Oh, hey, Walmart. Look at how you’re winning at branding today. I used to work with brands that were sold at Walmart. I know from experience that the “Own the school year like a hero” tagline and point-of-sale sign was never designed to market firearms. With two clicks of a mouse, I confirmed that the sign is part of a campaign featuring back to school clothing items featuring superheroes.
Unfortunately for Walmart, this “display” — likely the work of a cheeky sales associate who did it for the laugh — got lots of negative attention.
With more than 3,000 stores, the retailer has a tough job keeping tabs on its brand across all touchpoints. This speaks to the need for training and empowerment of all store employees to deliver on the company’s brand promise — every day, with all their actions. This one brand transgression has already thrust Walmart into the spotlight with some negative publicity — at a critical time when families are flooding back to retail to restock for the new school year.
A company’s people are probably the most important part of their brand. In the age of instantaneous news, non-news and social sharing — one bad decision on the part of a single employee can cast a negative impression on the entire brand.
This is almost the same as was happened to United Airlines a couple of months ago, when line employees weren’t truly empowered to do right by their customers. As was the case with United, I don’t suppose that Walmart’s brand will take a significant financial hit because of this one incident, no matter how awful we think it is.
The strategic brand construct consists of two parts: 1) the part the company owns: the “identity,” and 2) the part that customers own: the “image.” One of the goals of branding is to ensure these two aspects match. That requires a 360-degree focus on the brand and requires everyone in the company to be a steward of the brand, from the most junior sales associate on the floor, all the way to the CEO, and everyone in between. When one oblivious sales associate makes a split-second decision to do something off brand, and that image is captured on social media and subsequently shared at the speed of light, that single action speaks for the entire brand.
For all brands, regardless the industry they’re in, employees are the primary stewards of the brand experience. Train employees on your brand’s vision, its core DNA and the essence of how every customer should feel when he or she interacts with the brand at any stage of the customer journey. Create incentives for employees to deliver an on-brand experience. And correct them — or even dismiss them — when they don’t.
If you are operating in the B2B world – and you likely are, as either a supplier or client – do you find this statistic surprising?
This finding should be a wake-up call for B2B brands to figure out what is going on with their clients.
Do you know anyone in the business world who will say they are opposed to client-centricity? Putting clients at the center of a business remains an aspiration for many companies. Why is a strategy of such potential value so difficult to execute? What must happen to create mutually beneficial relationships between businesses and clients?
Companies have to get out of their own way and provide the value that clients expect. B2B or B2C, people handing over their money to you because they believe you are meeting their needs demand personalized engagement. They will choose the right moment to go elsewhere if you fail to deliver. Here are some areas that can make a difference:
Sales force compensation systems rewarding new client deals, with little incentive past contract signing and getting the client set up, can be updated to reward surfacing and delivering on continuing needs.
A linear approach to winning, welcoming and engaging clients can be reinvented to treat clients like people and break old habits of putting them through a gauntlet of internal systems and silos.
An outside/in understanding of client needs and wants can replace product pushing. Even traditional client needs assessments may not capture evolving needs – these methods tend to play back answers biased by the products driving today’s P&L.
There is no magic to this. Client-centricity requires change and a new mindset. It’s hard work. Where can you begin? Follow these four action steps to identify the priorities for your business:
Go out and talk to clients. The value of conversations where clients do most of the talking and you do most of the listening can be far higher than quantitative research.
Segment your client base. This is not just about bucketing clients by size, sector, potential value to you or historical purchase relationship. It’s about the clients’ journeys, including their attitudes and behavior, how they go about achieving their vision of success, and where you fit in.
Reimagine your clients’ experience of doing business with you. How does your brand enhance the clients’ journey — it’s not about making them fit in to your mechanisms for running your business. It’s about reflecting their preferences back to them in every interaction they have with you.
Figure out what this means for your employee experience and expectations. Everything from sales incentives, to marketing communications, to servicing policies to channel capabilities – should contribute to the experience your brand will create so your clients see you as enabling their vision for their business. Hire people who are not only business-focused but people-focused.
The very term “B2B” fails to acknowledge the reality that every brand, irrespective of whether its audience includes individuals or enterprises, must prove itself to the people who will be its users, buyers or payers. Behind every B2B relationship are P2Ps – People-to-People.
