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Customers Vote: State Farm or Lemonade?

A recent social media dust-up between renters and homeowners insurance technology upstart Lemonade Insurance and old-line insurance industry stalwart State Farm motivated us to look at what their respective customers are saying about their experiences with the companies.

A little context: State Farm recently aired a television commercial poking fun at technology-focused entrants to the marketplace. Specifically, the commercial made fun of the use of bots (artificial intelligence) used to process claims.

Lemonade was quick to respond to the perceived slight, with early Lemonade investor Ashton Kutcher even weighing in on Twitter. Kutcher has since deleted his tweet, but Coverager captured it in a screenshot.

To support its claim that Lemonade leverages technology to provide a customer experience superior to State Farm, Lemonade’s CEO Daniel Schreiber published, compared and contrasted its renters insurance customer rating and ranking to State Farm from Clearsurance’s independent platform. You can see Clearsurance’s full renters insurance rankings here.

Full disclosure: Lemonade is an engaged subscriber and affiliate marketing partner of Clearsurance. State Farm is not currently a subscriber. Being a subscriber does not enable any company to manipulate their customer ratings, which derive 100% from customer feedback.

See also: New Entrants Flood Into Insurance  

With that context, let’s see what renters insurance policyholders are saying about each company. Below is a table that includes renters insurance ratings of Lemonade and State Farm for six different categories. It’s important to note that, given that Lemonade was founded in 2015 and has a vastly smaller market share than State Farm, the startup insurer has far fewer renters insurance reviews (57) on Clearsurance than State Farm (1,349). Given that, the data should be taken with a grain of salt as Clearsurance user testing has revealed that the more reviews on a company, the more weight a consumer assigns to that company’s rating.

*Lemonade’s claim service rating based on just nine reviews

Time will ultimately tell whether Lemonade can maintain these high customer ratings as it scales and receives more reviews from its policyholders. Still, we can at the very least get a sense for how consumers feel about Lemonade’s technology-based insurance. And the early returns portend a customer base that is highly satisfied with the experience.

Despite not having agents like State Farm, which has more than 18,000, Lemonade has a 4.75 customer service rating out of 5. The part of the story that’s harder to tell with the data is how consumers’ experience has been at the time of a claim.

Lemonade’s 4.33 claim service score is based on just nine reviews, which isn’t enough to draw any conclusions. By comparison, State Farm’s 4.26 claim service rating (based on 267 reviews that include a claim) and 4.41 customer service rating are both among the best for renters insurance companies.

The largest discrepancy between the two companies is price. Lemonade has received a 4.80 rating from consumers for price, while State Farm’s 4.21 price rating is its lowest of any of the six categories we collect ratings on.

Beyond just the ratings, though, consumer feedback within reviews has helped provide us with a look at what their policyholders value.

Lemonade’s policyholders frequently discuss the ease of working with the company, things like getting a quote, buying a policy and setting up the coverage. In fact. 53% of Lemonade reviews discuss ease of the user experience while just 15% of State Farm reviews do so.

The online services of Lemonade are also a main focus of reviews. More than a third of Lemonade reviews (35%) discuss the companies’ online and application-services while just 3% of State Farm reviews address the insurer’s online services. Instead, State Farm reviews are more apt to talk about agents (18%, compared with 0% for Lemonade, which has no agents).

All this isn’t to say consumers have indicated one method — agent or bot — is better than the other. Quite the contrary, in fact. The consumer ratings data shows that both methods are pleasing the companies’ respective policyholders.

State Farm and Lemonade appear to be geared toward different demographics and different service preferences. Some may prefer the personalized service an agent can provide. Others may prefer the ease and speed of a bot — like Lemonade’s Maya. That’s what this data indicates. And both companies appear to be enjoying success of their different business strategies.

Lemonade has raised $180 million in funding and just last week was one of the companies Forbes named in a list of the next billion-dollar startups. State Farm, meanwhile, holds the largest P&C market share in the U.S.

See also: Making Lemons From Lemonade  

The misconception in all this — and why Lemonade may have taken offense to State Farm’s commercial — is that it insinuated agents are far superior to bots. The State Farm agent in the commercial says, “These bots don’t have the compassion of a real State Farm agent.”

