offers insurance agents a personal, quantifiable method of generating leads.

Types of Direct Marketing

Insurance brokers and companies use many direct marketing methods to find new customers. Direct mail postcards and letters are two types of traditional direct mail that are popular for insurance marketing. Many companies purchase local lists and send lead-generation mailers out for their insurance brokers. Other types of direct marketing used by the insurance sector include telemarketing, radio, television and digital advertising.

Benefits

There are several benefits of using direct marketing to sell insurance services. Direct marketing is easily measured, which makes it easy for insurance agents and companies to assess how well a campaign performs for them. Direct mail marketing activities can be hidden from competitors, a great benefit in the highly competitive insurance industry where companies may battle for new customers.

Measurement

Direct marketing campaigns can be measured in several ways. The overall response rate is assessed as the number of leads that come into the insurance office divided by the number of mail pieces sent out or audience size reached. Other metrics for insurance marketing campaigns that can be measured include the lead-to-close ratio, or how many of the leads that came in actually resulted in sold policies.

Tips

Insurance marketers offer several tips for generating a better response rate, especially for direct mail. Always offer a free gift to those who respond. The gift may be a report on home safety for home insurance leads, winterizing an automobile for auto insurance or estate planning for life insurance, but it should tie into what you’re selling. Include a response card, and use a unique 800 number to track phone responses by campaign.

Account aggregation sometimes also known as financial data aggregation is a method that involves compiling information from different accounts, which may include bank accounts, credit card accounts, investment accounts, and other consumer or business accounts, into a single place. This may be provided through connecting via an API to the financial institution or provided through “screen scraping” where a user provides the requisite account-access information for an automated system to gather and compile the information into a single page. The security of the account access details as well as the financial information is key to users having confidence in the service.

An aggregator is an entity that purchases mortgages from financial institutions and then securitizes them into mortgage-backed securities (MBSs). Aggregators can be the issuing banks of the mortgages or subsidiaries within the financial institutions themselves. They can also be brokers, dealers, correspondents, or another type of financial corporation. Aggregators earn a profit by purchasing individual mortgages at lower prices and then selling the pooled MBS at a higher price.

The database either resides in a web-based application or in client-side software. While such services are primarily designed to aggregate financial information, they sometimes also display other things such as the contents of e-mail boxes and news headlines.

Understanding an Aggregator

Aggregators are essentially service providers who eliminate some of the effort issuers need to go through in creating a mortgage-backed security. Depending on what the end customer is looking for, aggregators can seek out and purchase a defined type of mortgage from a diverse set of lenders and originators. By expanding the search across a variety of mortgage originators, including regional banks and specialty mortgage companies, it is possible to create tailored mortgage-backed securities that can’t easily be sourced from a single mortgage originator.

Secondary Mortgage Market

Aggregators are better understood as a phase of the securitization process rather than a distinct entity in the secondary mortgage market. When an originator, like a bank, issues a mortgage, they want to move it off the books to free up capital so that they can issue more loans. Selling a single mortgage directly to an investor is tricky because a single mortgage faces a lot of difficult-to-quantify risks based on the individual buying a property. Instead, the aggregator buys up a collection of loans where overall performance is easier to predict and then sells that pool to investors in tranches. So there is a pooling/aggregation phase that takes place before the MBS can be sliced up and sold.

• An aggregator is any entity that purchases mortgages from financial institutions and then securitizes them into mortgage-backed securities (MBSs) for sale.
• Issuing banks, subsidiaries within the financial institution, brokers, dealers, and correspondents can all be aggregators.
• Aggregators function as service providers that remove the work for issuers in creating a mortgage-backed security.
• When mortgage originators become aggregators in the securitization process, they create special purpose vehicles (SPVs) to facilitate the transaction.

Customer experience (CX) is the product of an interaction between an organization and a customer over the duration of their relationship. This interaction is made up of three parts: the customer journey, the brand touchpoints the customer interacts with, and the environments the customer experiences during their experience. A good customer experience means that the individual’s experience during all points of contact matches the individual’s expectations. Gartner asserts the importance of managing the customer’s experience.

Customer experience implies customer involvement at different levels – such as rational, emotional, sensorial, physical, and spiritual. Customers respond diversely to direct and indirect contact with a company. Direct contact usually occurs when the purchase or use is initiated by the customer. Indirect contact often involves advertising, news reports, unplanned encounters with sales representatives, word-of-mouth recommendations or criticisms.