Early yesterday, I wrote a post on how Zenefits’ compliance challenges in Washington state could cost the company millions of dollars in lost commissions. While noting that it was only a matter of time before someone at Zenefits lost his job over the situation, I had no idea that Zenefits CEO Parker Conrad would resign later in the day, citing the compliance problems.
In a press release cited by VentureBeat.com announcing Conrad’s departure, Zenefits’ new CEO, David Sacks, who had been COO, declared, ”I believe that Zenefits has a great future ahead, but only if we do the right things. We sell insurance in a highly regulated industry. In order to do that, we must be properly licensed. For us, compliance is like oxygen. Without it, we die. The fact is that many of our internal processes, controls and actions around compliance have been inadequate, and some decisions have just been plain wrong. As a result, Parker has resigned.” (The entire press release is worth reading).
The loss of a founder and CEO is another cost Zenefits will pay for the alleged failure to comply with states’ insurance laws. I don’t believe they’re done paying for their mistake, however.
Washington regulators are investigating Zenefits’ alleged use of unlicensed agents selling insurance policies in the state. This is not only embarrassing for a company as brash and boastful as Zenefits, but the company’s finances could be substantially affected, too. Not just because, if found guilty of this felony, Zenefits could face a multimillion-dollar fine. The far greater risk to Zenefits is the prospect of losing commission income — a lot of it.
William Alden at BuzzFeed News has done a great job pursuing the story of Zenefits’ unlicensed sales. Now Alden is reporting that, based on public records, it seems “83% of the insurance policies sold or serviced by the company through August 2015 were peddled by employees without necessary state licenses….”
The potential fallout is quite substantial even though only a small number of sales are involved — just 110 policies out of 132 sold or serviced by Zenefits in Washington between November 2013 and August 2015. “Soft dollar” costs include a damaged brand because of the bad press, distractions at all levels of the company and the need to address whether the company is ignoring other consumer protections.
Then there are the hard costs. 110 policies times the maximum $25,000 per violation that Washington can impose means fines of as much as $2.8 million. Financial penalties imposed by other states could add to this figure. While paying a $2.8 million fine is no laughing matter for a company losing money every month, this represents less than 0.5% of what Zenefits has raised from investors. However, the legal fines are, potentially, just the tip of the proverbial iceberg. As Alden points out, the fallout from this investigation could result in carriers dumping Zenefits, and that could cost the company far more than any criminal fines.
Carriers require agents to meet several requirements before contracting with them, and agents must continue to meet these requirements to keep the agreement in-force. Common provisions include being appropriately licensed, maintaining adequate errors and omissions coverage and not committing felonies or breaching fiduciary responsibilities. Fail to meet any of these requirements, and agents can find their contract terminated for cause.
Terminations for cause usually allow insurance companies to withhold future commissions from the agent and, depending on the specific terms of the contract, from the agent’s agency, as well. If an agency or agent knows or should have known he was in violation of contract terms when executing the agreement, carriers may be able to rescind the contract and demand repayment of commissions.
Being found guilty of a felony in Washington state could allow a carrier — any carrier, anywhere in the country — to terminate Zenefits’ agent contract for cause. Late last year, Zenefits CEO Conrad claimed the company was on track to earn $80 million in 2015. So, let’s see, millions times 50% … carry the one … yeah, this hurts. A lot.
A nuclear outcome is highly unlikely. The Washington state investigation into Zenefits is continuing, and Zenefits, to date, has been found guilty of nothing.
Even if Washington regulators find Zenefits committed a felony, for reasons described in a previous post, the outcome is highly unlikely to be a fatal blow to the company. Insurance regulators have considerable leeway in determining fines and penalties. Absent proof that Zenefits intentionally violated state law or that consumers experienced actual harm, the Washington State Department of Insurance is likely to conclude that this situation resulted from incompetence. The department might then impose a modest fine on Zenefits and subject the company to enhanced review of its licensing practices for a few years.
Let’s put this in perspective. Richard Nixon resigned the presidency as a result of what started off as a two-bit break-in. That kind of cascading escalation is extremely rare. What we’re seeing unfold in Washington state is probably not Zenefits’ Watergate moment.
Zenefits has already paid a small price for what it allegedly did. I’m guessing the whole mess has been a bit distracting to management. And the fact remains: Mishandling more than 80% of sales in a state is a sign of immense ineptitude, arrogance or both. Having this reality aired publicly is not good for Zenefits’ brand, and resources will need to be expended to make sure it doesn’t happen again. I’m not aware the company has fired anyone as a direct result of the lax licensing controls, but that could happen.