While more State Farm reviews use words describing the helpfulness of the company (15% to 7% for Lemonade), the customer service ratings in the table above indicate that isn’t the only part that matters. In today’s technological age, customer service in the eyes of the consumer may not just be about being compassionate. It factors in things like ease and speed, too. We would submit that saving a customer time from having to think about insurance is an act of compassion.

What this means for Lemonade and State Farm in years to come remains to be seen. For now, a majority of the policyholders from these companies have indicated they’ve had a positive experience. If you’ve held a policy with Lemonade or State Farm, share your experience on Clearsurance to help better inform other insurance shoppers.

This article originally appeared on the Clearsurance blog.

What Is the Future for Drones?

In 2013, Amazon CEO Jeff Bezos announced to the world that the online retailer would begin to develop a “drone-to-door” delivery service for its loyal customers. Dubbed Amazon Prime Air, the system would deliver packages directly to your doorstep in just 30 minutes after an order is placed, setting a new and higher bar for “fast delivery.”

However, after a variety of issues and concerns were addressed by increasing regulations added by the Federal Aviation Administration (FAA), it  appeared that Bezos’ announcement would never get off the ground. But after two years of waiting for the FAA, Amazon will finally get to test these drones on U.S. soil — or, should I say U.S. air? — bringing customers one step closer to having their Tide detergent refilled by a delivery drone.

Despite the U.S. government dragging behind on approvals, for retail and civilian use, sales for drones aren’t expected to slow any time soon. Companies like Teal Group, an aerospace research firm, estimates that sales of both military and civilian drones will total more than $89 billion by 2023.

Other big companies, such as State Farm and AIG, are also getting into the drone business. In fact, State Farm is the first insurance company in the U.S. to receive regulatory approval to test drones for commercial use. With drones popping up in so many different industries, it makes me wonder, what impact will drones have on companies’ customer experience — good and bad?

The Good

State Farm plans on changing the insurance industry for the better, using drones to aid in natural disaster relief. For instance, instead of State Farm spending the money (and time) to ship hundreds of claims adjusters out to natural disaster sites to assess damages, the company will send only a handful of agents equipped with a drone partner to more efficiently survey damaged property.

Jason Wolf, a property defense attorney and shareholder at the Florida-based firm, Koch Parafinczuck & Wolf, stated in an interview to ClaimsJournal.com: “I envision a time when, after a catastrophe, an adjuster pulls up to a neighborhood and opens the trunk of his car and presses a few buttons on his tablet device, and the drone does an immediate survey of everything and streams it all right to his tablet device, and he knows exactly where to go first and what’s most significant within minutes. Costing very little money, the insurance company has a sense of everything that needs to be done in a very short amount of time.”

Imagine all the headaches this could mitigate for customers and employees after the chaos caused by unfortunate losses created by natural disasters.

It’s interesting, too, how this type of surveying will require additional training, but training we might be familiar with. Much like a police officer who trains alongside his dog in a K-9 unit, insurance adjusters will train alongside their partner – only, in this industry, it would be a drone.

While there is debate in the insurance world about how drones will operate, one thing is for sure – they will be operated and used to speed up services and save on cost, making customers’ lives a little easier. As such, claims assessment aided by a drone will yield quick turnarounds and an even quicker payout to the insured.

Additionally, insurance companies will start offering drone insurance to owners of unmanned aircraft systems (UAS). RiskandInsurance.com noted that the general types of coverage that will be required for the use of UAS and ancillary business activities will include liability, personal injury, invasion of privacy, property and workers’ compensation. The publication also mentioned that, given the conservative nature of the insurance industry, carriers could place stricter guidelines on drone coverage than the FAA does.

Once regulated and insured, drones will be sent out into the community to collect data. For example, what if someone’s home flooded? Well, insurance companies could send their drone to the flooded house and survey the area for all damages, speeding up the process for families affected.

There is also the use of drones for the collection of data by third parties. Imagine that Ford is looking to target advertisements for a new truck to areas where the road conditions would demand the use of four-wheel drive. Ford hires an agency to send out drones to specific cities where it is looking to advertise.