Customer experience encompasses every aspect of a company’s offering the quality of customer care, but also advertising, packaging, product and service features, ease of use, and reliability. Creating direct relationships in the place where customers buy, use and receive services by a business intended for customers such as instore or face to face contact with the customer which could be seen through interacting with the customer through the retail staff. We then have indirect relationships which can take the form of unexpected interactions through a company’s product representative, certain services or brands and positive recommendations or it could even take the form of “criticism, advertising, news, reports” and many more along that line.

Customer experience is created by the contribution of not only the customers’ values but also by the contribution of the company providing the experience.

All of the events experienced by customers before and after a purchase are part of the customer experience. What a customer experiences is personal and may involve sensory, emotional, rational and physical aspects to create a memorable experiencer. In the retail industry, both company and customers play a big role in creating a customer experience.

In short, customer service is just one part of the whole customer experience.

As we mentioned, customer experience is a customer’s overall perception of your company, based on their interactions with it. Comparatively, customer service refers to specific touchpoints within the experience where a customer requests and receives assistance or help for example, calling an operator to request a refund or interacting via email with a service provider.

In other words: CX is larger than customer service. It includes every touchpoint a customer ever has with your company, whether it’s the moment they first hear about you in a blog post they found on Google, all the way through to the time they call your customer service team to complain about your product (and hopefully get a prompt response).

What is a good customer experience?

In short, good customer experience can be achieved if you:

• Make listening to customers a top priority across the business
• Use customer feedback to develop an in-depth understanding of your customers
• Implement a system to help you collect feedback, analyze it, and act on it regularly
• Reduce friction and solve your customers’ specific problems and unique challenges

Importance of Customer Experience

A remarkable customer experience is critical to the sustained growth of any business. A positive customer experience promotes loyalty, helps you retain customers, and encourages brand advocacy.

Today, customers have the power, not the sellers.

Customers have a plethora of options to choose from at their fingertips plus the resources necessary to educate themselves and make purchases on the own.

This is why it’s so important to provide a remarkable experience and make them want to continue doing business with you customers are your best resource for growing your brand awareness in a positive way.

So, how can you measure your customer experience to determine what you’re doing well and where there’s room for improvement?

Measure Customer Experience

1. Analyze customer satisfaction survey results.

Using customer satisfaction surveys (which you can easily create in HubSpot) on a regular basis and after meaningful moments throughout the customer journey provides insight into your customers’ experience with your brand and product or service.

A great way to measure customer experience is Net Promoter Score®, or NPS. This measures how likely your customers are to promote you to their friends, family, and colleagues based on their experiences with your company.

When measuring NPS, consider data in aggregate across teams. Since multiple teams impact your overall customer experience, you’ll need a clear picture of performance and that comes from multiple data points. For example, what is the NPS for in-product usage? What is the NPS for customer service teams across communication channels (phone, email, chat, etc.)? What is the NPS for sales? What is the NPS for attending a marketing webinar?

Analyzing NPS from multiple touch points across the customer journey will tell you what you need to improve and where you’re providing an excellent experience already, while showing customers you’re listening to them and care about what they have to say.

With your NPS score, dive into your team-by-team performance to ensure you’re performing well across the board. Also, you may choose to follow up on customer feedback whether it’s positive or negative to connect with customers, deepen your relationship with them, and improve your retention and loyalty.

2. Identify rate and reasons for customer churn.

Churn happens: it’s part of doing business. But it’s important that you learn from churn when it happens so you can prevent it from happening again.

Make sure you’re doing a regular analysis of your churned customers so you can determine whether your churn rate is increasing or decreasing, reasons for churn, and actions your team may take in the future to prevent a similar situation.

3. Ask customers for product or feature requests.

Create a forum for your customers to request new products or features to make your offerings more useful and helpful for the problems they’re trying to solve.

Whether that forum is shared via email survey, social media, or a community page, give customers the opportunity to proactively offer suggestions. This doesn’t mean you must implement all of the suggestions you receive but if there are recurring trends popping up, they might be worth investing time in to.

4. Analyze customer support ticket trends.

You should also analyze the customer support tickets your support reps are working to resolve every day. If there are recurring issues among tickets, review possible reasons for those hiccups and how you can provide solutions across the board this will allow you to decrease total number or tickets reps receive while providing a streamlined and enjoyable experience for customers.