As a result of this fiasco, Zenefits has already taken down its controversial broker comparison pages in which the company used carefully selected criteria to compare itself to community-based agents. (I guess the company was reluctant to add “being investigated for multiple felonies” as one of the comparison points). This is a small sacrifice as the comparison page was likely an attempt to enhance search engine optimization rather than an effort to take business from the competition.
Zenefits has paid a small price. The open question is: How large a price will the company ultimately pay?
This article is an excerpt from a white paper, “Capturing Hearts, Minds and Market Share: How Connected Insurers Are Improving Customer Retention.”To download it, click here.
Part 1 of this series explained why retention is so much harder these days. This article explains how insurers can solve the problem.
Know Your Customers
Understand values and behaviors of your customers. Start with available data sources. Augment structured data from traditional back-end systems with unstructured data like those collected through call centers and written correspondence. With these data, you can deduce meaningful patterns and behavior-based customer segments.
Enter into active dialogues to establish meaningful relationships. Use social media analytics and conversations via social networks to increase customer touch points. Use the knowledge gained about their wants and needs to sustain intermittent conversation about things that are helpful to the customer.
Build an environment where sharing data creates mutual benefits for customer and insurer. Transparency is key. Create and publicize a “customer data policy” that specifies how and when you will use data shared directly or generated through means such as “big data gathering,” and how customers will benefit. Use shared data to create extra customer value, as detailed in the next section.
Offer customer value
It is no surprise that customer value – that is, the value that a customer derives from the relationship with his or her insurer – drives customer loyalty. In a previous study, we defined customer value as the adequate response to customers’ changing needs. How can insurers translate this to understand which value drivers influence retention?
The fairness zone: The first component of customer value we will discuss is – again – price. For most of our respondents, the absolute level of premiums mattered less than individual perception of price fairness – a too-low price has the same negative effect on loyalty as one that is too high (see Figure 5). This means that a customer to whom the price seems right is two to three times less likely to switch in a given year. The fairness of premiums is also an emotional component that insurers need to get right (and tools like social media analytics can support this).
What is the power of brand? The second value factor we examine is brand. What is the retention value of a good brand? According to our data, it’s less than expected. Only 21% of our respondents name “reputation” as one of the factors that cause them to stay with their chosen insurers. Could brand still be an implicit value driver?
Our recent consumer products industry study, “Brand enthusiasm: More than loyalty,” showed that brand consciousness and brand loyalty are changing, and our data echoes those findings. Only 12% of respondents have a high brand consciousness, and that is the only bracket where it has a strong effect on loyalty in the insurance world (see Figure 6).
This suggests that an extra investment in brand creates limited loyalty returns; a great brand only matters if your customers belong to the few who are brand conscious to begin with. Moving customers to the “high” consciousness bracket might prove difficult to achieve.
So how can insurers, many of whom already have a strong brand, make this work to their advantage? We propose adopting the concept of “brand enthusiasm.” Brand enthusiasm is influenced by the level of customer engagement, which we will explore in the next section, and again leads to the increased emotional involvement with the insurer that we call “heart share.”
Transparency, not complexity
Last but not least, we examined other product-related value drivers. We suspected that the often high complexity of insurance products has a negative effect on loyalty, but our data proved this hypothesis wrong. Although product complexity might be a deterrent to purchase (which was outside the scope of the survey), even those who perceived the product they bought to be highly complex did not show a higher propensity to switch.
In contrast, transparency about the product strongly influences loyalty in a positive way. Transparency leads the customer to understand and be more comfortable with the product (and the insurer) even when it is complex. Seventy percent of respondents who reported that their product understanding was high expressed high loyalty – almost three times as many as those with low product understanding. High transparency leads to rational involvement: the “mind share” in our study title.
What current technology can help insurers promote customer value? To give customers an emotional connection and involvement with a fair price and a transparent product, telematics is ideal. Regarding fairness, customers can see that the rate is based on their personal risk and influenced by their personal actions. Examples include a “pay-how-you drive” auto product or the use of exercise tracking devices in health insurance. Transparency of this sort of auto product is high, and for many telematics offerings, there is an additional fun factor by seeing how well you drove, thus competing against yourself for better driving scores.