This drone will collect data on road conditions and take images of cars on the road to make sure a majority of drivers are in trucks, and will then report back on economic conditions. Ford doesn’t want to be advertising where citizens can’t or won’t pay for the product.

In a world becoming more drone-centric, these types of background checks and data collections via UAS will become increasingly more frequent.

The Bad

The government review process for a drone is 120 days, but, by the end of the process, Amazon says the technology of the drone submitted for regulation is outdated. Therefore, Amazon must update its filing and submit to the FAA for regulation, starting the 120-day review process all over again.

The other concern of the FAA is air traffic. Coming down with a few regulations on drone flight, the FAA is requiring that drone controllers have sight of the drone at all times and that they must operate under 400 feet.

Exelis, a global aerospace, defense, information and services company, was featured in an article on Engadget recently, discussing its development of an air traffic control system for drones. Nearly ready for testing at the FAA approved drone-testing sites, the low-altitude monitoring system would keep tabs on compact aircrafts flying at or under the mandated 400 feet.

It’ll be interesting to see how industry giants, such as Amazon, overcome these obstacles to create a non-invasive customer experience with drone technology.

Once regulated, the next issue is invasion of civilian privacy. Private and civil liberties advocates have raised doubts about the legitimacy of facial recognition cameras, thermal imaging cameras, open Wi-Fi sniffers, license plate scanners and other sensors commonly used by drones in the civilian sphere.

Civilian uses of drones for hobby are already causing issues, most notably at the White House, but across the country, as well. The LA Times reported last June that while LA Kings hockey fans were celebrating their Stanley Cup victory, a group noticed a drone flying over their heads filming the scene. Angry at the invasion of privacy, the crowd knocked the drone out of the sky using a T-shirt and then smashed it to bits with a skateboard.

In Los Angeles, flying a drone in public is not illegal, but LAPD Cmdr. Andrew Smith commented that, “It was kind of an eye-opener for us, that this something we really need to pay attention to.” While the Kings fans reactions may seem a little over the top, the general population seems to feel the same way when they see a drone overhead.

With no official laws on the books regarding the use of domestic drones, the right to privacy becomes a large topic of concern for many citizens. The American Civil Liberties Union states on its website, “Congress has ordered the Federal Aviation Administration to change airspace rules to make it much easier for police nationwide to use domestic drones, but the law does not include badly needed privacy protections.”

It will be interesting to see how industries promote drone use to their customers, without raising fears about a threat to privacy. After all, customers may not always be right, but they are always the customers.

Drones will also need to be protected from cyber attacks.

“Cyberattacks on your PC – they can steal information, and they can steal money, but they don’t cause physical damage, whereas cyber-attacks in a UAV or a car can cause physical damage, and we really don’t want to open that can of worms,” said Kathleen Fisher, the previous program manager of the DARPA project in a statement to NextGov.com

The Pentagon is currently working on developing code that will protect a Boeing Little Bird unmanned aircraft from being hacked. Defense industry programmers are rewriting software to safeguard the computer onboard the helicopter drone and aim to have the project completed by 2017.

The Future

It’s exciting to think about what drone technology will bring to companies and their customers – and to people everywhere. Let’s face it, if we think we have seen the complete potential of what customer experience has to offer, then, well, we’re being naive. The new drone technology will reinvent customer experience once again. And the best part? We all get to see how it unfolds.

The future seems endless for drones. Whether you feel they are an invasion of privacy, or they will begin to make our lives easier and aid society in ways that haven’t even been thought of yet, drones aren’t going anywhere any time soon. If you need to put it in perspective, a white paper featured on Cognizant.com notes that 40,000 drones are expected to deploy in 2015, and this is a number that will continue to increase each year. This industry is ready for take-off.

drone 2

If you haven’t come face-to-face with a drone yet, don’t worry, you will.

What Microsoft’s Errors Can Teach Us

What would it take to convince people that your business delivers a great customer experience? For tech giant Microsoft, the answer was more than $1 billion.

That’s how much the company reportedly spent on its Windows 8 marketing campaign when the new operating system was launched in 2012. (See, for example, “Microsoft Betting BIG On Cloud With Windows 8 And Tablets,” Forbes, Oct. 11, 2012.)

