Your Insurance Customers Will Cut You Off for Nothing

Most insurance executives instinctively know the price their business pays when they have unhappy and disappointed customers. Apart from the fact that insurance is mostly seen as a grudge purchase, there are many other consequences that your business needs to avoid…

• Profitability is affected because we have less customers, who buy less often, and have a propensity to defect to your rivals;
• This has implications in terms of higher marketing and promotion costs to new prospects - who don’t want to listen to the messages anyway;
• Desperation to replace lost customers also leads to cost cutting and reducing premiums in the hope of some recovery;
• They don’t recommend and refer the business through word of mouth;
• Thus, the company’s reputation is damaged, and cunning competitors will take advantage;
• Employee motivation and morale drops dramatically, (resulting in higher levels of absenteeism, bigger staff turnover, and similar headaches);
• And the costs of fixing problems and of arranging for refunds, (or ex gratia payments,) is enormous.

As if that’s not bad enough, unlike many other industries where companies get a chance to interact with their customers regularly, we may only interact with them once at the time that they sign up, and then only perhaps years later when they submit a claim.

It’s a bleak picture, isn’t it? And yet, in this bleak environment in a wretched economy, some companies are doing incredibly well. Even at a higher price point, customers remain loyal. Why? What are they doing right?

When a company can boast of high levels of customer delight and loyalty, all of the above symptoms are reversed, resulting in greater profitability and competitiveness, cooperative and positive customers who display respect for the company and its people, and dedicated employees that are more productive and innovative. The company becomes a shining beacon in a sea of industry despair. It moves your business away from what Strategy Professors Kim and Mauborgne of Insead University call “The Red Oceans” – industries where the battle for customers has resulted in a bloody mess of shark fighting shark – to an innovative, profitable and successful business that constantly adds value for your customers.

(If you’d like to see some of the research evidence, download our whitepaper here)

Delight Your Customers!

So what can you do to move away from this bleak situation and move to the “Blue Oceans”? (These are companies that compete on creating value and customer experiences that nobody else in their industry offers, and move to unexplored, uncharted, unexpected territory.)

There are probably two ways to look at this: first, from a customer’s perspective of what their total experience is like for them; and second, from your perspective as a business. What are the strategies and tactics that you can use to get your culture and infrastructure right?

Before we examine these I must share with you that the good news is that you don’t have to invest huge amounts of money in people, hardware and software to succeed. You don’t need to dive into a “Loyalty Programme,” which is a minefield of danger. (Apart from the huge expense of developing software and hardware to launch and drive the programme, why should you have to give things away to sell your products? It also cheapens your brand, is very hard to administer, is open to fraud by a few unscrupulous people, and only gives you an edge until your rivals imitate.)

Is There Any Hope for Your Business?

Once you know what your customers want, you can do what you need to do to make it happen. Therefore, creating a core of delighted, thrilled, excited, and, most importantly fanatically loyal customers depends on four crucial elements of value. Let’s dive right into what you can practically do in your business:

1. Get the basics incredibly right. If your business constantly has to fix things, replace and repair products, and fight fires that flare up, it doesn’t matter how fancy the rest of your strategies are. It’s the equivalent of putting lipstick on a pig – it makes the pig more attractive but it’s still a pig! Identify the things which your customers would define as “dumb,” and do what you can to eliminate them if possible. Listen to their feedback, and focus on the small details which they use to make judgements about your competence and commitment.
   
   
2. Make it easy and effortless to do business with you. No matter what you sell, remember that customers’ lives are complicated, and they are time-poor. Automation and artificial intelligence can help – as long as customers don’t feel neglected. Therefore, focus on four areas to simplify your interactions: physical, intellectual or conceptual, emotional and time effort. A great example is how Amazon has changed the world of retailing forever by making it incredibly easy to shop. But it’s also about taking responsibility for things that aren’t even your problem. One shopping mall – and it’s the only one I have heard of in SA – employs a locksmith whose main job is to help customers who have lost their car keys. It’s got nothing to do with them, but it creates tremendously positive feelings.
   
   
3. Put relationships first. It’s not enough to tell customers that they are important, and to have slogans like “the customer is queen.” You have to give them evidence that they are truly and genuinely the most important part of your business. For example, are the rules and procedures more important than the customer’s experience? When a client experiences a traumatic event, are your staff trained to show warmth, empathy and compassion, or are they trained to get the customer off the phone as soon as possible? It’s not about B2B and B2C. It’s about H2H – human to human.
   
   
4. Finally, constantly and continuously come up with innovative and creative ways to add value for your customers. There are at least 82 ways to add value for your customers, and yes, one of them is to introduce some kind of loyalty reward programme. But in reality, most of the rest are free or cheap, and can have a higher impact that simple rewards or points. For example, sharing information that they don’t normally have access to with them will be gratefully accepted by customers. (If you’d like a complete list of these 82 ways to add value for customers, write to us and we will gladly send them to you.)

Brainstorm these, and you will find that you will come up with dozens of ideas for delighting your customers. In the next section we’ll focus on what the business can do to create the architecture for being customer driven.

Also see my video below on "How to Create Customer Loyalty"

Where Do We Start to Make Our Business Customer Driven?

Most frustrated managers say, “Let’s do some training,” but that rarely helps in the long term. To undertake training events without the right context is the equivalent of planting seeds on barren ground. If the environment and infrastructure for customer management and delivering unbelievable personal, and memorable customer experiences doesn’t exist, you will fail. Guaranteed.

At its simplest, an effective customer management strategy comes down to six broad strategic steps…

1. Find out what your customers want and do your best to give it to them better than your competitors can. (This is what creates raving fans.)
2. Identify and win over the customers that you desire based on their needs and characteristics, but also by being very careful to not invest in those that you don’t desire.
3. Retain the desirable customers making sure that they never leave, by having a meaningful retention and loyalty strategy that emphasises innovative value added and puts relationships first.
4. Grow the value of these customers to your business through cross-sales and up-sales, and possibly even down-sales. If your customers can’t afford to take out your full offer, there may be value in asking “How can we help them to afford it?" Many airlines have very successfully done this.
5. Proactively use the power of referrals and recommendations. (It’s not as hard as you may think, and you won’t need to beg for contacts.)
6. Constantly work on reducing the cost to serve customers without compromising the business relationship.

It’s like many military missions or great endeavours such as space exploration: Once you have defined your business’s mission in clear terms, then you can also…

• Define exactly what the goals and outcomes are that your customers want to see.
• Define what “mission accomplished” looks like. (This describes what the future looks like, and what benefits people will get from it. It’s what Simon Sinek describes as “the why.”)
• It serves as a benchmark for whenever people are unsure about what they need to do, or when they need some inspiration.)
• It serves as a “bird’s eye view” of the journey ahead.
  

If you’d like to complete a self-administered diagnosis of your company’s customer drivenness, please write to us with your best email address and we’ll send it to you straight away. (Aki@LeadershipLaunchPad.co.za)

Until next time, thank you for making the time to read this.