Recommendations: Offer value
Support your customers in areas they personally value, even if they are not directly related to your core business. Offer information to your customers in useful areas that are widely related to their coverage: for example, traffic or weather information for auto insurers. Create communities of interest – in social networks or directly hosted by you – to share news, tips and enhance exchange among like-minded individuals and your organization.
Add risk mitigation or prevention into your products and services. Commercial insurers have been doing this for years. Start offering these at the outset of the contract relationship. Later, add tracking via telematics, plus assistance services.
Personalize offerings and provide pick-and-choose product options. Product flexibility starts in the back end. Your application architecture must enable a modular approach to products and services. Build a roadmap for flexibility using industry standards such as IAA. From the front end, add in-depth analytics to flexibly balance the offered options with market needs.
Fully engage your customers across access points
Incumbents at risk
One characteristic of the Millennial customer is the desire for omni-channel shopping for their goods and services. For insurance shoppers, this extends well beyond using traditional insurers – many Millennials are open to using adjacent providers and new entrants into the market (see Figure 7).
In the short run, offerings like Google Compare mainly replace existing aggregators; insurers still cover the actual risk. In the long run, online service providers – given their good customer knowledge across many products and services – could start to accept risk themselves. In this case, customers’ already-stated willingness to switch would become a real threat to incumbents.
In addition, the reason respondents gave for considering those providers should be troubling to insurers: They describe non-traditional providers as faster, more transparent and easier to reach (see Figure 8). To counter this, carriers need to engage with their customers across a broader range of access points than ever before.
The age of mobility
One option is to be more accessible on the go. Ninety-six percent of our respondents own some form of mobile device, most often smartphones (owned by 82 percent of respondents) and tablets (owned by 49 percent); they have become commonplace modern accessories throughout the world. Still, only 13 percent of respondents who bought their insurance online, either directly or via an aggregator, used their mobile devices to buy. On the other hand, 29 percent of all respondents stated they would like their insurers to offer an option to buy through a mobile device, and that this would increase their loyalty.
Expanding mobile offerings outside of searching and buying is an instant accessibility increase with potential loyalty gains. The biggest effects would be in submitting claims (42 percent) and in simple communication (43 percent). Many insurers have already invested in apps for claim submission, but again, they seem to be either unknown or too hard to use.
The effect of expanded mobile offerings differs widely by country, with the more empowered customers in developing markets increasing their loyalty more (see Figure 9). Still, given the larger market sizes in mature markets, investment in mobile services are still expected to generate returns.
Connecting everything, everywhere
Looking toward the longer term, insurers will also need to consider investing in the Internet of Things (IoT) to enhance customer engagement. A growing number of consumers either own or can imagine owning an Internet-connected device like a refrigerator or a washing machine (56 percent of millennials, 36 percent of boomers).
Currently, only a small percentage of customers told us they would be comfortable with insurers using the data from these devices (21 percent of millennials, 15 percent of boomers.) Still, for those respondents, the greater accessibility and convenience of the IoT would lead to an increase in loyalty. Insurers can make use of the IoT if they sell it right: with high transparency regarding how the data is used (and not used).
Recommendations: Fully engage
Embrace mobile to enable constant access for your customers. For your main set of lines of business, envision “customer journey maps.” These maps document the typical steps a customer must take during the provider relationship, from needs discovery through information gathering and purchase, all the way through after-sales services and claims processes. For each step, identify interaction options to generate a complete picture of potential mobile touch points.
Support decision making throughout each step of the sales process at the convenience of your customers. Create one unified front end for the customer, whether they come in through an agent, call center, the Internet or mobile devices. Make customer data and product information equally available at all touch points.
Have information available anytime, anywhere to support instantaneous fulfillment of client requests. Equip tied agents, underwriters, claims adjusters and other fulfillment roles with mobile technology like tablets and other handheld devices. This allows you to abandon a fixed workplace in favor of greater fulfillment flexibility – for example, claims can be adjusted directly on-site.
Ready or not – are you capturing the hearts and minds of your customers?
How are you using your in-house sources of customer knowledge? In what ways are you gathering and adding external information, such as that from social networks? How are you combining internal and external information? How is it used to generate greater customer value and loyalty?
Where and how are you using needs-based or persona-based segmentation approaches? How will you deepen your level of understanding individual customers?
To what degree can your customers pick and choose options from your product portfolio? What is your plan to remove the barriers to further customization?
How do you communicate with your customers? What is your approach to staying abreast of the ways they prefer to communicate, now and in the future?