And how’d that work for them? Not so well. Windows 8 sales were underwhelming at launch, garnering far less market share than Windows 7 at the same point in its release cycle. So, what went wrong?

In a word, it was the experience of using Windows 8. The software was designed to support both touchscreen tablets and traditional desktop PCs, but it handled neither particularly well. Many software reviewers and design gurus found the Windows 8 interface just plain confusing. One even declared that it “smothers usability” (Jakob Nielson of Nielsen Norman Group, Nov. 19, 2012, article titled “Windows 8 — Disappointing Usability for Both Novice and Power Users.”)

But this isn’t a story about the usability of a new software program. It’s a sobering reminder that great, loyalty-enhancing customer experiences — the kind that get people talking and buying — can’t be created with Super Bowl ads, stadium naming rights, public relations blitzes or any type of advertising campaign.

Those marketing instruments may help pique people’s interest in what you have to offer, but it’s the actual interactions they have with your company — the customer experience itself — that will ultimately drive long-term engagement.

Microsoft isn’t the only organization that’s erred in this regard. Many companies, across many sectors, try to use their marketing muscle to win the hearts and minds of consumers. The property/casualty industry spent more than $6 billion on advertising in 2013, according to research firm SNL Financial. And that’s just the carriers. It doesn’t include marketing expenditures by agents and brokers that, albeit smaller in absolute terms, are nonetheless material expenses for many field offices.

Some in the industry would argue that these are necessary expenditures, required elements for raising brand awareness and consideration among one’s target market.

That’s a fair statement, but in reality what often happens is that the marketing of a company’s brand promise gets far more attention than the fulfillment of that brand promise. And it’s that disconnect for customers that will undermine even the most carefully orchestrated branding campaigns, as Microsoft learned.

How can you help your organization avoid this kind of misstep?

Use the three tips below to reconsider what it really means to manage your company’s brand experience:

1. Think about brand in a brand new way.

If the term “brand management” conjures up images of your chief marketing officer or advertising agency, then it’s time to think more broadly. People’s impressions of a company’s brand will be shaped by the totality of interactions they have with the firm.

Granted, some of those interactions will be more influential than others, but they all serve to shape customer perceptions in some fashion.

Companies that cultivate intense customer loyalty recognize the broad array of touch points that compose their brand experience. And they actively manage those touch points to create great, even legendary, brand impressions.

For them, brand is about much more than a billboard, radio spot or TV advertisement. It’s about the end-to-end experience, from pre-sale to post-sale. It’s about their website, their call center, their retail outlets, their customer correspondence, even their billing statements. Every live, electronic or print interaction you can imagine.

Case in point: Amazon.com’s obsession with packaging. The online retailer, perennially rated among the most loved brands in any industry, obsesses over every detail of their brand experience, right through and including the act of opening up the box they send you.

Amazon recognizes that, even if subconsciously, the mere act of opening up a package will necessarily influence customers’ perceptions about the purchase process. And so they’ve tried to make even that as easy as possible by introducing “frustration-free” packaging that eliminates metal twist ties, razor-sharp plastic clamshells and other annoying wonders of modern packaging.

As a result, it isn’t just buying from Amazon that’s effortless (thanks to their patented one-click purchase button), so, too, is opening the package they send you. That’s what end-to-end management of the brand experience looks like in practice.

Think of all the customer interactions that will either reinforce your company’s brand promise or undermine it: coverage quotes, sales proposals, insurance applications, policy contracts, loss control programs, renewal communications, premium audits. The list goes on and on.

No matter what you choose to have your brand stand for — simplicity, expertise, helpfulness, sophistication, expediency or some other attribute — ask yourself if that theme truly permeates your company’s brand experience, and not just its advertising. If it doesn’t, remedy that by better balancing investments in promoting your brand promise with investments in actually fulfilling it.

2. Don’t just say it, prove it.

Talk is cheap when it comes to brand promises.

Any company can claim through its marketing to be something that it isn’t: fast, friendly, knowledgeable, client-focused, easy to do business with. What ultimately matters to customers isn’t what you say but what you do.

The most compelling brand promises are those that are backed up with tangible proof points — things that demonstrate very clearly to customers (or prospects) that your business really walks the talk.

Take Southwest Airlines, a company that aims to make air travel a bit friendlier, fun and hassle-free. Among the proof points: warm, personable staff and no baggage fees.

Or Trader Joe’s, a company that’s sought to make the grocery-shopping experience less overwhelming. (How many varieties of ketchup does the world really need?) Proof point: The company stocks shelves with just a fraction of the number of SKUs carried by competitors, each carefully selected based on target consumer tastes.

Patagonia, a maker of outdoor clothing and gear, has marketed itself as an environmentally responsible company. Proof points: The company uses organic cotton — and even recycled soda bottles– to make clothing and also donate 1% of revenue (sales, not profit) to environmental organizations.

All three companies are beloved by their customers, in part because people know what these organizations stand for and see them delivering on their brand promise in very demonstrable ways.

Does your company’s brand promise pass the “proof point” test?

Consider what your firm has chosen to be famous for, what brand attributes you’ve claimed, and then ask yourself: What could you point to that proves it?

If you’re at a loss to identify some tangible proof points, start creating some. Look at your customer touch points through the lens of your brand promise — coverage quotes, applications, policy documents, correspondence, premium audits, etc. Think about how those touch points could be reshaped (or new ones added) to help bring your brand message to life during routine interactions with customers.

And even if you are able to identify some existing proof points, it’s worth asking: Are you adequately highlighting them in your marketing campaigns? You might be aware they exist, but your customers and prospects might not. Don’t keep them a secret. Follow the lead of companies like Southwest, Trader Joe’s and Patagonia and show the marketplace that your organization’s claim to fame is anything but hollow.

3. Don’t sabotage your sales.

While you can’t advertise your way to a great customer experience, you can at least hope to fill your sales pipeline via those marketing efforts.

But even that marketing investment is pointless if it’s not easy for people to comprehend and buy your products. The purchase experience is an integral part of the customer experience. Sales interactions are as important to shaping your brand as service interactions.

Yet companies often sabotage their sales (and undermine their marketing efforts) by making it difficult for people to buy their products. From poorly staffed retail stores to ill-equipped telephone sales reps to unnavigable websites, businesses erect obstacles that exhaust even the most interested prospects.

BlackBerry, a company that dominated the mobile handset business for years, learned this the hard way as its product portfolio burgeoned and sales process became increasingly complex.

The inflection point came around 2011, when consumers who visited BlackBerry’s website were met with a wall of more than 20 device images– all with confusingly similar names (Bold 9780, Bold 9700, Bold 9650, etc.)– presented on a black screen that made it difficult to even see the devices. Plus, the site offered no “electronic wizard” to help prospective purchasers narrow down the handset selection based on how they intended to use the device.

Contrast that with what visitors to Apple’s iPhone website saw: just three smartphones, presented on a beautiful, bright and transparent background, making it easy to not just discern the devices but to choose the one that best met their needs.

Comparing these two product purchase experiences, is it any wonder that Apple’s handset business thrived while BlackBerry’s stumbled?

Oftentimes, it’s not the best product that wins in the marketplace but rather the one that’s most easily accessible and understandable to the customer. Our brains are wired for the path of least resistance. The more thought and energy required to navigate the purchase process, the more likely it is that people will just abandon the effort — and buy something that’s less taxing on their minds.

Maximize the effectiveness of marketing programs by carefully shaping the customer experience — long before they’re a customer. How easily can prospects navigate your product portfolio? Comprehend product features? Interpret a sales proposal? Get purchase guidance when they need it?

These are the questions you should be asking to create a purchase experience that not only burnishes your brand but also turns more prospects into customers.

No matter what you’re selling, the real battle for people’s hearts and minds isn’t waged on billboards and airwaves. Marketing campaigns may provide air cover, but the hand-to-hand combat of each customer interaction is where true loyalty is forged — the simplicity of your sales process, the usability of your products, the clarity of your communications, the helpfulness of your staff, etc.

So, before you hang your hat on an expensive marketing campaign to convince people how wonderful your product or service is, ask yourself why they need convincing at all.

This article first appeared at Carrier Management.