In what ways are you engaging millennials? And how will you stay updated to address the customers of the future, such as Generation Z and beyond?
This article is an excerpt from a white paper, “Capturing Hearts, Minds and Market Share: How Connected Insurers Are Improving Customer Retention.”To download it, click here.
A smoke alarm isn’t the only kind of protection on sale at your local superstore these days. Need some life or health insurance with those printer cartridges? You’re in luck. Insurers like Metlife and Aetna now sell insurance policies through superstores. Walmart launched a pilot program with Metlife to sell life insurance policies at 200 Walmart stores, and Costco members can select Aetna health plans offered through Costco’s Personal Health Insurance program — Costco has offered its members discounts on auto, homeowner, renters, umbrella and specialty insurance through Ameriprise Insurance for several years.
Although not every effort has gotten off to a flying start, these are good examples of insurers experimenting with approaches to tap into large, underserved markets and new sales channels and to create brand awareness in a shopping environment where there’s a natural connection with the products they sell.
What I’m most curious about is the impact the superstore channel will have on how these insurers sell. What can insurers learn from two of the world’s most valuable retail brands about creating the kind of convenient, affordable one-stop-shopping experiences that Walmart and Costco offer and consumers so desperately want?
Plenty of things. Here are four:
1) FOCUS ON SELLING YOUR BRAND RATHER THAN YOUR PRODUCT
Walmart and Costco both offer lower-priced house brand products, but neither focuses its attention on selling its own product even though that would obviously benefit the bottom-line. The goal is to own the customer by meeting the brand promise of offering low prices and good value on any and all products that a customer wants to buy. Walmart doesn’t worry about selling a competitor’s product – even with a small profit margin, Walmart still generates revenue and profit, through multiple product sales, and keeps the customer coming back rather than sending him to shop with the competition. It’s good business sense to focus on what the customer wants to buy rather than what a retailer wants to sell.
Similarly, it’s good business sense for an insurer to consider selling products that are a good fit with the brand and that complement other product offerings – even if that means offering a competitor’s product.
Selling a competitor’s products can help insurers facilitate that convenient, one-stop-shopping experience that consumers want. It allows the insurer to keep the customer relationship while generating revenue from underwriting the risk, or from brokerage fees. And in cases where an insurer doesn’t have the experience, appetite or capacity to underwrite the product, it’s better to make fee income than the underwriting income.
An insurer’s No. 1 goal is to own the customer. The insurer that underwrites the product makes one sale; the insurer that owns the customer can sell to her for her entire lifetime. That can mean decades of selling renewals, cross-selling related products and generating referral business.
2) OFFER CUSTOMERS CHOICE
Mac or PC? Chocolate or vanilla? We’re a culture of consumers who covet choice. Even a limited selection is enough to provide customers with this valuable component of the shopping experience. While Costco is cautious about the number of brands it offers (limiting the number of brands allows Costco to get the kind of volume discounts it needs to offer the lowest prices), like Walmart it offers at least two choices of brands for any given product.
Providing a competitor’s products can help insurers, too. The objective is to give customers a selection ample enough that they can compare insurance products and choose the product that works best for them. As with Costco, this may mean offering the customer a choice between two brands that offer different price points and levels of coverage.
3) SELL CUSTOMERS EVERYTHING THEY WANT
There’s nothing haphazard about the layout of a Walmart or Costco. Superstores invest a great deal of time and money walking the walk of their customers. They think through how customers search and shop for products and how those products should be grouped for optimal cross-selling opportunities.
While insurers understand the profitable art of cross-selling, in theory, I’ve witnessed more than a few property and casualty insurers who’ve missed big opportunities to cross-sell products. What happens when that flower shop you just insured needs auto insurance on its three delivery vehicles and you don’t have it? If the insurer isn’t prepared to sell the customer what she wants, the customer will go to the competition to satisfy her multiple coverage requirements.
4) NEVER LET THE CUSTOMER LEAVE EMPTY-HANDED
The path from creating awareness to having a customer walk through the door ready to purchase is long and expensive. A superstore does everything in its power to make sure you have no excuse to walk out the door without buying something.
Factoring in advertising and promotional campaigns, the cost of bringing a paying customer through the door could be as high as $400 to $500 for some insurers. Every insurer’s goal should be to make effective use of a lead by finding some way to fulfill the customer’s product needs.
I’ve only scratched the surface. Now it’s your turn: What superstore selling practices do you think insurers should consider to win market share?